When it comes to the business of big data, a growing number of companies are profiting from the collection, storage and analysis of user information. Take Axciom for example. Last year, the company registered $1.1 billion in sales for data-driven services in analytics.  Much of these data sets are part our digital footprints, generated increasingly  by the Internet of Things (think social networks, e-mails, browsing history, mobile location, etc.).

Collecting all this data has become a lucrative business model for the enterprise.  Analytics is emerging as the core competitive advantage for the enterprise, creating a market just as susceptible to the principles of supply and demand as any other.  The price of data is a question we must begin to ask ourselves–data is growing into its own as a commodity, available for trade on the free market.

Attaching a price to data is ultimately a matter of access: who can afford what types of data, and the analytics tools to make the most of it?  As we collect and crunch more data and uncover new areas of implementation, we also dramatically increase the risk of contravening our digital rights.

How data is fertilizing the money tree

Greasing the wheel churning the booming business of data is all the advanced technology we’ve seen in recent years.  New developments in storage, data transfer, social and mobile technologies have enabled a new world for businesses.  A world where software rules, data is put to work, and efficiency is the end goal.  We’ll all have to work smarter and faster to stay relevant, and the ring of opportunity has been heard around the world.

Companies are making significant strides in reducing the costs associated with big data systems, working closely with a new breed of data scientists on a bevy of projects.  These initiatives are helping to move big data out of the early adopter into the mainstream phase.

With mainstream appeal comes a vast exploration of data as a commodity, and the impact will show itself in the form of personalized advertising, the education and healthcare systems, and the enforceability of our government.  Data will, in more ways than one, become a matter of civil rights.  Despite being a powerfully democratizing force, data can also reflect the discriminatory nature of business once it gets hold of a commodity.

Be careful where you buy: it could change your credit limit

Perhaps the most important thing going on in big data is the contextualization of our amassed information.  Data is being used to make inferences on an individual level, making movie recommendations on Netflix and Amazon.  Data’s also being put to work on entire populations, optimizing traffic patterns in Chicago or determining car insurance rates for a region in Southern California.

The overlap of personal and public data has provided an intriguing look at purchase behavior, social patterns, the spread of disease and so much more.  Just knowing there’s a machine somewhere comparing your data to the world’s raises concerns over privacy.  Companies say the data they use isn’t personally identifiable, but the real issue is how these companies act on the information provided.  An advertiser may not know you’re John Doe from 123 Sesame St., but they do know a 34 year-old male from the 01234 zip code is using a Mac.  That advertiser has inferred enough about Mr. Doe to advertise higher prices on his Safari browser.

An article called Big Data is Our Generation’s Civil Rights Issue and We Don’t Know It by Alistair Croll discusses the notion that collected data can be used to judge or act on a person.  Croll draws one such scenario where a bank manager restricts patrons’ loans based on geographic data.

“When bank managers tried to restrict loans to residents of certain areas (known as redlining) Congress stepped in to stop it (with the Fair Housing Act of 1968). They were able to legislate against discrimination, making it illegal to change loan policy based on someone’s race.”

In another case, American Express used a person’s purchase history to adjust credit limits, despite his excellent credit score.

One customer says “his jaw dropped when he read one of the reasons American Express gave for lowering his credit limit,” Croll writes.   American Express’ response to the surprised customer read as follows:

Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express.

It seems a far leap from Pandora song recommendations to bank loans, but it’s the world in which we live.  Data has been used for years by financial institutions, insurance companies and several others in the private and public sectors, but new questions will arise as we continue to apply data to more business processes across industries.

Equal rights for your health data?

One industry where the price of data is most evident is healthcare.  In the US, there exists no chain of custody for any sensitive personal information, and few ways to control who gets it. There is no certain way to track or prevent the flow of health information to hidden data users and thieves.

The security of health-related data is abysmal, with some 80% of health data is not even encrypted. According to Redspin, a security audit company, the total number of patient records breached in healthcare industries increased 97% between 2010 and 2011. The report says that in all, more than 19 million patient health records have been breached.

The healthcare industry seems to have an aversion to encrypting data, and that’s a problem. In another study, the Ponemon Institute found that 97% of the healthcare organizations reported suffering a data breach in the previous two years.  The most breaches were lost or stolen equipment, errors by third parties, and employee mistakes. In addition, more than 73% of Americans do not trust the federal government to protect the privacy of their healthcare records.

“The entire premise of big data is that the collection of more and more terabytes of the most deeply personal, intimate information about each individual’s mind and body, geolocations, exercise, eating habits, etc. will be used for research or data analytics,” says Deborah C. Peel, MD, founder of Patient Privacy Rights. “But collecting big data and analyzing it without informed consent is illegal and unethical. Today, everything about us is collected … but by whom? How does industry get big data? Surreptitiously, by theft. The nation has no idea how much data is collected about them or how many millions of entities collect and sell it. Big data, as practiced today and envisioned by the industry in the future, equals Big Brother and the end of democracy.”

Leave it to the regulatory bodies?

One of the biggest challenges for government regulation is to manage privacy and data protection, particularly given the ways in which information collection and processing has changed so much in just a few years. Google, Microsoft, Facebook, Yahoo!, Twitter, and many others are lacking a strong and unified framework on data protection. The Electronic Communications Privacy Act, or ECPA, drafted in 1986 is still being used to address the complex implications of big data and user privacy.

Big data analytics faces another important challenge beyond that of regulation.  Transparency remains a central point of discussion when it comes to data–we don’t know how a company makes inferences based on personal and public data, and without the transparency of private companies and public authorities alike, we’ll never know.  It’s a loaded topic to discuss, given the debatable role of the government.  But that doesn’t mean regulation isn’t a necessary and ongoing initiative for digital data.

The Children’s Online Privacy Protection Act (COPPA), for example, was established to prevent companies from gathering data online from children 13 years and under. But the act does not have the authority to stop governments and non-profits organizations, so they can collect as much information as they please from children under 13 years of age.  This is just one instance where a gap exists between data collection opportunities and legal limits.

How can we keep data from becoming a civil rights issue?

Governments around the globe have started to take varied approaches to personal data. The U.S. government, more specifically The State Department, recently advised software developers to create programs that make it easy for government to collect and analyze data from places like Google, Facebook and Twitter.

The FBI, too, has proposed top Internet companies like Facebook, Google, Yahoo and Microsoft to alter their codes so they can wiretap social media sites.

Then there’s the European Commission, pushing for a General Data Protection Regulation (DPR), which will ensure all companies processing European data should be held to Europe’s privacy laws.

Business will only continue to find a way to monetize data. Without cooperation across the board, the economy of data-driven services will threaten to infringe our civil rights.  How we prepare for the commoditization of data will demonstrate how well we’ve learned the lessons of the past, and determine the type of society we are moving forward.

Contributors: Saroj Kar