In the most basic sense, a currency is really nothing more than something that a group of people agree has some value. In the digital age, a new powerful form of digital currency is radically redefining trade: data (1). The concept of payment is changing as well. Instead of paying with the cash they earned, people can now pay with the data they generate.
Payments with data
It is not a new idea. Then years ago, Clive Humby, the famous UK mathemetician who created Tesco’s Clubcard, said: “Data is the new oil. It’s valuable, but if unrefined it cannot really be used. It has to be changed into gas, plastic, chemicals, etc. to create a valuable entity that drives profitable activity; so must data be broken down, analyzed for it to have value”(2). A few years later, Meglena Kuneva, European Consumer Commissioner, added that: “Personal data is the new oil of the internet and the new currency of the digital world” (3). Eva Paunova, the shadow rapporteur on the directive on contract rules on the supply of digital content, warned that “customers are often not aware that they pay for ‘free’ digital content by providing personal information and usage data (known as alternative currency) which is later traded by companies in big data clusters”(4).
Last Thursday (8 June 2017), the Council of the EU adopted its position on the directive setting out new rules for business-to-consumer contracts for the supply of digital content and digital services (5). The directive introduces the entirely new concept of the contractual value of paying with personal data rather than the traditional way of paying with money (6). The text foresees that consumers should be protected not only under contracts where they pay a price for the digital content or service but also in cases where they simply provide suppliers with personal data. However, this provision will not apply in two specific cases. First, when the supplier processes personal data exclusively for the supply of the digital content or service. Second when the supplier collects data only to comply with legal requirements he is subject to (7).
Digital market regulations
As part of the implementation of the Digital Single Market Strategy, the Commission tabled the directive on contract rules on the supply of digital content on 9 December 2015. It was introduced together with a proposed directive on contract rules for online and distances sales of goods. (8, 9). The directive contains rules on the contractual aspects of the relationship between suppliers and consumers of digital content. In principle, contracts will not be able to deviate from the directive’s rules to the consumer’s detriment (10).
The directive covers exclusively business-to-consumer contracts for the supply of digital content. This comprises data supplied in digital form (e.g. music, online video, etc.), services allowing for the processing or storage of data in digital form (e.g. cloud storage), services allowing for the sharing of data (e.g. Facebook, YouTube, etc.) and any durable medium used exclusively as a carrier of digital content (e.g. DVDs). The scope of the directive includes all modes of conclusion, i.e. on line and off-line. However, digital content embedded in tangible goods is to be excluded from its scope (10).
Growth of the data economy
By 2020 people and connected objects will generate 40 trillion gigabytes of data. Following to the exponential expansions in the digital universe in the past few years, trading certain data for other data has become much more prevalent. With the amount of data we are all producing today, we could be sitting on a big pile of untapped wealth. In addition, data has a multiplier effect whereas traditional currencies work on a cumulative fashion. The addition of a new data point to a database leads to a greater level of information than the sum of each bit taken separately. So, the multiplier effect refers to the exponential increase in overall information arising from any new addition of data (11).
As a major producer and consumer of data, and as a key player in efforts to protect personal privacy, the European Union already occupies a crucial role in the recognition of data as form of currency (12). The possibility of official payment with data offers the promise of new wealth for the businesses and consumers alike.