The news of the opening of an investigation by the Milan Public Prosecutor’s Office into an alleged VAT evasion that would have been committed by Meta in relation to the use of data as a counterpart for the use of its services is sensational not for the merits — the nature “patrimonial” data – how much time has passed since for the first time a public authority decided that personal data can be a way to pay for services. More than “innovative”, therefore, the investigation is lethargic late and it is the archetype of failures caused by believing the narrative of “digital rights” and “cyberspace”.
Il February 17, 2000following a report from ALCEI, the Competition and Market Authority established, with provision 8051/00, the misleading advertising of an operator (Libero-Infostrada) which presented a service as “free” for which the user had to accept to be profiled and to receive personalized advertising. In the parallel proceeding before the Guarantor of personal data, the Authority also noted the lack of adequate information to the potential customer, who therefore could not fully assess the consequences of choosing to join the “free” service, deeming that “without prejudice to respecting the will of citizens and consumers to accept the transfer of identification data or data pertaining to tastes, preferences and interests, in order to obtain certain services free of charge, the interested parties must, however, be able to express their choices in an aware and free manner”. More “recently”, sentence 17278/18 issued by the first civil section of the Court of Cassation established that “the law does not prohibit the exchange of personal data, but nevertheless requires that this exchange be the result of full consent and in no way coerced”. The sentence of 29 March 2021, n. 2631 issued by the Sixth Section of the Council of State returns to the subject and notes, although without going into the merits of the possibility of using personal data as the price of a service, that “the capitalization of personal data, which in the present case occurs unknowingly (according to of the Authority when it accuses misleading information in the exercise of the practice in question), is the result of the intervention of the companies through the provision of the data – and of the user’s profiling – for commercial purposes”.
Social
Because the fine in Meta in three months could change the Internet as we know it
by Guido Scorza
The inevitable conclusion of the reasoning developed by the two authorities, the Court of Cassation and the Council of State is, therefore, that personal data are intangible assets whose economic value is quantifiable, for example, in the cost that the user would have incurred if he had had to pay for the service in money. The same conclusion can be reached if we want to take the mainstream narrative (albeit a bit out of fashion by now) according to which “data are the new gold” or “data are the new oil” at face value. Gold and oil are not “currency” but they have value and therefore taxes are paid on transactions that concern them. Therefore, for consistency, there are no reasons to argue that personal data should be treated differently.
The effect of this setting, if confirmed, would be disruptive because it would concern not only Big Tech but all companies, in any sector, which have based their marketing strategies on offering “free” services in exchange for personal data. The possible violations, contestable backwards for about ten years, would not only concern VAT evasion but also the regularity of the financial statements, the correct capitalization of the data and even the reliability of the accounting entries. It is not easy to imagine the amount of the sanctions, but it would not be surprising if, overall, they were astronomical figures.
Only time and some good tax experts will be able to unravel this tangle, but it is strange that Big Tech’s best defense comes, involuntarily, from the (new) Personal Data Guarantor. In 2021, an article appeared on the Authority’s website in which, substantially questioning the approach of the Libero-Infostrada provision, the authors wondered whether it was truly lawful to “pay” with personal data.
Analyzing this reasoning in detail is the subject of a legal review, but – in summary – the thesis expressed by the authors is that since consumers always have the power to revoke consent to treatment and the contract stipulated with the platform continues to stand, then personal data is not a “payment” for the service. In other words: I, the platform, offer a service which, among the various counter-performances, asks Also the authorization to process your personal data. After some time you customer revoke this authorization, but I continue to give you the service. So consent to the processing of personal data is not a way to “pay”. Rather, the authors argue, one should ask the problem of understand if the granting of a right (the one to the processing of personal data) can be a counterpart and conclude for a negative answer. This – but it is not explicitly stated in the article – would imply the illegality of the processing and the possibility of sanctioning those who operate in this way both by ordering the deletion of the data and by imposing administrative sanctions and, in theory, even considering the fact criminally relevant.
Such a view cannot be shared because, for example, in “supply contracts” (energy, telecommunications services, etc.) the user can withdraw at any time (subject to any advance notices established in the contract). So similarly in the case of an online platform the withdrawal of consent to the processing of personal data may be equivalent to withdrawal. In other words: if the withdrawal of consent to data processing implies the impossibility of continuing to use the service, the “counterparty” nature of personal data is difficult to deny.
The point, however, is not to embark on legal reasoning on the prevalence of law over the economy or vice versa. The law is the most arbitrary imaginable and therefore the interpretations of the rules are not necessarily consistent or objective. Just think, as is taught in the first year of the degree course in law, that a judicial decision He makes of white, black — turns white to black. As mentioned, in legal terms there is no objective answer to the question whether (personal) data should or can be considered an economic good immaterial and, consequently, whether the transactions that concern them are subject to taxation. Unlike the speed of light which – as Piero Angela said – is not decided by a show of hands, in fact, the right does. Therefore, Cassius Clay’s law also applies in trials: impossible in nothingand it cannot be excluded that a judge decides in favor of Meta by disavowing the approach of the investigators.
In depth
What are synthetic data and how they could change our idea of privacy
by Gabriele Franco
More interesting, however, is analyze the story in cultural and political terms and in particular to acknowledge that we are faced with yet another example of what it means to have believed and continue to believe that the adjective “digital” or the prefix “cyber” change the nature of objects, human relationships and individual rights.
Therefore, to return to the point, nothing (would) have prevented (to) the public decision-maker from assuming a clear position, enabling citizens and businesses to operate within an (acceptably) clear legal framework. However, despite the more than twenty years of proclamations on the “information society” and, today, on the “digital transition”, governments of all (multi)colors have systematically ignored the issue of “what to do” with an industrial model based on the accumulation of data.
The topic is difficult to understand and complex to manage, so it is understandable that the legislators and executives who have alternated over time have not gone much beyond declarations of principle or, while animated by a “will to do”, have remained mesmerized by sirens whose song sounded visionary but was, in reality, fatuous and insubstantial. Meanwhile, reality went on of its own accord, supported by the nasty attitude of not caring what men believe. Thus, while our “digital selves” ventured into the “virtual space”, the oxen escaped from the stables and, now, are about to cause a stampede which, once started, will be difficult to stop.
So, metaphorically speaking, the solution of the Meta case will hardly be only judicial. In fact, if the prosecution’s thesis were confirmed, then for consistency tens of thousands of similar proceedings should be opened against all those who have based their commercial models on the capitalization of personal data by trusting the narrative built on the “virtual” and on the “digital”. The effects on the “digital transition” would be enormous, even if only in terms of uncertainty on the economic activities of the sector.
It is not (yet) too late for a systemic intervention that deals in strategic terms – i.e. in the long term – with the issue of the legal nature of (also) personal data, establishing for example that they are a common — a common good — the use of which can be limited, similarly to property, for purposes of social utility. Or, conversely, the political choice could be to establish that personal data are the “exclusive property” of the subjects to whom they refer and that, as such, they can be the object of an economic transaction. Or again, the legislator could decide in a still different sense and deny any value to the information.
Since politics is free in its end, such a choice, whatever it is, would not be open to discussion. However a common starting point would be prohibit the use in regulatory and regulatory activity of concepts such as “digital rights” and the use of words such as “virtual” or “cyber”. This would force legislators to keep their feet on the ground, thus avoiding creating a very fragile hook on which to hang a chain of imaginative lucubrations which, as the Meta case demonstrates, could sooner or later break with a crash with unimaginable consequences but, certainly, anything but “virtual”.