The Substantially Similar Weblog

Bruce Schenier wonders why ChoicePoint seems to be so obviously asking to be regulated:

ChoicePoint actually has no idea if only 145,000 customers were affected by its recent security debacle. But it’s not doing any work to determine if more than 145,000 customers were affected — or if any customers before July 1, 2003 were affected — because there’s no law compelling it to do so.

I have no idea why ChoicePoint has decided to tape a huge “Please Regulate My Industry” sign to its back, but it’s increasingly obvious that it has.

I think the answer is quite simple: it will be much easier for ChoicePoint to implement some basic privacy safeguards if it is not put at a competitive disadvantage as a result. Regulation in this context could insure a relatively even playing field, and the big data aggregator/data mining companies would be forbidden from stooping to new lows of data disclosure in order to facilitate easier access to personal information by their customers, the data purchasers.

Perhaps ChoicePoint executives actually have a conscience, but competitive pressures prevent them from exercising that conscience. Or, more conspiratorially, maybe ChoicePoint realizes that it already has all the systems in place to implement better security and privacy protections and its competitors do not. If they were all forced to do this, ChoicePoint might be put at a competitive advantage.

I remember hearing a similar thing from a video rental company executive once: he was asked if he resented the Video Privacy Protection Act for depriving him of the opportunity to sell customer’s rental records to direct marketers. He responded that it didn’t bother him at all, since none of his competitors could sell that information either. Even if he believed it was wrong to sell that data, if it weren’t prohibited by law, he said he would be forced to do it or his competitors would be able to drive his business into the ground with the additional revenue.

All this is to say that markets only function within regulatory structures: the right wing mantra of “less regulation is good for business” misses the point that in many cases a healthier competitive environment is established with the right set of regulations.

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