Abstract
AbstractFor two decades, economic agents have been investing in the personal data-driven industry on the assumption that courts, the keepers of the legal systems, would have backed their claims, turning their technological control of personal data into legally protected property rights. Courts' backing has proved only temporary as they are now revising early solutions by constraining collection, use, and trade of personal data to protect the hierarchically superior rights. The theory of ‘legal bubbles’ rationalizes the economics underlying the legal shockwaves affecting the personal data-driven economy. ‘Legal bubbles’ tend to arise when economic agents invest in the economic exploitation of a new resource in a context of uncertainty and ignorance about the legal implications of innovative activities. These legal foundations may eventually turn out to be unstable as a result of courts' ex-post attempt to re-adapt them to the previously ignored implications of unconstrained commodification, with disruptive economic consequences.
Highlights
In the last two decades, the lowering of the costs of collecting, storing, and processing personal data has paved the way for a whole ecosystem of innovative activities
As if a market could thrive despite the lack of sound legal foundations. This is tantamount to a form of legal ‘exuberance’ where, instead of conforming to emergence and evolution of laws’, economic agents double down in their ‘commodification bet’ as if they could rely on some form of implicit ‘legal bailout’ in the rescue of an increasingly strategic industry. It is an effective example of the Collingridge dilemma that is well known in innovation studies (Collingridge, 1980), where the fact that massive reliance interests have accumulated upon the early property rights solutions within an industry, is regarded as a substitute for the absence of strong legal foundations
This paper traces the main legal-economic dynamics underlying the rise of the personal data-driven economy and argues that a legal bubble has characterized its development so far
Summary
In the last two decades, the lowering of the costs of collecting, storing, and processing personal data has paved the way for a whole ecosystem of innovative activities. The initial predominance of a management-based regulatory solution (Bonnín Roca et al, 2017) implied that economic agents could prototype legal solutions by contract This approach delegated to investors the legal balancing of the short-term benefits of commodification – by offering ‘free’ services in exchange for users’ personal data – and the risk of violating hierarchically superior rights. Within such a framework, entrepreneurs like Facebook, Google, Apple, and other companies (hereinafter ‘Big Tech’) have taken the lead in defining property rights over data (Bygrave, 2015; van Erp, 2015), enabling personal data commodification by way of contract.
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