Politech has a good article from Harvard Law professor Jonathan Zittrain about why proposals for data retention are bad ideas. I've already said that forcing internet providers to retain more data is bad because it simply makes people have more data instead of better data (and often hides the important data). Zittrain argues that "supply creates demand" as well. Basically, the fact that there would be this data store with so much information will be too tempting for people not to use. Trying to track down a deadbeat dad? Why not check the data store to see if he downloaded some illegal music and get him on that? It suddenly becomes too tempting to come up with a reason for almost anyone or anything to search through this supposedly "private" data store of all internet traffic.
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