Privacy & Innovation: A Data Privacy Day Reflection

The intuition that privacy and innovation are somehow opposed is surprisingly common. It is true that overzealous or reactionary appeals to privacy can cut off interesting ventures. (For instance, some believe Steamtunnels would have evolved into a social network in 1999 were it not shut down by the Stanford University due to privacy and copyright concerns.) But privacy generally supports innovation, and vice versa.

Privacy is, for instance, an important ingredient in creativity. Studies show that individuals are less creative when they feel observed and, as privacy scholar Julie Cohen has written, societies under excessive surveillance may tend toward the mainstream. This point is especially important in that at least one study suggests American creativity is on the decline.

Companies also innovate in response to user demand for privacy. Recent comments by the Electronic Privacy Information Center to the Department of Commerce point out: “As consumers place more of a value on privacy, companies compete over privacy, which leads to innovation.” Demand for privacy has even created arguably novel business models.

It may sound strange to say, but privacy is one reason you don’t have to rent your phone from AT&T. In the 1950s, the old AT&T forbade its customers (everyone) from plugging their own phones into the network. One company built a product that attached to the AT&T phone. AT&T claimed the right to forbid the attachment and the Federal Communications Commission agreed. But, in a landmark telecommunications case, the U.S. Court of Appeals for the D.C. Circuit reversed, holding that people could attach third-party equipment to their phone. This precedent paved the way for an entire telephone equipment industry.

The product AT&T tried but failed to ban? The Hush-A-Phone—a device to make conversations more private.

Finally, there is no reason to believe that all innovations—including those that involve the collection and processing of information—necessarily erode privacy. Some will; others will not. Rather than focus on any supposed conflict between privacy and innovation, we should be focusing on determining which innovations harm privacy—by creating discomfort and unease, for instance, or leading to adverse consequences we did not anticipate—and how to avoid or mitigate those harms. Moreover, we should recognize when and how innovative uses of information can proactively help consumers protect themselves. Privacy has nothing to fear from innovation. Innovation, everything to gain from better privacy.