Trust as a Cur­rency in the Dig­i­tal Econ­omy

Thai-American Business (T-AB) Magazine - - Contents - Writ­ten by: Thi­ti­rat Thip­sam­ritkul

Trust is al­ways costly. We, as in­di­vid­u­als and as so­ci­ety, pay more for trust even when we are not con­scious of it. We buy elec­tronic de­vices from fa­mous brands be­cause of the im­plicit guar­an­tee that the shop owner will not dis­ap­pear if tech­ni­cal prob­lems arise or if the de­vice is de­fec­tive. We pay more for reg­is­tered ex­press mail be­cause we do not have faith in reg­u­lar post. We choose to stay in well- known ho­tel brands rather than ran­dom guest­houses be­cause it is less likely that our se­cu­rity dur­ing the stay in an un­fa­mil­iar city will be en­dan­gered. Our taxes are used for is­su­ing spe­cial num­ber plates and li­cens­ing sys­tem for taxis to en­sure pas­sen­gers’ safety.

How­ever, many cur­rent tech­nolo­gies re­duce these pre­mium costs of trust that we have been pay­ing for. Real- time track­ing sys­tems com­bined with ef­fec­tive twoway re­view sys­tems be­tween cus­tomers and ser­vice providers al­low us to trust un­known driv­ers at a much lower cost. It is ev­i­dent that this is much more ef­fi­cient than the state- ap­proved taxi li­cens­ing sys­tem. We are also com­fort­able stay­ing in a room owned by a stranger in a for­eign city in a way that is not too dif­fer­ent from stay­ing in the house of a friend ( and many times, we be­come friends with those strangers). We can par­tic­i­pate in these trans­ac­tions of the so- called shar­ing econ­omy with­out any hes­i­tancy not be­cause there is a guar­an­tee by a state or govern­men­tal in­sti­tu­tion, but be­cause we be­lieve in the mo­bile ap­pli­ca­tion and its re­view sys­tem.

In the past, we would go to par­tic­u­lar bars or lis­ten to spe­cific ra­dio sta­tions be­cause we trust the bar owner or DJ’S taste in mu­sic. To­day, we trust machines to pre­dict our per­sonal pref­er­ences, or even tell us what mu­sic we are likely to love. The grow­ing ca­pac­ity of Ar­ti­fi­cial In­tel­li­gence cou­pled with Big Data tech­nol­ogy makes pos­si­ble a cus­tom­ized rec­om­men­da­tion sys­tem that fore­sees our taste in con­sump­tion even when we our­selves are not aware of such predilec­tions un­til we try or ‘ dis­cover’ the rec­om­mended prod­ucts. This per­son­al­ized ex­pe­ri­ence is pos­si­ble in a range of ser­vices, from on­line shop­ping and mu­sic stream­ing to dat­ing ap­pli­ca­tions.

Be­fore we ad­vance to the new dig­i­tal world, let us stop and think about ‘ trust’ for a bit. What does it mean when we trust some­one? What are the as­pects of prod­ucts and ser­vices that al­low us to use them with trust?

SAFETY AND SE­CU­RITY

We trust prod­ucts or ser­vices be­cause of the im­plied safety. We buy ex­pen­sive brands of elec­tronic prod­uct be­cause we want to make sure it will not ex­plode when we use it. We even buy a guar­an­tee just in case it re­ally does ex­plode. Safety or se­cu­rity is the ba­sic un­der­pin­ning of trust. In many cases, we do not have enough in­for­ma­tion to trust ser­vice providers, so the li­cense sys­tems pro­vided by reg­u­lat­ing agen­cies can help, such as in the case of taxi li­cens­ing sys­tems that re­quires reg­u­lar car check­ups and the reg­u­la­tion that re­quires ho­tels to have stan­dard fire ex­its. But we have seen from the case of ride hail­ing ap­pli­ca­tions that tech­nol­ogy and trans­par­ent in­for­ma­tion can be more ef­fec­tive than state reg­u­la­tions.

CER­TAINTY AND AU­THEN­TIC­ITY

We also base trust on cer­tainty and au­then­tic­ity. We want to make sure that our money are trans­ferred to the right per­son at the right time. For these qual­i­ties, the tech­nol­ogy of blockchain or dis­trib­uted ledger may help raise cer­tainty lev­els close to 100%. In ad­di­tion to in­dus­tries that re­quire high level of au­then­tic­ity eval­u­a­tion such as di­a­mond trade and real es­tate, there is al­ready an at­tempt to use blockchain tech­nol­ogy in the food in­dus­try to guar­an­tee food safety through­out the en­tire sup­ply chain. Peo­ple might not need to put trust in reg­u­lat­ing au­thor­i­ties or well- known com­pa­nies any­more; they can trust the sys­tem in­stead. Such ef­fi­cient sys­tems can be pri­vate, de­cen­tral­ized and highly trans­par­ent, but at the same time safe, se­cured, and guar­an­tee­ing your pri­vacy.

TECH­NOL­OGY AND TRUST

Sta­ble hi- speed in­ter­net con­nec­tions com­bined with ef­fi­cient per­sonal in­for­ma­tion man­age­ment have changed our con­sump­tion habits and the way we feel about trust. These tech­nolo­gies sup­port two im­por­tant func­tions in any trans­ac­tion.

First, these tech­nolo­gies can match de­mand and sup­ply in the most spe­cific man­ner. We do not need to guess the rate of food con­sump­tion and pro­vide space to store raw food any­more. Cus­tomers can pre- order and sell­ers know in ad­vance what they need to pre­pare, con­se­quently pro­duc­ing less garbage. Ac­tu­ally, it does not even need to be the con­sumers them­selves, but the smart fridge con­nected to the food sup­ply web ser­vice.

Sec­ond, these tech­nolo­gies help build trust among strangers. In the past, we only trust ed those whom we knew well, whether in­di­vid­u­als or com­pa­nies. How­ever, to­day we can trust the sys­tem in­stead of per­sons or brands. We do not need to trust our in­di­vid­ual Uber driv­ers be­cause we can trust the mo­bile ap­pli­ca­tion sys­tem which is cheaper and more ef­fec­tive than the na­tional trans­port reg­u­la­tion sys­tem, in­clud­ing the me­ter sys­tem. As a con­se­quence, the in­ter­me­di­aries who ben­e­fited from the in­ef­fi­ciency of

the old sys­tem, such as su­per­mar­kets or taxi- me­ter de­vice pro­duc­ers, will pro­gres­sively be ex­cluded from these trans­ac­tions in the up­com­ing dig­i­tal era if they do not adapt their roles.

The ap­pli­ca­tion of these tech­nolo­gies to build trust can be found in gov­ern­ment work and law en­force­ment as well. Thai courts re­cently launched a project us­ing data anal­y­sis in de­ter­min­ing pro­vi­sional re­lease with­out bail, and track­ing the re­leased de­fen­dant by elec­tronic mon­i­tor­ing de­vices.

TRUST IN SYS­TEMS

Re­cent trends in­di­cate that sys­tems can be more trust­wor­thy than hu­mans in many sit­u­a­tions, es­pe­cially in so­ci­eties where gov­ern­ment op­er­a­tions are not fully trusted or not al­ways ef­fec­tive. How­ever, one of the fun­da­men­tal el­e­ments that al­low these tech­nolo­gies to op­er­ate is the free flow of data, in­clud­ing per­sonal data. Con­se­quently, it is not an over­state­ment that our per­sonal data is no longer un­der our full con­trol. The pro­tec­tion of pri­vacy or data pro­tec­tion is a qual­ity that tech­nol­ogy and the mar­ket alone can­not pro­vide as long as there is hu­man in­ter­ven­tion. That is why there must be rules to pro­hibit em­ploy­ees from copy­ing and dis­tribut­ing per­sonal data. With­out the in­ter­ven­tion by na­tional leg­is­la­ture the over­all level of pri­vacy pro­tec­tion can be­come a race to the bot­tom.

Apart from reg­u­la­tions, we also need an en­vi­ron­ment that fa­cil­i­tates these sys­tems. We do not want to sac­ri­fice our pri­vacy or se­cu­rity for free and fast con­nec­tion. We need both free and safe flow of data. This is where laws can co­or­di­nate be­tween the two equally im­por­tant de­mands. An ef­fec­tive data pro­tec­tion law must be able to reg­u­late com­pany be­hav­ior con­cern­ing pri­vacy and set min­i­mum stan­dards of tech­nol­ogy used for se­cur­ing data.

PRI­VACY AND DATA PRO­TEC­TION IN THAI­LAND

The Thai le­gal sys­tem is be­hind in the area of data pro­tec­tion, though pri­vacy is­sues have been raised as con­cerns fre­quently for the past sev­eral years. Peo­ple have been com­plain­ing about their mo­bile num­bers be­ing sold to com­pa­nies that con­duct di­rect mar­ket­ing via phone. Many are wor­ried about the way telecom­mu­ni­ca­tion com­pa­nies han­dle their mo­bile use data.

The first at­tempts to draft data pro­tec­tion law hap­pened 10 years ago. There have been at least four dif­fer­ent ver­sions of bills that failed to reach the na­tional as­sem­bly. The lat­est at­tempt was in early 2015. The Data Pro­tec­tion Bill was part of the Dig­i­tal Econ­omy Bills, to­gether with the Cy­ber­se­cu­rity Bill, Copy­right Act Amend­ment Bill, Com­puter Crime Act Amend­ment Bill and 10 other laws. The Data Pro­tec­tion Bill did not face con­tention in the same way as the above- men­tioned bills, but its con­tents were heav­ily re­sisted by in­dus­tries whose busi­ness de- pends on cus­tomers’ per­sonal data such as bank­ing, fi­nance and in­surance.

How­ever, con­sid­er­ing the re­cent de­vel­op­ment in data pro­tec­tion laws in many Asian coun­tries and the new Gen­eral Data Pro­tec­tion Reg­u­la­tion ( GDPR) in the Euro­pean Union, the au­thor­i­ties seem to fi­nally un­der­stand that it is high time for Thai­land to have a proper data pro­tec­tion law for both the pub­lic and pri­vate sec­tors. If not, the transna­tional na­ture of fu­ture data flow will nat­u­rally ex­clude Thai­land from the net­work of safe coun­tries for data trans­fer. Any com­pa­nies who want to do busi­ness with Euro­pean or other coun­tries with higher level of data pro­tec­tion must fol­low the laws of those ju­ris­dic­tions rather than Thai law. With­out na­tional law that re­flects in­ter­na­tional best prac­tices, the man­age­ment of in­for­ma­tion in Thai­land will be­come more and more com­pli­cated, which would curb the Thai Gov­ern­ment’s am­bi­tions to be­come a re­gional dig­i­tal econ­omy hub.

WHAT SHOULD WE EX­PECT FROM THE NEW DATA PRO­TEC­TION LAW?

Any­one who has ever clicked the ‘ agree’ but­ton af­ter scrolling down the ‘ terms and con­di­tions’ page should eas­ily un­der­stand that the prin­ci­ple of con­sent and pur­pose lim­i­ta­tion alone can­not help to protect our pri­vacy. The re­quire­ment of data se­cu­rity stan­dards and breach no­ti­fi­ca­tion sys­tems must also be in­cluded.

The new law is ex­pected to nav­i­gate the dif­fi­cult bal­ance be­tween per­sonal data pro­tec­tion and ben­e­fits of data use. Some op­er­a­tions still have to be per­fomed even with­out con­sent, such as in sit­u­a­tions of fraud and crime de­tec­tion, per­for­mance of con­tracts and re­search ac­tiv­i­ties. These ex­cep­tions of ‘ le­git­i­mate in­ter­ests’ should be pre­scribed in a way that does not over­ride the fun­da­men­tal rights of data sub­ject. Also, the rights of data sub­jects — such as the right to ac­cess, right to era­sure and, right to ob­jec­tion — must be rec­og­nized with reser­va­tions for busi­ness ne­ces­sity to re­tain some data.

The new law will not only change the way we han­dle per­sonal data, but it will also re­quire a lot of work in re- clas­si­fy­ing ex­ist­ing data. The data that is no longer nec­es­sary must be erased. The nec­es­sary data must be main­tained un­der rea­son­able se­cu­rity stan­dards. Leg­is­la­tors around the world are strug­gling to find ways to open up op­por­tu­ni­ties for more data use, es­pe­cially in the case of Big Data, while at the same time look­ing for ac­cept­able stan­dards of en­cryp­tion and pseudonymiza­tion.

The new data pro­tec­tion law will def­i­nitely cre­ate some bur­den for busi­ness, as well as for the gov­ern­ment sec­tor, which holds the big­gest per­sonal data­base in the coun­try. Nev­er­the­less, this change is in­evitable if we want to en­hance the en­vi­ron­ment for the flour­ish­ing of the dig­i­tal econ­omy. Pri­vacy and se­cu­rity are the most im­por­tant com­po­nents of ‘ trust’ for tomorrow.

Thi­ti­rat Thip­sam­ritkul is Lec­turer at the Fac­ulty of Law at Tham­masat Univer­sity. She can be con­tacted at thi­ti­rat. thip@ gmail. com.

Peo­ple might not need to put trust in reg­u­lat­ing au­thor­i­ties or well- known com­pa­nies any­more; they can trust the sys­tem in­stead.

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