Apr 9, 2018

Facebook Woes Illustrate Need to Balance Privacy, Security, and Digital Commerce

Christine McDaniel Senior Research Fellow

Properly managing digital privacy and security are two of the biggest obstacles to digital commerce achieving its full potential. Facebook's recent woes demonstrate the need to think harder about the balance between privacy and security on one hand, and firms' abilities to do business globally on the other. If firms cannot get the balance right, then government intervention is inevitable. 

On a recent episode of the Mercatus Policy Download, Joshua Meltzer, Brian Larkin, Chad Reese, and I disentangle some of these thorny issues, and discuss why Congress and the White House must work with our NAFTA partners and other trade partners towards rules that protect privacy and security in the least trade-restrictive ways. 

Many countries are using "must-store-data-here" laws in the name of privacy and security but if taken too far these laws can end up restricting trade and commerce. For instance, the experience by LinkedIn in Russia illustrates how these rules can restrict trade and market access.  Russian authorities ordered the firm to store all 6 million Russian users' data in the servers in the country, which rendered LinkedIn's business model nonviable, and the company halted its operations in Russia. 

We discuss how privacy and security concerns are real, however "must-store-data-here" rules are not necessarily the solution, and can even be counterproductive.  

Learn more: Data Localization Requirements: What They Are and Why They Matter

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