Which Combination of Property Rights Can Tame the Internet Giants?

Abstract

The internet technology allows the harvesting, storage, and processing of large datasets about individuals and things. When new datasets are derived from the raw data, new information is generated, which can be both privately profitable and socially productive, serving to realize economies of scope and a better allocation of resources. Or these practices can amount to a mere unproductive transfer of wealth and facilitate unfair trade practices. The raw data often contain protected information on individuals. Internet regulation must therefore achieve three policy goals. It must protect the privacy of internet users, which is derived not from economic goals but from basic human rights. It must incentivize the production and use of derived datasets and open secondary markets for data. And it must effectively prevent the use of data for unproductive purposes. The current global legal situation achieves none of these goals. It allows the internet giants to reap monopoly profits, achieve market dominance, divert income streams, and reduce consumer welfare. And it does not sufficiently protect personal data. The efficient use of information cannot be achieved by competition law but rather through a combination of different property rights, an alienable erga omnes right for the subjects of information to protect their privacy, and an open data rule for depersonalized datasets, which would remove the current de facto property of data controllers. Processed and newly derived datasets should however be protected by copyright law.