Most businesses recognize that personal data and the individual and collective profiles derived from those data have economic value, and the business models of many companies now include the revenues that can be derived from such data. These developments have raised concerns about the privacy of people’s personal data.
Multiple state and federal proposals have surfaced offering different solutions for establishing data privacy. The proposals garnering the most press and, therefore, political attention share certain basic features. They all cover companies that collect information from substantial numbers of Americans. They also all cover those companies in industries subject to regulation by the Federal Trade Commission (FTC), which include nearly all businesses except those in financial services and “common carrier” transportation services.
In order for policymakers to craft a more effective regulatory regime that protects data privacy for the greatest number of people without sacrificing the consumer and economic benefits of the digital economy, policymakers need to understand the economic scope of the proposals. For purposes of this analysis, we selected the proposal with the most expansive definition of what companies would be subject to it. The proposal we assessed (Wyden 2019) covers all publicly traded and privately held companies subject to FTC regulation with annual revenues of $50 million or more, or that hold data on 1 million or more people.
We find that such legislation would cover 41,772 publicly traded and privately held large and medium sized businesses. Those businesses had a combined market value of $91.88 trillion in 2019 or 69.9 percent of the market value of all U.S. companies. They employed 61,082,672 people in 2019, or 47.6 percent of all jobs in private businesses in 2019. Finally, those businesses accounted for $8.601 trillion of GDP in 2019 or 40.14 percent of the nation’s total output in 2019 and 45.8 percent of the output by private, non-governmental enterprises.
Given the outsized impact that potential privacy legislation would have on the overall economy, policymakers would be wise to fully consider the economic ripple-effects of such legislation and take care at the outset to avoid economic disruption.
Understanding Data Privacy Regulation: A Look at the Economic Footprint of Data Privacy and Regulation Thereof was published in November 2020, authored by Robert Shapiro and Siddhartha Aneja, supported by USTelecom | The Broadband Association.
USTelecom and America’s broadband providers support the fundamental principle that digital privacy is sacred. For more on this USTelecom advocacy priority, visit our Privacy Action Center.