Jim Balsillie is a businessman and philanthropist.
The rise of the data-driven economy has ushered in a trail of social harms: the wholesale destruction of privacy; a mental-health crisis amongst youth; the poisoning of social discourse with misinformation and disinformation; the proliferation of sexual deepfakes; and the weakening of democratic processes and institutions. The unprecedented levels of surveillance that underpin the modern economy have also created markets that are neither free nor fair, driving higher costs-of-living and eroding paycheques for most of Canada’s working population. In a recent poll from Abacus Data, 67 per cent of Canadians say the cost of living “feels as bad as it ever has.”
Privacy is a critical part of the contest over economic rents in today’s economy. The erosion of privacy drives up consumer costs in two ways: first, data monopolies and oligopolies use their market power to charge higher prices. Second, they use individual consumer information to charge exploitative rates and call it “tailored” or “personalized” pricing. These new surveillance-based pricing and remuneration models are the antithesis of a free and efficient market because they undermine the core benefit of “consumer surplus,” which is the extra value consumers receive when they buy a product for less than what they were willing to pay due to free-market competition and transparency.
In the contemporary surveillance economy where exploitative pricing is employed, consumer surplus is not realized by the consumer but instead appropriated by the company selling the product or service. You are increasingly a market of one, and the seller’s information asymmetry – from tracking and profiling you – allows for exploitative pricing, which creates higher consumer costs.
Opinion: Canada is becoming digitally subservient to the U.S. in the global economy
Companies also use their monopsony power to suppress wages and prices for small suppliers. Monopsony is a market structure in which a dominant buyer can dictate lower prices for goods or lower wages for workers. Examples are Walmart and Amazon for small manufacturers and for farmers, and both Uber and DoorDash for drivers. The dominant hiring power of these firms has not only created the gig economy but also gave rise to opaque remuneration programs that use an algorithmically generated “desperation score,” asserting authority of the employee in a manner that tailors the pay to the minimum possible amount a worker is willing to take.
This is corporate exploitation via monopsony power in the labour market to appropriate from the worker their “employment rent,” which is any difference between the remuneration a worker receives and the bare minimum wage they would accept.
Data, as an economic asset, is unique in that each new data set a company collects makes all pre-existing data sets in the hands of the same corporations more valuable, disproportionately enhancing their power, while making it harder for new players to enter the market. This is why the data-driven economy has, in less than 10 years, created the greatest market and wealth concentrations in economic history, reduced the rate of entrepreneurship, innovation and business dynamism – all of which lead to higher prices.
Canadian politicians talk incessantly about addressing cost-of-living issues but it’s all a mirage. The Trudeau government’s unprecedented embrace of foreign data-driven companies reached a pinnacle when in 2020 they introduced a new federal privacy law called the Digital Charter Implementation Act. The legislation not only read like it was written by Big Tech, but it also stripped away pre-existing privacy protections for children. The bill was championed in earnest by Silicon Valley and domestic oligopoly lobbyists but was vigorously fought by civil society, privacy experts and other responsible stakeholders who forced the government to shelve it. Their second attempt at federal privacy law, Bill C-27, which also didn’t address economic effects of privacy, died on the Order Paper.
The Carney government has signalled early it doesn’t care about the privacy of Canadians. It sneaked in a clause in Bill C-4 that exempts federal political parties from any privacy rules, including retroactively for 20 years. This allows political parties to track, profile and manipulate voters, poisoning the public sphere that enables democratic debate. Our politicians rely on social media companies to do this, which is why they won’t regulate them. And the retroactive timing is meant to ensure no one can get access to surveillance of voters done in the past.
Ironically, Bill C-4, is called the “Making Life More Affordable for Canadians Act” even though it’s designed to not address the root cause of much of the cost-of-living issue. Meanwhile, the Official Opposition is firmly aligned with the Liberals and NDP on exempting their party from privacy protections. They talk about “unleashing the free-market” but have yet to propose policies that address the structural violations and imbalances of power that undermine free-markets for Canadians and enable this new type of authoritarianism.
Everyone’s personal data is being extracted, and no one seems to care
Proponents of exploitative pricing often gaslight about “balancing” privacy protections against the benefits to consumers who might enjoy more targeted advertisements. But it’s an attempt to give cover for exploitation. They frame regulation as a consumer protection to be balanced against “legitimate” commercial interests, rather than treating privacy as a human right which is much harder to justify violating.
Corporate power to debase and undermine the working population based on ubiquitous and intrusive surveillance is a threat to a free society. So, when the federal government soon brings back its privacy bill for a third go-around, it will unambiguously show what they value: either protecting Canadians against private tyranny or entrenching surveillance. Watch for how creatively our politicians carve themselves out of any meaningful privacy rules and how they avoid regulating companies that track, profile and manipulate so they can charge consumers more and pay workers less. Continued higher costs, eroding paycheques and enormous social harms will not be addressed until our government starts taking privacy seriously.