In a recent post, I discussed the interesting response to the idea that information has taken on the characteristics of common-law property: “That would be a bad idea.” Saying so has incongruence akin to looking at a rainstorm and saying it’s a bad idea. Good or bad, I believe it’s happening. And I think it’s good.
If the evolution toward property rights is not a policy proposal subject to arguments for and against adoption, what is it, and where does it come from? I have something of an answer to that, and a piece of archaeology to share.
In my recent law review article, “Personal Information is Property,” I drew parallels between the evolution of property rights in “movables” and the current evolution toward property rights in information. Property rights in movables—essentially things you can carry, also known as personalty—followed the earlier development of property rights in land.
William Blackstone looked back in his famous 18th-century Commentaries on the Laws of England, saying that ordinary possessions were historically “not esteemed of so high a nature, nor paid so much regard to by the law, as things that are in their nature more permanent and immoveable, as lands, and houses, and the profits issuing thereout.” But commerce in increasingly valuable movable goods necessitated legal recognition for personalty “in a light nearly, if not quite, equal to” realty.
How did property rights in movables come about? In my article, I summarized works by Harold Demsetz and institutional economist Avner Greif. Demsetz wrote about property rights in natural resources in the New World. Greif wrote more extensively about Europe, where merchant guilds were the organizational impetus for the establishment of property rights in movables. Unlike individual traders, guilds could credibly threaten rapacious feudal lords with losing the benefits of trade, including the opportunity to tax. The lords’ arm-twisted willingness to respect people’s control of things became a custom and then an obligation, ultimately hardening into a property right.
Different institutional actors have done the same with personal information over recent decades. In the 1990s, led by protective (and other) impulses, the US Federal Trade Commission (FTC) began threatening to regulate under new or existing authority. Selfishly interested in consumer confidence, industry procured efforts aimed at establishing the custom of issuing privacy policies (as well as privacy assurance programs). These two types of organizations overcame the collective action problem the way guilds did.
“The industry groups,” I noted, “could provide coordination, education, and pressures that included threatening to withhold advertising from the non-compliant.” That last bit—the threat to withhold advertising from websites that didn’t have privacy policies—was something I remembered but couldn’t strongly confirm. At the time I wrote the article, I found a mention of that activity in an FTC report (at 12–13). But I didn’t have good evidence of the practice beyond that. I was able to confirm my recollection with an old (I mean long-time) friend who was in the corporate sector during that time.
Since publication, that friend (an Adonis who drinks from the Fountain of Youth!) has shared more direct evidence. In June 1999, Microsoft sent a letter to its advertising partners highlighting the importance of user trust and confidence in the World Wide Web. To push the industry toward fostering consumer confidence, the letter said, “beginning in the year 2000, Microsoft will only advertise on Web sites that post comprehensive privacy statements.”
This was part of the move toward essentially comprehensive publication of privacy policies, which have validated and expanded the intuition that people retain control while sharing information with platforms and services. My argument is that the controls are contractual, and the contracts divvy up property rights in information.
The announcement that Microsoft would create strong incentives favoring privacy policies is one piece of evidence about institutional behavior of the time. It’s hardly the complete argument that our customs, actions, and beliefs have hardened into property rights.
But it seems evident that treatment of information as property is well down the path that property rights in movables took. If it is happening quickly, that may be necessitated by the rapid change in technology and business practices. Consumer interests would be protected by recognizing common-law property treatment of information, I argue in my piece. If the argument is premature, the passage of time, which is relentless about age, may also produce maturity.
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