The $4 trillion question: How can we protect online privacy without stifling innovation?

Economists will tell you that trust is necessary for a stable economy. So what are we to make of growing concerns about what businesses do with the personal data of internet users?

Poll after poll shows that consumers simply don’t trust companies with their data and are losing faith in government’s ability to protect their personal information. Meanwhile, regulators around the world struggle to keep pace with technology and business models that are, by nature, anti-privacy; at the same time they worry that overly stringent rules could dampen growth in the digital economy which is expected to contribute an estimated $4-trillion to major economies.

“Today, the digital economy is the economy,” Navdeep Bains, Canada’s minister of innovation, science and economic development, said in a speech last year. In fact, mass data has become a valuable asset. Whether it’s vacuumed up by mobile or other internet devices, consumer data increasingly drives business decisions. Web-based giants like Google and Facebook are earning fat profits from targeted advertising.

No wonder lawmakers are caught in a dilemma. They know that cutting off access to data by introducing new laws, or even enforcing existing ones, could be viewed as catastrophic for the constellation of firms that depend on it.

And yet, in an age when consumers are growing wise and wary of being tracked for commercial purposes, it’s worth asking whether relentless data-mining and profiling is a desirable long-term business strategy.

“People are waking up to this. It’s going to restrict growth,” said Ann Cavoukian, former Information and Privacy Commissioner for Ontario and director of the Privacy and Big Data Institute at Ryerson University, referring to potential losses due to user mistrust. “Regulators should be out there, speaking to companies, talking about embedding privacy. At the moment, business views privacy as a negative, but in reality, privacy breeds innovation.”

The internet is ushering in major breakthroughs in communications, health, and even climate change, but it is also saturated with worrying trends in addition to commercial profiling.

Catastrophic security breaches like the 2013 hack of more than one billion Yahoo accounts and last October’s partial web shutdown have reinforced the reality that the online world is not always a safe place. Allegations that Russia interfered in last year’s U.S. election and had a role in spreading fake news has fuelled calls in Western democracies to better prepare for the increasing threat of cyber-assaults. And thanks to Edward Snowden’s revelations, people are genuinely afraid of government snooping, a fear that the Trump administration has done little to assuage. Critics are already up in arms about the now infamous executive order, arguing that it strips Canadians and other foreigners of the limited digital privacy protections they had enjoyed until now in the U.S. For now though, the order does not appear to grant further powers to U.S. law enforcement or intelligence to force businesses to disclose information about Canadians. At some point, policy makers may have to look into where the commercial mining of personal data intersects the political world.

“We are right at the point where enormous benefits are just around the corner. But widespread distrust will hurt the potential of new technologies reaching people,” said Timothy Libert, a doctoral candidate at the Annenberg School for Communication at the University of Pennsylvania and a research fellow at the Alexander von Humboldt Institute for Internet and Society in Berlin. He points to ad-blocking software designed to remove advertising content from websites as a reaction to a regulatory failure.

Virtual private network providers are also reporting an upsurge in downloads from consumers willing to take steps to protect their online privacy.

But while there are some controls, users lack easy-to-use and effective choices in terms of privacy.