Self-Regulation: How Big Tech Could Beat Washington to the Punch

By Team Block697

The fallout over the misuse of data at Facebook has stirred up debates over privacy and data ownership everywhere. From your everyday consumer to your typical civically active and socially aware keyboard warriors, the public is demanding assurance that such a blatant misuse of data and breach of privacy won’t ever happen again. This marks the end of the blind and implicit trust the public has granted to tech companies thus far, and hiding behind the nuances and jargon of the tech industry will no longer suffice as a sufficient excuse to the public.

We can debate whether it is too late for the tech world to right the ship before the unrelenting tide of bureaucratic red tape and protocol comes crashing down on them, but what isn’t up for debate is that if they don’t start doing a better job self-regulating soon, the beltway is bound to do it for them. Given the current administrations tone and previous statements on such matters, regulation may seem unlikely, but if Silicon Valley doesn’t start moving in the right direction, you can bet that data regulation and privacy will become a new popular bipartisan theme in Washington.  

Putting politics and political debates over government regulation aside, the fact of the matter is that self-regulation is almost always a smart move for companies to make. In the case of the tech industry and data protection, it’s almost a foregone conclusion that it’s the right move. Taking a proactive approach to regulation is far more economical than waiting for the government to set the guidelines and protocol for you. The reason for this is that regulators do not operate with efficiency in mind. They rather aim to establish broad compliance requirements and mandate these extensive, blanket policies, without putting thought into the feasibility of these demands. They operate by finding the lowest common denominator in order to prescribe these uniformed solutions that don’t always align with the reality and complexity of the real world. Lawmakers and regulators often don’t just miss these issues over efficiency – they also have a habit of completely disregarding the future, and legislating based solely on the realities of the present day. Long term, being ahead of the curve in regards to self-regulation gives companies extra pliability - making it easier to innovate. 

This lack of foresight into the future of innovation in the industry in Washington is without question trouble for the world of tech. It is no secret that D.C. has an uncanny ability to disable a company’s ability to innovate.. By creating an effective and credible self-regulation framework, companies can react faster to the rapid pace of innovation that is undoubtedly going to continue to happen in the tech industry. 

What questions should we be asking?

Tech companies need to start asking the right questions, and then start developing the practice of continually asking them.

Ø  Where are we storing and/or sending this data?

Ø  Who is responsible for protecting it?

Ø  How much control should users have over their data?

Ø  How do we get consent?

Ø  How much data are we collecting?

Ø  Are we using data in a way that doesn’t add value for users?

Ø  What happens if data is misused? 

So where does tech go from here?

Tech companies need to map out their stakeholders in order to determine the largest long-term driver of value for the company. This will create an opportunity for the company to place the individual motivation of the employees in alignment with the long-term value of the company and clear out any confusion in regards to responsibility. For example, Facebook recently decided to move away from optimizing entirely for time spent on the platform because it was leading to less meaningful interactions with publishers and brands. Now, it’s focused on creating deeper levels of engagement, which aligns more closely with the company's long-term vision.

This alignment is not an easy task, however. Implementing the inner structure and assuring that these changes have a lasting and enduring impact is a demanding assignment. 

Companies need to declare their responsibilities to the consumers (the privacy of data, accuracy of public information, etc.) publicly, instead of only announcing the usual the profits responsibilities they traditionally have to the shareholders. Additionally, the compensation committees in the companies’ boards have to make sure that the compensation programs are tied to all those responsibilities and not just the profits or share price. This has to start with CEO compensation and should trickle down through the entire organization.

Prioritize Transparency 

Tech companies also need to find ways from which they can better prioritize transparency. The blind trust that the public has bestowed on the tech industry is dwindling, and the general public is starting to demand that the tech industry align their policies and practices more with their personal interests/privacy. Trust is not usually something that is just given without cause – especially after learning of a breach of that trust – and teach companies will have to take increased measures to prioritize transparency in order to regain that trust from users and the public at large. 

Improving transparency is not just a step taken by the executive team and board, serious improvements require third-party action to verify that data management practices are in good order. Companies throughout the world of tech should put serious thought into launching Data Accountability Committees. In a similar fashion, many companies have established audit committees and hire auditors to provide third-party verification and build trust.

In summary

While attempting to keep regulators at bay may be an exercise in futility, there are still sensible steps that tech companies should take in order to better create trust with the public and help develop corporate policies and practices that will assist in the possible transition into a more regulated space. Even if regulation is a few years away, the companies that get ahead of it today will have a clear advantage in the years ahead.