Big data turned out to be too big until 2019, when algorithms and improved databases morphed into AI (Artificial Intelligence) and predictive technology. 2019 also saw GDPR settle in and raise consciousness about data rights and privacy. So what will 2020 bring? Data and privacy attorney Enrico Schaefer has some answers.
Matt Roush: Hey, it’s Matt Roush.
Michael Brennan: And Mike Brennan.
Matt Roush: And we’re back with another segment of the M2 TechCast with a longtime friend of the show.
Michael Brennan: Enrico Schaefer.
Enrico Schaefer: When you guys were asking me what I thought might be really interesting in terms of what’s going to happen next year, I immediately knew the answer. And that is, it’s all really becoming about data and privacy. Privacy is the other half of data.
Michael Brennan: Right.
Enrico Schaefer: And with everything that’s happening both domestically and across the world in terms of privacy rights and data protection, big fines for folks on data breach issues, you can just kind of feel this groundswell coming. And in the U.S., we don’t have any data privacy rights to speak of.
Michael Brennan: Well, California is developing them, though, right?
Enrico Schaefer: They have implemented started in January. And so, that is going to be probably a first of many states that are going to want to start to protect their citizens and do something that is analogous to GDPR in the EU where–
Michael Brennan: That’s what I was going to say. That’s really the example, isn’t it?
Enrico Schaefer: It is. It took years and years to get developed and implemented. But essentially what GDPR does in the EU is it says every person has the right, the inalienable right, to their own data. And so, like you have certain fundamental God given rights in the EU.
Matt Roush: To your person and your possessions and all that stuff.
Enrico Schaefer: Their position is your data one of those rights. And so, every company that ends up getting your data that is identifiable to you has a whole lot of regulatory items that they have to put in place in order to protect you and your data, and to allow you to reclaim all your data, to have all your data deleted, to be able to know exactly where your data is stored across their networks and their servers.
Well, that’s a huge ask, but the big companies have implemented those back-end technologies in order to make that happen. Well, we’re the opposite in the U.S. In the U.S., it’s like, “Yeah, I click wrapped yes, and I gave you all of my data, and you can do whatever you want with it.” We don’t even think about it. Right?
Matt Roush: Who reads the terms of service? Who really reads that? Yes, and the privacy [crosstalk].
Enrico Schaefer: Not even the lawyers do it.
Michael Brennan: And it’s all fine print four pages long. Boring stuff.
Matt Roush: Impenetrable six-point type. Yeah, right, okay.
Enrico Schaefer: Well, because we already know what it says.
Matt Roush: It says we can do whatever we want with your data, more or less. Right, yeah.
Enrico Schaefer: Exactly, exactly. Not in privacy rights anymore. And so, starting in January, companies of over $25 million, 50,000 users in California (California Consumer Privacy Act CCPA), these types of companies now have to start providing end users data rights and taking precautions to protect that personal data.
Michael Brennan: Two very large companies are based in California: Facebook and Google. Now, if they have to do it for California, does that carry over to the other 49 states?
Matt Roush: Yeah, is it like emission standards? Is there going to be one for California and one for everybody else?
Enrico Schaefer: Well, I think that if I take and put my me hat on, I hope so. Because then what’ll happen next is the federal government will step in and say, “Whoa. We can’t have 50 different data privacy rights across all 50 states.” Data is traveling across state lines. It’s interstate commerce. And guess who actually wants federal legislation right now? Facebook and Google.
And the reason why is twofold. One is they can’t handle 50 different state regulations. There’s actually 3 reasons. The third is they’ve already built the network to be able to handle data privacy. They had to do it for GDPR. And 3, the reality is it’s a great market barrier against competition for these big companies. They actually support regulation because they know it’s going to make it that much harder for the up and comer companies to get in the game to compete.
Enrico Schaefer: Barrier to entry.
Michael Brennan: So, what’s the possibilities that what they’re doing in Europe will become the model for what we do in the states, or something very similar?
Enrico Schaefer: I think it’s going to be similar. The EU, the GDPR is pretty dramatic in terms of the rights that it provides individuals to their own data. So, I’m not expecting that our buyer beware, American, western cowboy spirit is ever going to embrace that, because we always weigh towards no companies are able to run us over like a freight train and we just line up like lemurs and jump off the cliff. Right? So, I don’t think we’ll ever get there. But I do think [crosstalk]
Matt Roush: I think there’s three metaphors there. There’s the train, there’s the lemur, and then I think it’s lemmings that jump off the cliff.
Enrico Schaefer: Oh, it is lemmings.
Michael Brennan: It is lemmings. I don’t think the trains jump off too often, but once in a while.
Enrico Schaefer: They might, though, in 2020.
Michael Brennan: Yes.
Enrico Schaefer: They see some of these data regulations that are going to come. Yeah, so I think that the big companies are going to push it at a federal level in order avoid having more Californias come down the pipe.
Michael Brennan: Yeah, makes sense. Just a question of when. I think with the current administration, they’re more laissez faire. They’re not into regulation.
Matt Roush: Yeah, you have a pretty business friendly administration right now.
Michael Brennan: So, maybe if the Democrats win in 2020 then you’ll see it. But otherwise, I don’t really think you’ll see it for a while. But who knows?
Enrico Schaefer: Yeah. It’s going to be congress that’s going to have to push it. There will always be companies that will be fighting it. But generally, if it’s the right regulation, that probably is already drafted by Facebook and Google themselves.
Michael Brennan: And they’re all ready to go. Get their army of lobbyists out there, right?
Matt Roush: How similar are the California and GDPR regulation?
Enrico Schaefer: So, GDPR is more dramatic. And so, there are similarities between what’s happening in California. California is less about your data rights and more about making sure that these companies are doing what they need to protect your data.
Michael Brennan: Right.
Enrico Schaefer: There’s lots of different ways to get in trouble with some of these new frameworks, one of which is if you get hacked and the data gets exposed, you could end up like — I think British Airways got hit with $228 million fine because they got hacked, and user data ended up getting out there.
Matt Roush: So, that’s a lot of steamed towels on that flight to London. Boy, I’ll tell you. Man, that’s a big one.
Enrico Schaefer: They’ll just jack up their rates [and] cover it, right?
Michael Brennan: We end up paying in the end.
Enrico Schaefer: Yes.
Matt Roush: Yep. Okay.
Michael Brennan: So, automation, connected cities, mobility.
Enrico Schaefer: I love talking about that stuff.
Michael Brennan: That strikes right at the heart of what we want to do here in Detroit, right?
Enrico Schaefer: It does. And so, in the realm of data, right? We heard the last years about big data, big data, big data. Big data turned out to be nothing because it was so big, no one can do anything with it. Right? No one knew where it lived. No one knew what the good data versus the bad data was in their networks. And so, yes, big data was this great buzzword, but it ended up being a big yawner.
Well, the data is all still there. And in fact, now the data is exploding, the amount of data. And a lot of that has to do with mobility and autonomous and some of these other technologies. Smart cities. Can you imagine a smart city, how much data is going to be collected, right?
Michael Brennan: Trillions and trillions.
Enrico Schaefer: Trillions of terabytes a minute.
Michael Brennan: Yes. Just crazy.
Enrico Schaefer: And they’re starting to build algorithms and analytics around that so that they can actually do interesting things. AI is essentially predictive algorithms on data, what is going to happen next given all the probabilities and the data. So, you’re going to see a lot of AI-based systems, a lot of analytics-based systems, and you’re going to start to — Data is going to become meaningful.
Michael Brennan: Yeah.
Matt Roush: Will that help the traffic flow more efficiently or anything like that? Sort of the more municipal stuff that we see.
Enrico Schaefer: It will, as long as you trust the people who are controlling the algorithm to not work against you rather than for you. But it has potential.
Michael Brennan: Are they black hats or white hats? We don’t know.
Enrico Schaefer: Probably gray.
Matt Roush: I think you and I talked about this once is that the quickest way to really cripple a city would be to really screw with the traffic lights so you create huge traffic backups.
Michael Brennan: Oh yeah, definitely.
Enrico Schaefer: I live in Salt Lake City. I think the traffic lights there, because of the religious connotations of the way the city developed and everything, were all there to work against you, to just give you a sense of being controlled. Like, “We know there’s traffic lights everywhere and you’re going to have to stop.”
Matt Roush: Okay. All right.
Michael Brennan: I was watching on The History Channel one of those little short hour long programs they do about technology, and they showed how AI was being used in China and it scared the heck out of me.
Enrico Schaefer: It should.
Michael Brennan: You can’t scratch yourself in China without some comrade seeing it somewhere. And now they’ve got facial recognition everywhere. And they’ve eliminated the need when you go to an ATM machine, it reads your facial recognition and then lets you in. My God, that’s 666 written all over it. I mean, holy cow, right?
Enrico Schaefer: It is.
Michael Brennan: Hopefully that’s not where we’re going here in this country.
Enrico Schaefer: Well, look, there’s this huge tension between data privacy and AI, because AI requires, in certain instances, for it to know who you are in order to interact with you. But the big trend is to anonymize as much data as possible so that data cannot be tracked to a person itself or in combination with other data so that you don’t have to comply with some of these regulations. But it’s going to be interesting.
Michael Brennan: Yeah. That’s what you need. The AI harnesses the big data and then it all kind of works together to centralize control, which doesn’t fly well in this country. But in China that’s always the way it’s been. Countries like that, yes. But more western countries, I don’t know. It’s a real tough situation.
Enrico Schaefer: Yeah, it is. And maybe it’ll be blockchain and therefore it’ll be decentralized control. But it’s going to be fast moving.
Michael Brennan: Everybody is using blockchain these days.
Matt Roush: Feel like I’m living in a Phillip K. Dick novel, I really do.
Michael Brennan: Yes. Yes, absolutely.
Matt Roush: It’s just a question of which one. One of the more benign ones or one of the really evil ones.
Enrico Schaefer: Good and bad in both, probably. I think it’s just going to be a really interesting time in the next 10, 20 years.
Michael Brennan: Okay. So, we got a couple minutes left, Dave? We’re good? Let’s talk a little bit about your practice. This is where you get to do the shameless plug. Now, I’ve known you for a long time and you’ve always been in Traverse City. But, couple years ago you set up an office right down by Comerica Park, right?
Enrico Schaefer: Yeah, so we’re down in Detroit at the WeWork space down in Campus Martius as long as that continues to exist.
Michael Brennan: Yeah, WeWork, that’s another story we won’t go into. But it’s like, boy.
Matt Roush: WeWork for now.
Michael Brennan: Yeah. What a scam. But hey, no, we can’t say that, can we? So, how’s that working out for you?
Matt Roush: We’ll fix that in post.
Michael Brennan: I know you were saying something about when your last son graduates from high school up in Traverse City that you may move down here permanently, but I don’t know if you’re still there or not.
Enrico Schaefer: Absolutely. Detroit is rocking, and it’s been an amazing thing to come back down here after 25 years and see what’s happening and be a part of it. I feel like a carpetbagger coming in when it’s good. But I’m here now and I’m here every other week. And then as soon as my youngest graduates, I’ll be here all the time. We do Internet and tech law, so a lot of intellectual property. And we specialize in tech company representation.
Michael Brennan: I suppose as a disclaimer I should also mention you are my tech attorney. So yes, so he’s working — As you all know, I’m working on a video project, so his people are helping with that, negotiate all that sort of stuff, and examine my software to make sure we’re not stepping on anybody’s toes.
Enrico Schaefer: I know. I hope you’re stepping — How am I going to litigate for you if you’re not stepping [on toes]?
Michael Brennan: I know, yes.
Enrico Schaefer: I’m actually looking for problems.
Michael Brennan: Oh, okay.
Matt Roush: No litigation, no money. Yeah, geez.
Michael Brennan: Yes. No billable hours, what’s up with that?
Matt Roush: Okay.
Michael Brennan: Folks who want to find out more, how do they reach out to you?
Enrico Schaefer: So, www.traverselegal.com.
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