Big data has become an important resource not only for commerce but also for governance. Governance-by-data seeks to take advantage of the bulk of data collected by private firms to make law enforcement more efficient. It can take many forms, including setting enforcement priorities, affecting methodsof proof, and evenchanging the content of legal norms. For instance, car manufacturers can use real-time data on the driving habits of drivers to learn how their cars respond to different driving patterns. If shared with the government, the same data can be used to enforce speed limits or even to craft personalized speed limits for each driver.

The sharing of data for the purpose of law enforcement raises obvious concerns for civil liberties. Indeed, over the past two decades, scholars have focused on the risks arising from such data sharingforprivacy and freedom. So far, however, the literature has generally overlooked the implications of such dual use of data for data marketsand data-driven innovation.

In this Essay, we argue that governance-by-data may create chilling effects that could distort data collection and data-driven innovation. We challenge the assumptions that incentives to collect data are a given and that firms will continue to collect data notwithstanding governmental access to such data. We show that, in some instances, an inverse relationship exists between incentives for collecting data and sharing it for the purpose of governance. Moreover, the incentives of data subjects toallow the collection of data by private entities might also change, thereby potentially affecting the efficiency of data-driven markets and, subsequently, data-driven innovation. As a result, data markets might not provide sufficient and adequate data to support digital governance. This, in turn, might significantly affect welfare.