Why the “Data Economy” is Not (Yet) a Real Economy

The current so-called “data economy” is no more an “economy” than a “dairy products” economy or an “aerospace components” economy: it is simply another type of B2B service, misnamed and misunderstood.

Data-as-a-value-store is a necessary pre-condition for a viable data economy

Hence the reason why the data revolution hasn’t really happened yet. The potential is there: the data economy in the EU alone is estimated to have had a value of almost €300 billion in 2016 and is projected to more than double by 2020, reaching €739 billion [European Commission, source]. Globally, it is estimated that better access to data can help unlock at least $3–5 trillion in global economic value [McKinsey], which represents an increase of 2–5% of the gross world product. And yet, despite this, the EU acknowledges it has been “slow to embrace [the data economy’s] development” — underscoring what the true potential might be. So what is hindering the explosion of a true data economy? Despite Brussels decrying the “lack of trusted and secure platforms and privacy-aware analytics methods for secure sharing of personal data and proprietary/commercial/industrial data” these are only superficial factors.

The bottom line is that data is hard to trade and even harder to value: until these twin dimensions are somehow rationalised and reconciled, a true data economy will remain out of reach. Our radically-new technology, a DApp called DECENTR is designed to decentralise online data in the same way current blockchains decentralise digital trades, meaning the transfer of currency is indivisible at the point of exchange from information. This creates a paradigm whereby money-as-currency is eliminated in favour of data-as-currency, solving the problem of valuation and trading data by deployment and design. That’s the theory, anyway. To understand why DECENTR is not only a viable future for a “true” data economy, but possibly the only viable future, we need to first deep-dive into the circumstances that led us to build this tech.

The slow uptake of wider data sharing practices by public and private bodies is symptomatic of a more urgent, fundamental problem — one that is not being directly addressed by any private ICT or technology company, government body, legislation or directive. As a result, this slow uptake cannot be overcome by continuing to develop an ever-greater number of new platforms — no matter how novel or secure — if these platforms are not addressing the underlying cause of this problem. Current data exchange platforms, including open (such as social media platforms), open public (such as Gov.uk and similar EU initiatives amongst Member states that comply with Directive 2013/37/EU to make information available for re-use) and paid private/public (such as LexisNexis and Datastreamx) offer little more than datasets for public and commercial re-use: this is not a solution to a “data economy” per se.

It is a misnomer to call it such: a digitised service that offers the re-sale of marketing, statistical and other kinds of data, no matter how comprehensive and well-regulated, does not contain the elements of an “economy” in any real sense. What needs to be apprehended and addressed is that the exchanging of datasets — however widespread and accessible — will not lead to a true data economy in the absence of improved network effects. This is because network effects are critical in order to maximise the benefits of exchange and re-use and by doing so assign to data the value store capabilities necessary to repurpose it as a legitimate “currency” for a true Internet of Value (IoV).

This lack of network effects points directly to the fundamental problem — one that needs urgent redress if a true data economy is to ever become a reality: this fundamental problem is the non-integrated nature of the current internet itself. The lack of integration can be seen at every level of the internet, from the data-walling and other manipulative third-party practices of social media sites to lack of interoperability of transfer services and non-standardised Application Programming Interfaces (APIs); stumped, even the SEPA Instant Credit Transfer Scheme (SCT Inst) scheme has left this issue “open”. This ensures the current internet is not — and with current approaches can and never will be — able to support data sharing activities beyond simple access to and exchange of datasets.

And it gets worse: the number of platforms (including data marketplaces, etc) that continue to be built on the existing internet in an attempt to catalyse a safe, secure and immutable data economy is unwittingly accelerating the entropic degradation (and hence value) of the very data they are trying to harness. This is due to increasing fragmentation of the wider internet greatly worsening data sharing and analogous security and other problems. This means the re-use of potentially valuable data in conjunction with the digitisation of EU industry as part of a single digital market is severely hampered due to diminished network effects, whilst the continued development of Knowledge-Based Capital (KBC) as a valuable resource for SMEs and multinationals — especially in many OECD economies — is greatly restricted by the same limitations.

A true data economy: Increased network effects redouble the value of data

The fundamental problem with the implementation of safe, secure and immutable networked data sharing is that while the exchange of digital assets online in the form of blockchain solutions is decentralised (and hence democratic) the exchange of data and information is hyper centralised (and hence undemocratic). Consequently, data is routinely exploited by the large communications platforms, in conjunction with data firms, who are free to restrict, misdirect, misrepresent and otherwise misuse data as they see fit through data sharing practices that are invasive or otherwise non-beneficial for users; the large platforms are well known for employing these practices in order to pursue their profit-driven, political, ideological and other agendas.

In 2016, WhatsApp announced that it would be sharing data with Facebook in order to improve Facebook ads and user experience. In 2017, it was discovered that the email unsubscribe service Unroll.me was selling aggregate data about users’ Lyft receipts to Uber. In 2018, investigative reporting revealed that the data firm Cambridge Analytica (whose methods are widely considered to have been a contributing factor to Donald Trump’s presidential win) made use of data collected from Facebook under false pretenses. This is not even an exhaustive list of controversies that fall under an umbrella that seems to normalise these practices: internet platform users finding out that their data is being used in ways that they do not expect or intend is no longer considered the exception.

Ostensibly “normalising” these practices discourages public and private bodies, as well as private users, to participate in data sharing activities, meaning — as noted by the EU — “the creation of a data market and data economy [is hampered] by limiting data sharing, mostly to open data”. Moreover, regardless of the number of directives and legislation introduced to promote good data practices while fining those who do not comply, it is very difficult and costly for all parties concerned to enforce this legislation in the absence of any sort of community-led democratic governance.

These and other analogous concerns ensure current approaches and technology will continue to prevent the internet from reaching its full potential as a data sharing tool: it has in effect been hijacked by the vested interests of the large tech companies and data firms, both open and paid, in order to support their business models that are based on the trade of data, which is used as a commodity between big tech companies; names, email addresses and even sexual orientations are all valuable data points used to send users targeted ads or marketing messages. As a result, the current internet lacks the fundamental framework (or socioeconomic will) to adapt or evolve into a truly fair and egalitarian data economy — one that would promote the creation of the type of true Internet of Value (IoV) that DECENTR, proposes — an IoV being a necessary precondition to underpin a data market and data economy. This is because an effective data economy fundamentally needs to be supported by an environment in which data sharing is encouraged through enhanced security coupled with effective, user-centric network effects. DECENTR is creating this environment through decentralisation of the current internet. By promoting community-led democratic governance, and hence democratically aligned communication and data sharing practices, DECENTR is set to usher in a true data economy — one that ensures all online data is re-usable and exchangeable as part of a networked economy that assigns this data payable and tradable value.

Feel free to get in touch with me for more DECENTR Project details at Decentrproject@gmail.com