Smart Data policy and practice - not as smart as legislators think?

As opening statements go, Tim Jarvis, Director of Consumer and Competition Policy for the UK’s Department for Business, Energy & Industrial Strategy (BEIS), was on message as he pointed to "the biggest health and economic challenge this country has faced in all of our lifetimes".

Jarvis was speaking at a (virtual) Westminster eForum conference this week on the sharing and portability of consumer data, in the wake of the UK Government’s Smart Data Review.

While Jarvis, speaking at a London conference as a member of the British Government, clearly approached his presentation from a UK perspective, the themes under discussion and some of the conclusions reached (or not reached!) have global relevance and bear inclusion in wider international debate around this topic.

For his part, Jarvis was in full reassurance mode, despite Gaia Marcus, DCMS’ Head of Data Strategy, admitting at a previous eForum that the UK’s data strategy was conceived as a solution to a completely unknown problem:

It's important to stress that all the energy and expertise of government is focused on meeting that challenge. Certainly, in my role as Director of Consumer and Competition policy, we have diverted a huge amount of resources to meeting the challenge and addressing some of the concerns we've all got. We are working very closely with the Treasury, which is providing a package of support for businesses. 

Clearly, there are going to be lots of challenges for business over the next few years, which I think for some of you begs the question of why we might feel the need to talk about smart data at this time. But it's important to recognise that at some point we will need to move out of this economic situation. Recovery will be important, and one of the key elements of that will be competitive markets. Increased productivity will help the economy recover over time, and I very much see the Open Data initiatives as part of that response.”

Smart or not?

Leaving aside the higher question of whether data itself can ever be ‘smart’ – isn’t it the use that it is put to that is smart or dumb? – this was at least an encouraging statement on the subject of data openness that it would be encouraging to see other nations align with.

However, Martin went on to express the view that it’s in regulated markets where government sees the biggest challenges in terms of data policy. This was another of those significant, but ambiguous asides that has typified so many government presentations of late. The impression that this UK administration - and it’s hard to see its current US counterpart disagreeing - sees all regulation as bad, rather than as means of protecting citizens or trading with partners on mutually agreed terms, is becoming hard to avoid. The drip-feed of coded comment makes it so.

In a far off more innocent time – January – the then UK Chancellor of the Exchequer Sajid Javid felt empowered to make sweeping statements about Brexit Britain being a “rule-maker, not a rule-taker”. In the current situation, such rhetoric seems reckless and absurd, opening the country up to the risk of yet more economic shocks after the Treasury has bailed out the nation from the effects of a killer virus.

More, the government’s knowledge of the markets it seeks to liberate from supposed red tape often seems woefully inadequate – arguably, DCMS’ Marcus admitted as much when she said that the UK’s data strategy was a solution in search of a problem. How many other countries are in a similar position?

Online from his home office, BEIS’ Martin continued:

Over the last 20 to 30 years, in terms of the products and services available to consumers, we're still seeing some unsatisfactory output. We might see a lot of choice in lots of ways, but it is quite a complex landscape and very difficult to navigate. And this has led to what some people have referred to as the ‘loyalty penalty’, with people paying large amounts of money for their essential services.

This might be the first public acknowledgement by a Conservative government’s spokesman that market forces don’t automatically create better and cheaper services for consumers. However, Martin’s point was that it is often harder to switch providers than it ought to be, especially in regulated markets such as the energy sector.

That’s certainly true. But despite the upbeat, on-message presentation of panelist Richard Neudegg, Head of Regulation at uSwitch, that has less to do with a supposed absence of smart data, or of portals that enable consumers to find better deals, and more to do with some companies behaving like mobsters in 1930s Chicago.

It has become commonplace for energy suppliers to entice consumers with misleading offers, then ramp up their direct debits and make it almost impossible to end the relationship quickly, or without paying a hefty penalty. Such gangster-like behaviour may prove harder to sustain in the post-Coronavirus world, in which many livelihoods will have been lost or diminished.

However, Martin was right about the ‘loyalty penalty’. The longer customers stay with any provider – a mobile network, for example – the less competitive their deals tend to become, suggesting that churn is consumers’ best or only weapon in the absence of a smarter market.

Problem 

But there’s a problem. Constantly surfing a wave of better deals might be ideologically attractive to some, but it is enervating and time-consuming in the real world. It’s boring, and that’s scant reward for our disloyalty. Don’t consumers simply want good service at a fair price, rather than to be constantly shopping for better deals? The notion that all of us want to spend our lives haggling over basic services in some dynamic digital space is a delusion.

After all, doing so also relies on the assumption that a market hasn’t been rigged by the suppliers. Just look at the banking sector and the widespread fraud, mis-selling, and exchange rate fixing scandals – Libor, Forex, and more – that took place for at least a decade and involved nearly every major brand.

Smart Data is all very well as long as a sector isn’t fundamentally corrupt – or cashing in on COVID-19 at the expense of a public that bailed it out for a trillion dollars in 2008-09 and endured a decade of austerity for their pains.

It’s naive to assume such behaviour isn’t endemic in other markets. Last year, for example, the UK’s big six energy suppliers were accused of price fixing and using tariff caps as a target, rather than an upper limit. And so it goes on: take the cellphone market, as another case-in-point.

In such a world, consumers aren’t data-empowered super-shoppers or mobile-wielding data ninjas, they’re rats in a trap – having data sucked out of them so they can be force-fed advertising for the rest of their lives. Pity the buyer in such a digital world.

Yet in Martin’s view, the problem is rooted in data itself. He said:

Consumers lack the information and tools to get the best deals. I think it's very difficult for people to navigate these markets. And similarly, when you look at new entrants into these markets, the consumer data that is held by an incumbent is often a barrier, I think, to disruptive newcomers. This is what led us to set up our Smart Data program. UK data protection law gives consumers a right to data portability. Now, the question is, why do we need to do any more than that? And I think it's basically the difference between what we're calling ‘Smart Data’ and the normal advice you get under data protection law. I think first difference is being able to access this data in real time, rather than waiting 30 days and getting historical data. It’s the immediate provision of the data.

And then it’s about the format in which that data is supplied. Is it supplied in a way that’s enabling technologies, such as application programming interfaces [APIs], which developers use to lock into that data and use it to benefit consumers? And it’s not just about personal data. When you're looking at some of these markets, it's the products that you're buying, how you're using the surface, and the products that are available behind that, that are important to understand and the choices that are available. So it's a much wider provision of data.

We also think it’s important, for this to work, for there to be common standards and consumer protections to give people the confidence to operate in these markets. [...] If you have all of these things, then it enables this ongoing real-time transfer and use of data to enable it to work for the consumer. That's ultimately what we mean by Smart Data.”

My take

Fair enough – if consumers want these services, which frankly isn’t clear.

Let’s take an example. With just one million customers of Open Banking, the most mature Smart Data market, compared to 70 million current accounts and a UK population of 66.4 million people, it’s hard to make the case for overwhelming consumer demand for such services, at a time when some in the industry are calling for ‘Open Everything’ based on this model.

Clearly, then, the UK Smart Data Review makes assumptions about consumer behaviour that may be wrong - errors that are entirely replicable around the world?

However, Smart Data may make the process of engaging with digitally-enabled markets more bearable for those consumers who simply want to get on with their lives. 

In the meantime, who will regulate ‘Open Everything’ is, fittingly enough, an open question. And what about the digitally excluded?