David Robinson, Harlan Yu, Bill Zeller, and I have a new paper about how to use infotech to make government more transparent. We make specific suggestions, some of them counter-intuitive, about how to make this happen. The final version of our paper…
Linden Lab, the company that runs the popular virtual world Second Life, announced Tuesday that all in-world “banks” must now be registered with real-world banking regulators:
As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy.
This is a significant step. Thus far Second Life, like other virtual worlds, has tried to avoid entanglement with heavyweight real-world regulatory agencies. Now they are welcoming banking regulation. The reason is simple: unregulated “banks” were out of control.
Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world “banks” defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20, 40, or even 60 percent annualized.
Usually, we don’t step in the middle of Resident-to-Resident conduct – letting Residents decide how to act, live, or play in Second Life.
But these “banks” have brought unique and substantial risks to Second Life, and we feel it’s our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse – leaving upset “depositors” with nothing to show for their investments. As these activities grow, they become more likely to lead to destabilization of the virtual economy. At least as important, the legal and regulatory framework of these non-chartered, unregistered banks is unclear, i.e., what their duties are when they offer “interest” or “investments.”
This was inevitable, given the ever-growing connections between the virtual economy of Second Life and the real-world economy. In-world Linden Dollars are exchangeable for real-world dollars, so financial crime in Second Life can make you rich in the real world. Linden doesn’t have the processes in place to license “banks” or investigate problems. Nor does it have the enforcement muscle to put bad guys in jail.
Expect this trend to continue. As virtual world “games” are played for higher and higher stakes, the regulatory power of national governments will look more and more necessary.
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Last week Facebook canceled, and then reinstated, Robert Scoble’s account because he was using an automated script to export information about his Facebook friends to another service. The incident triggered a vigorous debate about who was in the right. Should Scoble be allowed to export this data from Facebook in the way he did? Should Facebook be allowed to control how the data is presented and used? What about the interests of Scoble’s friends?
An interesting meme kept popping up in this debate: the idea that somebody owns the data. Kara Swisher says the data belong to Scoble:
Thus, [Facebook] has zero interest in allowing people to escape easily if they want to, even though THE INFORMATION ON FACEBOOK IS THEIRS AND NOT FACEBOOK’S.
Sorry for the caps, but I wanted to be as clear as I could: All that information on Facebook is Robert Scoble’s. So, he should–even if he agreed to give away his rights to move it to use the service in the first place (he had no other choice if he wanted to join)–be allowed to move it wherever he wants.
Nick Carr disagrees, saying the data belong to Scoble’s friends:
Now, if you happen to be one of those “friends,” would you think of your name, email address, and birthday as being “Scoble’s data” or as being “my data.” If you’re smart, you’ll think of it as being “my data,” and you’ll be very nervous about the ability of someone to easily suck it out of Facebook’s database and move it into another database without your knowledge or permission. After all, if someone has your name, email address, and birthday, they pretty much have your identity - not just your online identity, but your real-world identity.
Scott Karp asks whether “Facebook actually own your data because you agreed to that ownership in the Terms of Service.” And Louis Gray titles his post “The Data Ownership Wars Are Heating Up”.
Where did we get this idea that facts about the world must be owned by somebody? Stop and consider that question for a minute, and you’ll see that ownership is a lousy way to think about this issue. In fact, much of the confusion we see stems from the unexamined assumption that the facts in question are owned.
It’s worth noting, too, that even today’s expansive intellectual property regimes don’t apply to the data at issue here. Facts aren’t copyrightable; there’s no trade secret here; and this information is outside the subject matter of patents and trademarks.
Once we give up the idea that the fact of Robert Scoble’s friendship with (say) Lee Aase, or the fact that that friendship has been memorialized on Facebook, has to be somebody’s exclusive property, we can see things more clearly. Scoble and Aase both have an interest in the facts of their Facebook-friendship and their real friendship (if any). Facebook has an interest in how its computer systems are used, but Scoble and Aase also have an interest in being able to access Facebook’s systems. Even you and I have an interest here, though probably not so strong as the others, in knowing whether Scoble and Aase are Facebook-friends.
How can all of these interests best be balanced in principle? What rights do Scoble, Aase, and Facebook have under existing law? What should public policy says about data access? All of these are difficult questions whose answers we should debate. Declaring these facts to be property doesn’t resolve the debate — all it does is rule out solutions that might turn out to be the best.
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I’m excited to announce that Princeton’s Center for InfoTech Policy is putting on a workshop on the policy and social implications of “Computing in the Cloud” — the trend where companies, rather than users, store and manage an increasing ran…