A Straightforward Implementation of Data Dividends That Meets the COVID-19 Moment (and Prepares for the Future)

The COVID-19 pandemic has forced many of us to work from home, communicate via video conferencing, and depend on online delivery for groceries. Small and medium sized businesses that were once the backbone of the service economy are at risk of bankruptcy. The big tech firms, including Amazon, Google, and maybe soon, Zoom, are spilling over into the physical world and may exit the crisis with more power over every segment of the economy than they entered it.

The fallout of this crisis has made California Governor Gavin Newsom’s call for a “data dividend” more important than ever. The governor understood that California’s technology economy does not exist without California’s data-generating public, and the public should receive their fair share of the benefits from this economy.

However, Governor Newsom’s call for data dividends also raised many complex questions: What form would a data dividend take? How should data be valued, and how should that value be distributed? These questions have led to an understandable debate and have raised doubts about what can be implemented in the near term and create a path to reducing the power of big tech by democratizing the data economy.

To address these concerns, we formed the California Data Dividends Working Group, an ad-hoc team of scholars and practitioners without any political affiliation. Following months of deliberation, we have drafted a data dividends plan that can be implemented readily and lays out a path towards a fundamental reform of the institutions that undergird the power of “the platform economy.” Our plan is rooted in pragmatism and existing practices, and does not require any leaps in technological capability. The plan aims to quickly bring meaningful benefits to a wide group of Californians – an urgent need given the state of the world that the COVID-19 moment will leave us in– and at the same time lays the foundation for longer-term reforms. Our proposal is adaptable: technological advances, rapidly-evolving research into the technology economy, and developments in other jurisdictions demand that data dividends be implemented using a flexible approach.

Our proposal emphasizes four elements to create an effective data dividend that is embedded within a larger set of policies to democratize the date economy:

• Institute a Data Dependence Tax: California should create a tax on companies based on their “data dependence”. To share the burden as fairly as possible, the tax would define data dependence using regulations already in the CCPA and be implemented similarly to existing California corporate income tax. The Data Dividend tax would also include a tax on sales of personal data to third parties.

• Fund public goods: The Data Dividends Tax should fund public goods that are well-known to provide broad benefits to a wide group of Californians. Ideas in our proposal include education investment, public wifi and computing infrastructure, and baby bonds. These public goods could serve to directly address long-lasting consequences of the current emergency. This action is motivated by similar approaches in Washington State.

• Create a Data Relations Board: A Data Relations Board should be instituted and funded. The board should be modeled off of existing state boards and will conduct and review studies on the technology economy. It will be tasked with making recommendations to the California government based on this research. The DRB will be a crucial source of expertise for policymakers and the public.

• Prepare for the future: The Data Relations Board should lead explorations into more transformative initiatives. In our report we suggest that the board should explore a data industrial policy that promotes collaboration between government and industry towards building infrastructure from which all Californians can benefit. These initiatives also include the promotion of pro-social, data-intensive businesses through public administration of socially important data sets and the facilitation of union-like entities for data contributors.

In the same way that we say 'we went to the moon’, all Californians - and all Americans - can say we created the amazing AI technologies that are improving our lives every day. Our proposal helps to ensure that all Californians benefit more from these technologies, not starting years in the future, but now. The data economy is rapidly transforming the way that economic value is created, bringing great rewards but perhaps also instability; we need a policy that not only keeps up with it but gets ahead of it to insure that new advances benefit all citizens.