Explainer: Data portability and how it affects everything from streaming music to insurance plans

SINGAPORE — Imagine a world where special promotions arranged by your bank pop up on your phone as you enter your favourite store, while the background music changes to a track that you recently saved on Spotify.

This may very well be a reality as the Government intends to enable people to share their data between different companies and across different sectors.

As part of an ongoing review of the Personal Data Protection Act 2012 (PDPA), the Government has released a paper discussing the impact and benefits of data portability and hopes to commence discussions on its implementation.

The paper is put up by the Personal Data Protection Commission (PDPC) and the Competition and Consumer Commission of Singapore.

Prior to this, the PDPC had commissioned London Economics, a United Kingdom-based consultancy, to conduct a study on benefits and issues which might arise with the introduction of a data portability requirement, including the impact on consumers, businesses and competition should such a requirement be introduced in Singapore.

London Economics’ views were expressed in the paper.

WHAT CHANGES TO THE PDPA ARE BEING PROPOSED?

Under the existing PDPA, an organisation that has a user’s personal data is not obliged to share it with another entity, even if the user requests it.

The Government is proposing that organisations be obliged to share such data upon the user’s request and for such data to be presented in a “structured, commonly used and machine-readable format”.

WHAT ARE THE BENEFITS OF DATA PORTABILITY?

One benefit of data portability is that consumers will no longer need to manually key in their preferences whenever they switch service providers.

For instance, if a consumer changes his music streaming service provider from Apple Music to Spotify, his music preferences can be transferred so that suitable songs can be recommended immediately.

With greater sharing of historical data across different industries, companies will also be able to innovate and create products that are more targeted to the needs of their customers, the paper said.

For example, insurance companies can gather health readings from fitness tracking companies and dietary habits from food delivery companies to offer customised insurance plans for consumers.

The paper said that data portability might also encourage companies to break into markets where data is an important, or even essential, input in the creation of products — spurring competition in such markets.

WHAT ARE THE DISADVANTAGES OF DATA PORTABILITY?

The paper recognised that while data portability might increase competition, it might have the secondary effect of dampening innovation in markets that are already competitive.

This is because as competition increases in competitive markets, the incentive to innovate becomes smaller.

Another potential downside of data portability relates to price discrimination. For example, large and dominant companies may use their data to set predatory prices — artificially low prices that have the likely effect of shutting down competitors in the market —  lowering competition in these markets.

In addition, data portability will increase cybersecurity risks as data has to be shared between diverse companies of different sizes, with differing security and risks management abilities.

SO WILL DATA PORTABILITY EVER HAPPEN?

The Government is still looking into how to implement data portability.

Announcing the release of the paper at the Mobile World Congress in Spain on Feb 25, Minister for Communications and Information S Iswaran said that “data is a key enabler of digital transformation, but a delicate balance must be struck between data protection and business innovation”.

Issues such as whether or not organisations may impose a fee for porting data, and who should determine the fee, need to be resolved before data portability becomes a reality in Singapore.