Data Privacy Principles for Spurring Innovation

Daniel Castro June 10, 2010
June 10, 2010
ITIF responds to the Department of Commerce's Notice of Inquiry on the nexus between privacy policy and innovation in the Internet economy.

As data on individuals or their actions increasingly is collected and stored electronically, it is important for policymakers to consider the effect this has on privacy. The Department of Commerce's notice of inquiry provides a welcome opportunity to explore the best ways of protecting individual privacy while avoiding constraints on business innovation and unintended negative impacts on consumers as a whole. Privacy is important, but it must be balanced against competing goals including usability, cost and future innovation. While many technologies can be misused, they should not be banned simply because they come with some risk. Privacy fundamentalists often overstate privacy concerns as a rationale for opposing certain innovations: we have seen this in everything from RFID to biometrics to electronic health records. Moreover, restrictive privacy regulations for the private sector would likely result in less innovation, fewer free services for the average user, and higher costs for consumers. Instead, policymakers should embrace principles that support consumer privacy, but not at the expense of productivity and innovation.