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3 Things to Know About Data Trusts

Because data trusts are still a relatively new idea, many questions remain about how they should really work in practice.

Facundo Molina

By Facundo Molina

Chief Business Development Officer Facundo Molina drives sales processes and BairesDev's fast growth pace while also improving company relations.

10 min read

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Data drives so much of people’s lives, yet it’s often something we have minimal control over. As the  Royal Society for the Arts (RSA) states in a blog post, “We have little say over what can be collected, accessed and used, and by whom. Nor do we enjoy much agency over the ways social platforms study and steer our behaviors.” One possible solution to this issue is the development of data trusts. 

The RSA blog post defines a data trust as “a structure whereby data is placed under the control of a board of trustees with a responsibility to look after the interests of the beneficiaries.” Data trusts not only limit how data can be used — they also promote its beneficial use. This concept can be useful for individuals in terms of protecting their privacy, as well as the greater good for pursuing projects that require large amounts of anonymized data. 

Here BairesDev delves into data trusts, including what they are, who runs them, how they help individuals and businesses, and how they might be used in the future. Specifically, we present information about how data trusts improve data collection and distribution, protect privacy, and involve third-party data control. 

1. Improve Data Collection and Distribution

As technology companies have grown in size and scope, they’ve determined how data is collected, maintained, and distributed. In many cases, no one is telling them how to do these things. But their policies might not be in the best interest of the people who use their services. 

Facebook, Google, and other providers, for instance, enable advertisers to finely target their ads to users who fit their profiles. But those companies pay nothing to the people who provide that data. Is that fair? Maybe yes and maybe no, but the point is it’s not even an option. A data trust would set rules about what data can be collected, who can access it, and why. 

Data trusts can help businesses as well as individuals. The European Commission in the EU has issued guidance framing data sharing for worthy projects as a civic duty. This strategy includes creating a multinational data market to be managed by a data trust. Technology companies must access data via the trust and citizens will be paid “data dividends.” Canada has introduced the data trust concept into its privacy law modernization discussion. 

As of early 2021, the details of the EU arrangement are still being ironed out, including some of its challenges. But at least the decoupling of data stewardship from data use appears to be a positive move. Possible uses for data sharing include fraud detection, supply chain visibility, product development, medical research, policy development, and innovation.

The following video from the Centre for International Governance Innovation explains how data trusts can be useful in managing collective data: 

2. Protect Privacy

According to MIT Technology Review, “Technology companies have proven to be poor stewards of our personal data. Our information has been leaked, hacked, and sold and resold more times than most of us can count.” With this carelessness, privacy becomes a huge issue.

Even in situations in which data collection and use are for the public good, it may not be for the good of each individual. A smart city project is a good example. While the data collection and use will help people enjoy a more convenient, personalized experience, the project is likely overseen by a company that must ultimately answer to its shareholders, not the public – and the company has no obligation to protect user privacy.  

Privacy policies can help but, in situations like a work environment in which employees are subject to surveillance, individuals truly have little choice in the matter. Even the strictest of policies may not be able to compete against massive power imbalances, such as those between large corporations and their workers. 

3. Involve Third-Party Data Control

Experts have wrestled with the best way to get data back into the control of those that generate it. Some solutions that have been proposed include breaking up Big Tech companies, nationalizing Big Tech, or using personal data stores to house personal data. However, each of these solutions has its own set of problems. For example, is the control of personal data by governments any better than their control by companies? 

Data trusts take the control away from corporations and governments. They also relieve individuals of the challenges of making decisions about how it should be used — decisions that would require an enormous time investment to understand all of its nuances. 

Similar to how many people leave investment decisions up to an investment expert, they could leave data decisions up to the data experts who form data trusts. The obligation of those that run the trust is to those individuals, not any other entity. 

Another benefit of a data trust is that it can make decisions on behalf of numerous individuals, giving it collective power. Without such an advocate, individuals have little recourse in the event of challenges with technology giants. Likely their only option is to discontinue using the service. As the representative of a large group of people, the advocate can threaten the technology giant with that large group discontinuing service, which would have a much greater impact. 

What’s Next for Data Control? 

Because data trusts are still a relatively new idea, many questions remain about how they should really work in practice. For example, what is the appropriate framework for data sharing? What legal considerations must be included? What are the ethical implications of this use of data? What is the best way to distribute the data? Should it remain in place? How can emerging technologies such as blockchain be used to improve the process? 

As individuals, companies, governments, and communities move toward greater maturity in data collection, maintenance, and use, those that choose to form data trusts will have to consider these questions and eventually arrive at appropriate answers. 

Some entities, including medical startups, financial institutions, and even social media companies are already experimenting with this model. For now, the concept is still in the initial stage and many observers will be interested to see how it evolves. 

Facundo Molina

By Facundo Molina

Facundo Molina is BairesDev's Chief Business Development Officer and is responsible for maintaining and increasing the company's fast growth. He also works to improve internal sales processes while enhancing every customer and lead's experience with BairesDev.

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