Social media giants may soon be required to put a dollar amount on how much user data is worth if newly proposed legislation makes its way through Congress. That could help consumers better understand the trade-offs they face when they decide to log on.
Senators Mark Warner and Josh Hawley introduced the "Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data Act," or the Dashboard Act on Monday.
"The bill, essentially, would direct the Securities and Exchange Commission to come up with a way to put a value — a dollars and cents value — on the individual data that users share with big companies," Kim Hart, the managing editor of Axios, told Cheddar. Axios first reported on the legislation Sunday. "This is literally how these companies make their money. They sell advertising based on the information that they collect from their users when they log onto their services."
The legislation would require "operators" with more than 100 million monthly users to disclose what types of data they're collecting and to regularly update their users with an assessment of that data's value. Companies would also need to report an annual, aggregate estimate of all the user data they collect, as well as reveal any third party partners involved in data collection.
But that's not where it ends. Users would be able to request information about how their data is being used and request that their data be deleted.
"I think it will be really hard for the SEC to come up with something that everyone is satisfied with. I think the companies are going to push back pretty hard on having to attach a dollar figure to this kind of data," said Hart. "But it makes this conversation more tangible to users and to consumers."
Warner's proposal comes as politicians on both sides of the aisle express increasing concern over the practices of large tech platforms.
"There is bipartisan consensus, he says, that the status quo for big tech companies is no longer working," according to Hart, but cautions that getting any legislation to pass Congress would still be difficult.
She added that Warner's legislation could potentially be seen as a compromise amid some calls to have Big Tech companies broken up.
"He would rather take some more tailored solutions to address very specific issues and concerns that he has," explained Hart.
In an emailed statement, a Facebook ($FB) spokesperson said, "We look forward to continuing our ongoing conversations with the bill's sponsors."
Amazon ($AMZN), Twitter ($TWTR), and Google ($GOOGL) would not comment.
"For years, social media companies have told consumers that their products are free to the user. But that's not true – you are paying with your data instead of your wallet," said Warner in a statement today. "But the overall lack of transparency and disclosure in this market have made it impossible for users to know what they're giving up, who else their data is being shared with, or what it's worth to the platform."