B2G Data Sharing in the City of the Future: A reflection

When and how to incentivize businesses to share users’ data with the State in the Cities of the Future?

The technological progress experienced in the last decades has enabled the emergence of Smart Cities and, more broadly speaking a new perspective on our Cities in the Future. As vastly agreed upon (see for instance here and here), their essence lies in the collection, storage and processing of data through the use of advanced technological tools. It follows from this statement that data is the “fuel” of the cities of the future.

My reflection is about the importance to inquire into the existing and potentially future incentives to encourage market actors, in particular businesses and companies, to share these data. In fact, for the purpose of running and fostering the City of the Future, bulky amounts of data belonging to individual users, customers, consumers and prosumers – commonly addressed as “data subjects” – would need to be shared by companies with the State and local authorities.

It is well known that most of the systems and devices used in the City of the Future, from cars to garage doors up to personal assistants, are manufactured, run and controlled by private companies. These serve as “data controllers” according to Article 4, no. 7, GDPR, as they collect and process the data of their customers in order to enable and improve their goods and services.

Such data, however, is not only helpful to private companies, but also to local administrations for the functioning of the City of the Future. For example, the data collected from smart cars may allow to assess the risk of car accidents and traffic roadblocks. Information on the energy supply network is also very important because it allows to find waste points, better distribute resources, quickly solve grid failures, and, at the same time, enable the State to manage benefits, create alternatives to the consumption of these natural resources by financing the use of renewable energies. Another example is the information contained in devices such as smart watches. This information is essential as it will allow monitoring the health indicators of users. Thus, health authorities will be able to react more quickly to emergency situations and implement corrective policies. For instance, the city of Louisville already uses data from  smart asthma inhalers to monitor the health impact of air pollution in real time. This allows them to implement measures to control CO2 emissions.

The question arising is: When and how can the State obtain access to these data to serve the goals of the City of the Future? In which situations should and could the public interest prevail over the fundamental rights of data subjects and data controllers?

It is common to associate the subject of data protection with the key relationship between the data subjects and the State (see here), as well as the equally topical relationship between data subjects and companies responsible for collecting and processing those data (see for example here). However, an important – and at times overlooked – side of the story is the crucial relevance of the interactions between the companies and the State in measuring the role and impact of data protection in the Cities of the Future. In other words, a “triangular” relationship can be observed between the main stakeholders at play:

Focusing on the relationship between companies and the State, it is important to set the focus – of our discussions and our research in the field – on the types of incentives and their role in encouraging the sharing of these data by private companies.

An incentive is generally considered an (external) motivation to perform (positive) or not to perform (negative) some tasks. Any incentive system is deeply rooted in many levels of our society due to the behavior modelling effect of individuals. An example of this is represented by the heterogenous regime of fiscal incentives in our legal systems (e.g., taxes, fees, benefits). It is true that individuals are driven by their own desires, convictions, moral beliefs, and goals, but incentives play a key role in influencing and stimulating these factors.

From the perspective of data protection in the City of the Future, we should start pay closer attention on which types of incentives might encourage the sharing of data by private companies with the State authorities. To promote this discussion, I would like to draw the attention on four macro-categories of incentives at play in our legal and business systems:

Legal Obligations: This category of incentives results from the application of the law or other forms of orders issued by a public authority. In this case, parties are compelled to perform or not to perform an action, and non-compliance will usually carry heavy legal consequences. The category may include, for example, situations where a crime is committed and the company has a legal obligation to share its users’ data with the public authorities.

Monetary and non-monetary incentives: Monetary incentives are used as a tool to influence the behaviour of subjects who “use and are affected by accounting information”. These kinds of incentives can be direct, for example by offering a percentage for each data transaction, or indirect, by giving a tax benefit (see for instance here and here). Non-monetary incentives are tangible rewards, social practices or factors related to the subjects’ conduct that allow to shape their behavior, without a direct reflection in the target party’s accounts. Non-monetary incentives are very influential from a psychological point of view (see here). They may be related, for instance, to the enhancement of the company’s reputation or to the appreciation of other social values, such as education. (see for example here).

– Public-private partnership: it is the term used to describe the relationship established between public and private entities in several sectors, such as that of infrastructures. This type of relationship is motivated by the assumption that the private sector acts more efficiently than the public sector, since private companies, with their own investments at stake, have a great incentive to effectively manage the services. Examples can include public-private venture projects providing traffic lights, roads, bridges, surveillance cameras, and so many other services. By sharing efforts on a joint project, companies are naturally encouraged also to collaborate with the State regarding the transaction of data from their users. Moreover, non-cooperation in this regard can generate an early break-up of this relationship between public entities and private companies.

Lack of incentives: In Article 16 of Charter of Fundamental Rights of the European Union (2012/C 326/02) the freedom to conduct a business is recognized. This right aims to enhance social and economic development by emphasizing the importance of private initiative. In this sense, the State should not interfere in the activity of private companies, only in situations where its action is essential to prevent social or economic damage, as is the case, for example, in insolvency cases. In this context, the incentive for private companies will be not to collaborate with public authorities, in order to safeguard their own and their consumers’ interests.

Indubitably, data play a fundamental role in the Cities of the Future, as they are the source of power that allows them to function. My reflection highlights how there should be a greater focus on the State and public authorities on the relationship they establish or may establish with private companies, regarding the collection of data from individual users, customers, consumers and prosumers. In this sense, a thorough study of the system of incentives will be relevant to identify when and how these connections between the State and private companies can be strengthened. This would enable the rise of new opportunities for collaboration between public and private sectors, allowing the collection and use of reliable and accurate data, which would increase the efficiency of the components that form part of the Cities of the Future.

The opinions expressed within the article are solely the author’s and do not reflect in any way the opinions and beliefs of WhatNext.Law or of its affiliates. See our Terms of Use for more information.

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