Texas Attorney General Ken Paxton has put data-hungry businesses on notice: Give consumers a fair shake or pay the price

What is your customers’ data worth to them? It’s the key question behind Paxton’s new lawsuit against Allstate and its subsidiary Arity. The suit claims that Arity monitored driver behavior by tracking users' phones, then sold that data on to insurers, who used it to jack up motorists’ insurance costs or deny them coverage. Allstate, naturally, contests the claims.

The underlying issue, though, is that drivers had no idea their data was being mobilized against them, and appear to have received little of value in exchange.

Allstate isn’t alone in avidly collecting data, of course. In the AI era, businesses of all kinds are gathering all the data they can, and using it to build the AI models they’re counting on to deliver competitive advantage. The problem is that leaders focus so much on the value data has for their business that they overlook the fact that it also has value to their customers. All too often, that leads them to see data collection as a one-sided, extractive process, rather than an equitable exchange that benefits both customers and businesses.

To put it another way: data collection doesn’t just generate value for the company that gathers it. It also imposes a cost on the data subject. (In the case of Allstate, it was a literal cost in the form of higher insurance premiums.) Unless consumers feels they’re getting a fair shake and receiving something of equivalent value in exchange for their data, they’re quite rightly going to resent being taken advantage of. In the long run, that will cause all kinds of problems — including reputational harm and heightened regulatory attention — as companies seek to develop effective and sustainable AI strategies.

It might sound strange to........

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