The DASHBOARD Act could force big tech to reveal the actual monetary value of user data (FB, GOOGL, AMZN)

Yesterday, Senators Mark Warner (D-Va.) and Josh Hawley (R-Mo.) introduced a bipartisan bill, dubbed the Designing Accounting Safeguards to Help Broaden Oversight And Regulations on Data (DASHBOARD) Act, that would require tech companies to reveal how much the data they collect on users is actually worth, per Axios.

Facebook Ad Revenue, by User Geography Business Insider Intelligence

The bill would only impact tech companies with more than 100 million users i.e. Facebook, Google, Amazon, and Twitter, among others. In addition to disclosing the value of their data to users every 90 days, the companies would be required to annually report this information to the Securities and Exchange Commission (SEC).

Here's what it means: This legislation could force tech companies to be fully transparent with users and regulators on how they collect, use, and monetize data which could help regulators identify the abuse or mishandling of data.

The senators have suggested that tech companies be required to disclose the following:

What types of data they collect and exactly how it's used
The amount of revenue companies generate from user data and how that revenue is generated
What third-party contracts they engage in
What measures are being taken to protect users' data

Although it's unclear just how much user data is worth, it's clear that it's the main driver of revenue for tech companies. There is precedent for the valuation of users: Facebook, for instance, revealed a global average revenue per user (ARPU) of $6.42 as of Q1 2019. And while ARPU is not an exact comparison to the value of raw data, one doesn't exist without the other.

Further, Sen. Warner argued that companies do know the value of user data, stating , "If these companies can do all these acquisitions and many of these acquisitions were made on what appeared to be outrageous prices they had a pretty darn good notion of how they could use that data and how much that was worth."

Tech companies' core value no longer lies in the service they provide, but rather the troves of data they can use to deliver targeted advertising. It's from these massive vaults that they're able to pull so much ad revenue so, it's highly unlikely tech firms don't have a good idea of exactly how much it's worth.

The bigger picture: Greater transparency as to the specific value of user data could help restore some faith in tech companies amid heightened distrust among users and regulatory scrutiny.

Users know their data is being collected and exploited, but they opt in because social media tools are fundamental to modern interaction.But if tech giants were to regularly disclose the information the Senators' bill would require to users and users still agreed to share their data (as I expect they will) it could hold tech companies to a higher standard of responsibility when it comes to how they handle data.

And that could mean tech firms become more likely to avoid inappropriate usage, in turn helping companies lessen the backlash among important constituencies that result from data privacy scandals.

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