Liu Taoxiong: The process of data governance should effectively protect the rights of users

Originally published in Chinese by the Beijing News on February 8, 2021. Translated by ACCEPT.

Written by Beijing News reporter Xiao Longping. Edited by Ke Rui, proofread by Zhao Lin.

Source: https://www.bjnews.com.cn/detail/161274896315328.html

Data is of great value to today's economy, social development, and scientific and technological innovation. It is now considered to be the fifth factor of production, but the lack of rules around the nature, ownership, and utilization of data constitute the biggest obstacle to the development of the digital economy. In order to promote data application, strengthen data governance, and more effectively unleash the future function and role of data, five think tanks of Tsinghua University, including the Institute for Studies on Artificial Intelligence and Law and the InstituteforAI International Governance, have jointly initiated a series of forums on data utilization and data governance. The first seminar, Enterprise Data Utilization and Governance, was successfully held on February 5.

At the seminar, Professor Liu Taoxiong, Secretary of the Party Committee of the School of Social Sciences at Tsinghua University, said that data is valued as a factor of production because it can create great value, which in turn leads to infringement, privacy violations, and platform blocking. If data governance leads to a decline in the efficiency of the data market, such governance will run counter to its original intentions. In terms of regulation, the relevant authorities must combat infringement, protect rights, and commit to the advancement of anti-monopoly work.

• Data is a non-competitive factor.

From an economic point of view, what are the characteristics of data as a factor of production that distinguish it from other factors of production? Liu Taoxiong explained that data behaves differently from other factors in terms of cost, just like air, as a certain person using it does not affect the other users. Therefore, data is also considered to be reproducible at zero cost, which constitutes a big difference between data and material elements. Once someone has used a material element, it cannot be reused by someone else, lending such elements a strong competitive nature.

Liu Taoxiong said that the most important characteristic of data after it begins to generate revenue is increasing returns of scale. In other words, the increase from one copy of data to two copies of data does not simply double growth, but can multiply growth several times over. That is to say, the value of a relatively small amount of data is not very obvious, but when all kinds of data are gathered together and reach a certain scale, the available value will become very large.

Professor Liu believes that data is also a product, and it especially embodies the properties of intermediate products. Nowadays, many organizations and enterprises process data, which has turned data into an input, intermediate product, and then into the next production link to input. Thus, data has similarities and differences with the elements specified by traditional intellectual property rights. Only when the economic attributes of data elements are clear does it become beneficial to discuss how exactly they should be governed.

• Data governance should follow four economic principles.

 So, how should data elements be governed?

Liu Taoxiong suggests that several principles must be seriously taken into consideration when it comes to data governance. The first is to focus on efficiency and welfare improvement. Data is prized because it can create a great deal of value, which in turn also leads to infringement and issues of privacy protection—only when there is an infringement is there an invasion of privacy. Therefore, if data governance ultimately leads to a very large decline in the efficiency of the entire data market, this will run counter to the intention of data governance in the first place.

Second, data governance should facilitate economies of scale and promote innovation. The creation of data value depends on scale—without scale, data cannot exert its value effect. If our governance system ends up forming data into isolated islands and does not bring data together for large-scale use, then it will be a failure. If our governance cannot promote continuous innovation in digital technology, it will also be a failure.

Third, to achieve data governance, a basic approach is to make the data market run well. Liu Taoxiong believes that the only way to do this is to have clear property rights. In addition, it is necessary to create market systems and links to allow for smooth data transactions. If such transactions become increasingly hindered and difficult to manage, then data governance will also be a failure.

Finally, the process of data governance should effectively protect the rights of individuals. Liu Taoxiong said that organizations and platforms have more power in data transactions, making individuals the vulnerable party. Therefore, whether from the perspective of consumer protection or fairness, data governance should reflect the protection of individual rights.