Andrew Yang's Data Dividend Isn't Radical, It's Useless

On Tuesday, former presidential candidate Andrew Yang unveiled the Data Dividend Project, a program which aims to use privacy laws like the California Consumer Privacy Act (CCPA) to enshrine data privacy rights as property rights, putting a little money in people’s pockets in exchange for handing their information to corporations.

In its manifesto, the project bills itself as a "human movement to bring data rights back to the people" and borne out of the belief that "every American is entitled to share in the gains of the large tech companies that profit off the use of their data." The project aims to start with Californians, due to CCPA, and oddly (given its focus on legislation) will focus on working in “technology company boardrooms” and in a court of law “if needed.”

In an interview with The Verge, Yang was optimistic about the project's potential: “It's that first day that people get paid their dividend through DDP for All is going to be such a great day because you can imagine thousands and even tens of thousands of Americans getting something in their PayPal or Cash App. Even something like $20, $50, or $100, and they'll tell their friends, and we can change practices industry-wide,” he said.

While this sounds potentially radical, with the aim of giving Americans a right to own their data and everything that comes with that, in reality Yang is proposing little more than a tax on data. In fact, data privacy rights experts see Yang’s tax as so miniscule and ineffective that it would most likely reinforce existing power dynamics that allow data to be extracted and exploited in the first place.

"It's kind of confusing to wrap your head around because, as I understand it, he's talking about CCPA and data dividends but not how those two are connected," said Lindsey Barrett, staff attorney and fellow at the IPR Communications & Technology Law Clinic at Georgetown Law. “If your idea is to make it more expensive for companies to do an undesirable behavior, then it doesn't really change their behavior if the company is essentially printing money and if the payment isn't meaningful to the company or individual.”

The question looms even larger when you actually consider the numbers in the most generous scenario Yang presents—$100 for one million Americans. Yang’s example also suggests the $100 is going to be what a person gets industry-wide, not per-company and implies these payments would come in on a single day, but let’s say a per-company annual payment is what he’s imagining. Per-company pay-outs for one million Americans would amount to a grand total of $100 million. To put this in perspective, in 2018, Facebook's revenue was $70.7 billion and it had $54.8 billion on hand. In 2019, Alphabet's revenue was nearly $162 billion with over $119 billion cash on hand.

$100 million annually for data is nothing when Facebook previously sailed through a $5 billion FTC fine for mishandling users’ data.

If the goal is really to galvanize people for this “human movement” to change the industry, there is a better way: a dividend funded by a company’s overall profits. Silicon Valley has already dodged at least $100 billion in taxes on profits over the past decade, so closing loopholes, raising rates, and redirecting some of that into a dividend would seem to better achieve Yang’s goal. It’s not an out-there idea: Alaska already pays an annual dividend of thousands of dollars to residents, funded by the profits of the extractivist oil industry. Couldn’t data be treated the same way?

While many details clearly need to be worked out, it seems like Yang’s DDP is focused on getting the “data collectors” to pay a dividend. This ignores the vast and nebulous web of data reselling that exists after it leaves the grip of whatever company initially collected it from you. While major platforms are the most familiar faces of the data market, they’re just the tip of the iceberg. On top of that, personal data is persistently useful and has a long, unpredictable life. A small, one-time payment for some particular data from one of these companies, through this lens, feels less like just compensation and more like a bribe.

"If I sell you a chair, you can do what you want with it. If I sell you my geolocation data for the month, that's it," said Paul-Olivier Dehaye, founder of PersonalData.IO, a data protection rights nonprofit, told Motherboard. "I can deduce where you live, how often you go out, if you smoke, exercise, shop in supermarkets, eat out, etc. I don't need to buy it next month."

Yang's data dividend would ultimately reinforce existing inequities by playing corporations’ own game, not to mention seemingly intending to argue the case in their private boardrooms.

"The idea of paying people for their data puts privacy in this framework of a transaction,” Barret told Motherboard. "Putting this frame around privacy as something that people on an individual basis are able to sufficiently protect themselves if we suddenly put money on the table, well, years of researching and common sense have told us this simply isn't true.”

It’s worth considering how companies might implement the DDP, if they did so voluntarily and on their own terms. There is a significant risk that the data of some groups could be seen as more valuable, and this outcome would be seen as a step forward instead of regression.

Overall, the approach of Yang’s DDP fits into what technology critic Evgeny Morozov once pegged as "economism" or a "perspective [that] does not easily admit non-economic critiques of today's big tech; the only power relationship it detects and scrutinizes is that between firms and consumers. There are no citizens - let alone social and public institutions - in this political universe."

There are actual proposals from actual lawmakers, like Sherrod Brown's Data Accountability and Transparency Act of 2020 or Ed Markey’s Privacy Bill of Rights Act that would do what Yang's project believes it can "mobilize" people towards. Brown's bill seeks to place "strict limits on the collection, use, and sharing" of personal data as well as enshrining privacy rights as civil rights, not property rights, along with the creation of an independent agency to ensure enforcement of the law. Markey’s bill, as the name suggests, seeks to establish privacy as a civil right for "both online and offline companies.”

Barrett said that any real reform would, in addition to these limitations on use and collection, have to allow for "meaningful" penalties that would actually deter companies from exploiting user data, legally and politically empower regulators to enforce the law and pursue violations, and bring an end to forced arbitration clauses that kill negotiations before they even start.

Ironically enough, the DDP’s terms of service include a forced arbitration clause in exchange for serving as a user’s “agent” in the human movement for achieving a data dividend.

"In my view, what galvanizes people is precisely the non-commercial themes. Also, themes where there is an inherent divide in the population,” added Dehaye. “We do need to galvanize people but in Europe even with the GDPR we see the real hurdle is enforcement and I think it is the same in the U.S. The core tactical problem (‘way to galvanize’) is to ensure there are effective counter powers to keep Big Tech in check."