Paul L. Caron

Friday, August 25, 2023

Barry & Sokol: Data Valuation And Law

Jordan M. Barry (USC; Google Scholar) & D. Daniel Sokol (USC; Google Scholar), Data Valuation and Law, 96 S. Cal. L. Rev. __ (2023):

S Cal L RevData has become an increasingly valuable asset. Numerous are-as of law—including contracts, corporate law, IP, antitrust, tax, privacy, and bankruptcy—require parties and courts to determine the value of assets, including data. Unfortunately, data valuation has been hindered by a lack of clarity over what data is and why it is valuable. This lack of clarity also increases the chances of legal decisionmakers valuing data in inconsistent ways, which would create further confusion, inefficiencies, and opportunities for regulatory arbitrage.

This article proposes a unified framework for valuing data that will promote consistent valuations across fields of law. It begins by conceptualizing data as building blocks: It is of little value on its own. But when placed in skillful and creative hands, it can unlock choices for its holders—choices they would not otherwise have—that can generate tremendous profits. Thus, data constitutes what is known as a “real option.”

This article shows how using real options to value data can significantly improve upon existing data valuation practices. ...

When thinking about data and AI, it can be helpful to consider a simple, three-tier vertical model of how companies and other actors use data and AI to further their goals.

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