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What Happens When You Collect "Metadata" On Multinationals Instead of People?

BY Nick Judd | Tuesday, June 11 2013

Chris Taggart. Photo: Esty Stein / Personal Democracy Media

When Sony unveiled its new PS4 video game console Monday at the E3 industry expo, gamers immediately started salivating.

But where will those PS4s come from, exactly, when the device hits stores? Is the wholesaler Sony Electronics Inc., a California foreign corporation? Will it be that company's corporate parent, incorporated in Delaware? Or Sony Electronics (Singapore) PTE Ltd., which, while it has Singapore in its name, is incorporated in India?

The answer isn't immediately clear. I could buy directly from Sony.com, but I'm not exactly sure who I'd be dealing with. The site's domain name registry information lists a business services firm as its point of contact, so we can't even tell which company owns the domain.

This complex system is why Chris Taggart co-founded OpenCorporates, which scours, digitizes, consolidates and publishes public corporate records as machine-readable open data. Using a dataset that now includes more than 54 million companies, regulators, industry insiders and journalists get a window into questions like this one.

The world has been rocked this week by revelations that the National Security Agency has been collecting "metadata" on millions of Americans' phone calls — who was calling whom, and for how long. Metadata, it turns out, can be revealing, and the national conversation has turned towards wondering if this kind of information about private citizens should require a warrant even for purposes of national security. As the price of operating in a given state or country, corporations have to disclose "metadata" of their own that has long been public, whether that's simply the name of the company and its address, a list of owners or directors, or parent and subsidiary companies. OpenCorporates is a database of this kind of metadata, compiled from public sources all over the world — no secret courts or vast national security apparatus necessary.

"When you work for somebody, Microsoft for example, or BP, or Siemens, you work for Ford, you don't work for Microsoft, because Microsoft is just a concept," Taggart told me at Personal Democracy Forum 2013 last week. "There's Microsoft Inc., there's Microsoft UK Research Limited — you have to work for a company with legal personality because an employment contract is just that a contract and in order to sign a contract you need legal personality."

Sony is the technology company in the news today, but many of them have a similar web of corporate parents, subsidiaries and affiliates that span the globe. This puts different parts of a company under different jurisdictions or subject to different laws. For a company like Sony, that means it can pick legal venues that suit its purposes. It also allowed financial derivatives traders at AIG to issue trades in London backed by American taxpayers, contributing to the fiscal meltdown — and it presents a thorny problem for many, from lawmakers looking to repatriate tech companies' tax dollars to Commodity Futures Trading Commission regulators hoping to prevent lax rules in other countries from creating new risks for people who live here in the U.S.

This network is only going to get more and more complex, Taggart says.

Meanwhile, companies appear to be doing their best to keep that complexity opaque. In his main stage talk at PDF, Taggart traced Facebook's ownership network through Ireland and through multiple stops in the Cayman Islands, where the identity of a company's owner is protected by law. So the company that wants you to share everything about yourself with everyone, he explained, is actually pretty serious about its own corporate privacy.

"In the UK, which is not a huge country, its 60 million people, in the country we have 3 million active companies," Taggart told me. "How are you going to deal with 3 million active companies except by treating it as data. And that number of active companies is increasing week by week."

Taggart's 54-million-company database is a collection of nodes linked together by affiliate relationships and by venue — Delaware, California, the Cayman Islands, wherever. Because OpenCorporates derives its data from several states in the U.S. and many other nations around the world, he explained to me, they are able to piece together a richer picture of the network of companies and directors involved in global commerce and start to glean some insight into what they are doing.

At least, that's the theory. So far OpenCorporates, just two years old, has concentrated on putting the data out there for others to analyze. Taggart had no research of his own or conclusions to share, just questions. For instance: He's noticed that some companies are owned by an intermediary that is partially owned by a subsidiary of the parent company, creating a bizarrely circular ownership structure. But Taggart is a developer, UK-based former journalist and magazine publisher — one of the last titles he worked on was "Junior," a high-end parenting magazine — not an expert in corporate governance. Or at least, not yet. So the reasons for this are lost on him.

OpenCorporates pulls together public records and releases them in the open, offering users an opportunity to update entries that look out of date and fielding requests to change things that are wrong. Taggart says if something is inaccurate, it's usually because it was misreported in the original, public source.

He adds that he's had his share of complaints from corporate officers.

"Sometimes it'll be, I don't want someone to see that I was connected with this company it went bust. Okay — now that to me is a reason it should be public," Taggart told me.

At the same time, he says, he'll also hear from people in finance or business who make use of OpenCorporates to investigate potential investments or business partners. OpenCorporates is a for-profit that gives access to its database away for free, so long as derivative works are under a similar license. It proposes to make money by selling license to use the database without the obligation to make any improvements also freely available, which might be appealing to financial institutions or regulators.

Social network analysis, the decades-old quantitative discipline now in the news because it's likely used by government intelligence analysts revealed to be working with call records secretly obtained on millions of Americans, might offer more publicly available insights — and could even be used to detect corporate fraud or wrongdoing.

"In a highly connected, networked world, where the network's evolving all the time, the power comes from being able to connect the dots," Taggart told me. "And at the moment ... citizens, people, other companies even don't have the ability to connect those dots."

"When you've got 4,000 entities in a modern financial company then the regulators can't do that, the citizens can't do that, the people trying to figure out risk can't do that," he continued. "So it's about connecting those dots."

As the volume and integrity of data in OpenCorporates continues to grow, he hopes its utility will too.

"People have been using these techniques for a long time, but they've rarely been doing this on companies," Taggart said of social network analysis. "If you look at the work that's been done on corporate networks you'll actually find its very limited. And the reason it's limited is the data doesn't exist in one source."