Valuing Social Data

Abstract

Social data production—accumulating, processing, and using large volumes of data about people—is a unique form of value creation that characterizes the digital economy. Social data production also presents critical challenges for the legal regimes that encounter it. This Article provides scholars and policymakers with the tools to comprehend this new form of value creation through two descriptive contributions. First, it presents a theoretical account of social data, a mode of production that is cultivated and exploited for two distinct (albeit related) forms of value: prediction value and exchange value. Second, it creates and defends a taxonomy of three “scripts” that companies follow to build up and leverage prediction value and explains their normative and legal ramifications.

Through the examples of tax and data privacy law, the Article applies these descriptive contributions to demonstrate how legal regimes fail to effectively regulate social data value creation. Tax law demonstrates how legal regimes historically tasked with regulating value creation struggle with this new form of value creation. Data privacy law shows how legal regimes that have historically regulated social data struggle with regulating data’s role in value creation.

The Article argues that separately analyzing data’s prediction value and its exchange value is helpful to understanding the challenges the law faces in governing social data production and its surrounding political economy. This improved understanding will equip legal scholars to better confront the harms of law’s failures in the digital economy, reduce legal arbitrage by powerful actors, and facilitate opportunities to maximize the beneficial potential of social data value.

Keywords: Law, Privacy, Data Protection, Tax, Political Economy, Informational Capitalism

JEL Classification: K1, K10, K20, K34