In a new report, the Federal Trade Commission (FTC) declines to call for new laws but makes clear that it will continue to use its existing tools it to aggressively police unfair, deceptive—or otherwise illegal—uses of big data. Businesses that conduct big data analytics, or that use the results of such analysis, should familiarize themselves with the report to help ensure that their practices do not raise issues.
The report, titled “Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues” grew out of a 2014 FTC workshop that brought together stakeholders to discuss big data’s potential to both create opportunities for consumers and discriminate against them. The Report aims to educate businesses on key laws, and also outlines concrete steps that businesses can take to maximize the benefits of big data while avoiding potentially exclusionary or discriminatory outcomes.
What Is “Big Data”?
The Report explains that “big data” arises from a confluence of factors, including the nearly ubiquitous collection of consumer data from a variety of sources, the plummeting cost of data storage, and powerful new capabilities of drawing connections and making inferences and predictions from collected data. The Report describes the life cycle of big data as involving four phases:
- Collection: Little bits of data are collected about individual consumers from a variety of sources, such as online shopping, cross-device tracking, online cookies or the Internet of Things (i.e., connected products or services).
- Compilation and Consolidation: The “little” data is compiled and consolidated into “big” data, often by data brokers who build profiles about individual consumers.
- Data Mining and Analytics: The “big” data is analyzed to uncover patterns of past consumer behavior or predict future consumer behavior.
- Use: Once analyzed, big data is used by companies to enhance the development of new products, individualize their marketing, and target potential consumers.
The Report focuses on the final phase of the life cycle: the use of big data. It explores how consumers may be both helped and harmed by companies’ use of big data.
Benefits and Risks of Big Data
The Report emphasizes that, from a policy perspective, big data can provide significant opportunities for social improvements: big data can help target educational, credit, health care, and employment opportunities to low-income and underserved communities. For instance, the Report notes that big data is already being used to benefit underserved communities, such as by providing access to credit using nontraditional methods to establish creditworthiness, tailoring health care to individual patients’ characteristics, and increasing equal access to employment to hire more diverse workforces.