New models, new models

Have you ever accessed a newspaper through its internet site, peep at what your contacts and friends “hung” in the social network of your choice, and you suddenly meet with a suspiciously relevant advertising or, occasionally, an email with a better offer for this flight of holiday with which you were silently dreaming of, or another with the promotion of this hybrid stick that will improve your golf more than a personal lessons with Tiger Woods or Lorena Ochoa?

If it ever happened to you, maybe you have felt like many, at the same time surprised and scared. Surprised because it may seem like magic, scared because it may look like witchcraft.

Through our habits in navigation, the search for products or services online, the things that we like, comments that we post, the articles that we read, we leave traces. These are data about our actions, preferences, friends and contacts, habits, movements and who knows what else. We provide these data, sometimes consciously, as when we click “like” on a link or we qualify poorly lousy service from the restaurant last night; sometimes we do this unconsciously when we accept to join some services without carefully reading the 27 pages of the agreement. There are things that sometimes we do without realizing too much of what we do: at times, as it is obvious, when we rate a restaurant, if we give it five-star and recommend it to friends saying that the place X has the best spaghetti vongole of the city. Sometimes we do it doing check-in or posting on our wall that we are here and post the picture of the spaghetti with a face of joy that by itself recommend the restaurant and dish. Sometimes we do it in a way less clear, less obvious way, just loading with us our phone in purses and pockets leaving the phone to record and share our location with the accuracy of a GPS allowing whom has access and know how, to know that we are for the third time in the month at that Italian restaurant and spent more than one hour each time.

Technology in itself is not good or bad. Having the app open, which identifies and report the exact place in which we are can report our taste for Italian food, but also allows to consolidate data from many drivers, model almost real-time traffic from the streets and city routes, identify crowded areas, places with accidents reported, find a public parking lot or the nearest service station. By identifying the positions of police and radars on their routes, drivers slow down to avoid fines and some may dislike this because they feels that others do it just to avoid fines, while others, by contrast, may be happy, because they think that this way drivers lower speed and avoid accidents.

But without a doubt, these applications and services are doing their job, using data from users and sometimes spontaneous contribution. Sometimes the financial benefit may arise from the sale of advertising to third parties for the provision of goods and extremely personalized services, or the sale of the data. The levels of customization that can be reached are going far beyond the things we use and on which we click. It is more and more about the things that we use. The band that we use around the wrist when we run, the wristwatch that through sensors capture biometric data such as temperature, heart rate, or very soon, the levels of sugar in the blood. It’s the golf hybrid stick that will detect perfectly the moment and the point at which you will spoil the swing and detect the diversion in the angle of the bat hitting the ball.

The creators of these goods and services, not all of course, generate profit through the development of technologies, innovation, strategy, opportunity, and even luck. In this process the collection and processing of data are essential. Let me say it more clearly, those details are your data and my data, your car data, and even data from your pet. From the point of view of the country and the society, collectively, we can say our data. To this you should add something called the network effect (1) that we can describe in a simplified way by saying that the value of the network is partly determined by its size (how many members) and quality (which members), i.e., even if Groucho Marx had not accepted to be an admitted member of a club, many of his admirers would have tried to be members of that club if he became a member with an additional extension. A network that have many of my friends as members may know things about me without me even being a member, thanks to things like the invitations that those friends I extend so I join them using my email, comment things that they make and the wisdom contained in the old saying “You know a man by the company he keeps”.

Then, the question arises: Can we make an analogy between, for example, the exploitation of mineral resources and these business models? When a concession is granted to a foreign company without a local subsidiary, to go mining into a country determined to exploit natural resources, as a result it pays royalties and taxes for their exploitation. Now if data from the citizens of a country are used by a foreign company without a local subsidiary, this could also be taxed. Of course, in the first case the company physically has to establish some kind of presence and in the second case, probably not. And this “no” results, at least in part, from to the development of a communications infrastructure that allows precisely such interaction.

If your answer is yes, the second question is immediate: how? We could perhaps expect that a company determine, with some criterion, which part corresponds to which country and perhaps has to declare income in the vast majority of countries in the world? If it is not the case, there are to establish minimum criteria to consider which tax participation correspond to which country, and which criteria we could or should consider to determine those limits? Are these criteria such as the amount and type of data, bandwidth, and number of valid or non-valid users? And if these criteria seem absurd to you, then I would maybe consider more traditional elements such as sales.

Are we not here breaking with some current criteria in comparison with the non-digital economy, At least for some countries?

Greetings and good luck.

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