The Privacy–Innovation Conundrum

54 Pages Posted: 21 Apr 2015

See all articles by Tal Zarsky

Tal Zarsky

University of Haifa - Faculty of Law

Date Written: April 20, 2015


The age of Big Data is upon us. The analysis of personal data is generating greater opportunities for privacy breaches as well as innovative progress. Governments worldwide are striving to establish a proper response to the ongoing practices of personal-data collection, analysis, and usage. This regulatory discourse immediately leads to a discussion of the relation between privacy rules and the broad and complex concept of innovation. Privacy laws could either enable or impede the flow of personal data. Availability and access to such data can either enhance or undermine innovation.

The overarching debate on the relation between privacy and innovation is constantly heating, especially in the political and policy world. In addition, the link between privacy and innovation raises a variety of complicated analytical questions, hence calls for a nuanced academic and theoretical discussion. This Article introduces the first attempt to compressively map out and evaluate the various ways in which the relationship between privacy and innovation could be articulated.

In Part II, the Article launches the discussion by providing foundational working definitions of the concepts of privacy and innovation. Thereafter, it maps out five possible links between privacy and innovation. This Part concludes that among the different arguments, the “privacy-versus-innovation” theme is of greatest interest and relevance to the current academic and policy discourse. Part III scrutinizes this latter theme closely. At first blush the “privacy-versus-innovation” argument seems absurd or intentionally manipulative. Yet a deeper examination shows that it might rely on the argument that peripheral privacy rights are potentially uncertain or overbroad.

Part IV strives briefly and cautiously to move the “privacy-versus innovation” argument, and the cross-Atlantic policy debate it involves, to the empirical realm. Here the Article confronts the possible linkage between lenient privacy laws in the United States and the success of U.S. firms in the internet/ICT environment, as opposed to strict privacy and relative failure in Europe. This Part strives to properly frame the meaning of this linkage in the underlying privacy-innovation discussion.

In addition, Part IV carefully examines the policy implications of recognizing a causal relationship, as opposed to mere linkage, between privacy and innovation in the United States and the EU. One course of action would be to change the existing EU data-protection scheme and to assure the persistence of lenient privacy laws in the United States. However, other theories and policy steps, which account for the way laws shape technologies in a global setting, might recommend the adoption of a global, strict privacy regime. The Article concludes by alluding to the most recent trends and transactions in global ICT markets, which might indicate a new direction for privacy, innovation, and the interaction between them.

Keywords: Information privacy, Innovation, FIPPs, Data Protection, EU/U.S. law, Online trust

Suggested Citation

Zarsky, Tal, The Privacy–Innovation Conundrum (April 20, 2015). Lewis & Clark Law Review, Vol. 19, No. 1, 2015, Available at SSRN:

Tal Zarsky (Contact Author)

University of Haifa - Faculty of Law ( email )

Mount Carmel
Haifa, 31905

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