Data Market Discipline: From Financial Regulation to Data Governance

Abstract

Privacy regulation has traditionally been the remit of consumer protection, and privacy harm cast as a contractual harm arising from the interpersonal exchanges between data subjects and data collectors. This frames surveillance of people by companies as primarily a consumer harm. In this paper, we argue that the modern economy of personal data is better understood as an extension of the financial system. The data economy intersects with capital markets in ways that may increase systemic and systematic financial risks. We contribute a new regulatory approach to privacy harms: as a source of risk correlated across households, firms, and the economy as a whole. We consider adapting the tools of macroprudential regulations designed to mitigate financial crises to the market for personal data. We identify both promises and pitfalls to viewing individual privacy through the lens of the financial system.