How platforms a la Google organize a huge market failure in a model using our privacy as a currency
Every day, people give away their data to just a few shareholders using corporate giants as wealth managers. These data funds, such as Google or Facebook, then spin off AI-powered applications, that in turn become privately owned assets. As productive resources, data, AI and their byproducts are about to replace most jobs of the working class, even those of relatively senior executives. Many predict that AI-correlated jobs will only compensate for a tiny bit of those redundancies. This issue of “jobless growth” is a core characteristic of our transition into industry 4.0, and has pushed even Bill Gates to suggest that a tax on AI should be an option.
Those “data-driven” assets are being built with privacy-invasive systems collecting thousands of data points on billions of people. Ironically, people willingly feed these systems because there is no feedback on the actual value of data. How can you lose something if it has no value? Giving data for free has become an unquestioned doctrine justifying itself by the provision of cheap services in return. But is it really cheap or free? There is little debate about a rationale that disregards not only fundamental individual rights but also ignores compounded value of data across generations and the long-term effects of such a model on our economies and societies.
Are the Google, Amazon, Facebook or Apple (GAFA) of this world currently executing the biggest heist in recent history?
For a free market to be “efficient” and “free”, concepts that are supposed to underpin our liberal economic policies, it is necessary that goods be valued. However individuals never know the value of their own data, and the GAFAs carefully preserve this information asymmetry. This ensures users keep on providing their assets for free without questioning. The GAFAs then leverage this situation into a huge market failure, aligning with a long-term predatory strategy.
They prize data as a substitute for currency because they know data will translate into unprecedented advantages in most areas of economic competition.
In the absence of an alternative, consumers today opt into “Terms & Conditions” that they don’t understand, paving the way for abuses down the road. Because those services are offered for free, paying alternatives die or never really emerge. Once large enough, free platforms fueled by our data change the way people interact and organise their daily life. They are becoming so systemically entangled in our economic and social tissues that they become totally mandatory to have a normal social life.
Freedom is the right to say no and still have a decent life.
Moving forward, concentration of data ownership will increase the speed of value hyper concentration, and run the risk of killing healthy competition mechanisms in unprecedented ways. Should we not agree today to treat personal data as a form of universal resource principally owned by individuals, will there be any realistic wealth redistribution mechanism in our future economies? How can we keep wealth moving around when the raw material for innovation and new wealth creation, our personal data, is all in the hands of a few data monopolists? Without alternative data ownership models, capitalism may start freezing, failing in its role of making wealth a dynamic resource.
Can we save capitalism?
This is a painful path for humankind. Power may ultimately be so concentrated that barriers to challenge this position will become quasi infinite on both political and competitive fronts. Without reciprocity between a handful of equity owners and those straggling from the ancient working class, what will happens to those billions of redundant, useless people? Should we terminate them, use them as biomass or should we send them into VR Utopia forever? Should we find a kinder path?
What do you think?
Jérôme Groetenbriel is a former consultant and global business developer. He co-founded PersonalData.IO and is an MBA graduate of IMD Business School in Switzerland.
PersonalData.IO is a technology startup developing a fair value creation model for personal data on the internet, centered around the individuals.