The Data Economy
The booming of the internet and tech devices has transformed data into big data — the lifeblood of the digital world — alongside the rising of privacy, security, and ownership concerns
The internet users and internet usage both grow significantly over time, the data stored, transferred, and created, as a result, is enormous. It is estimated that there are about 5 billion internet users worldwide in 2021 accounting for more than 60% of the world population, a fivefold increase compared to 2005. Accordingly, there are nearly 10,000 tweets posted, about 98,000 Google searches performed, and approximately 990,000 non-spam emails sent every second as recorded in internet live stats on December 26th, 2021. All those numbers only represent a small part of the economy of data.
The early days — data is the new currency
There is nothing as a free lunch so if you use a tool or platform for free, there is a high chance that you’re paying with your data. In the late ’90s, legendary internet companies like Amazon and Google were born, and they forever change our daily lives by triggering the transformation of turning plain numbers into gold mining. Tech giants including Amazon, Facebook, Google, TikTok, or even banking service providers all monetize mainly by providing free-of-charge basic services for users in exchange for people’s demographic data as well as psychological and behavioral insights, which will help their companies to leverage the power and thus sell advertising services and packages to other brands and companies. In other words, internet companies are centralized hubs of user data that can be harvested for diverse research and marketing activities while customers pay for the services with data as the medium of exchange. A similar idea was addressed in Deloitte’s 2013 Issue: “Currency is how we create and exchange economic value across geography and through time. It is anything that can serve as a medium of exchange, something that can be “cashed out” for goods and services, or used to pay debt or to store value for future use. Data has each of these essential characteristics.” The endless power of data has been unveiled since then.
The importance of data
The current Fourth Industrial Revolution builds upon and further accelerates the digitalization which is triggered in Industry 3.0 with deep tech such as IoT, robotic, cognitive computing, or blockchain. And the core component for many of which is data, especially big data. Aside from human, computer in general, AI/ML, in particular, utilizes data to become smarter throughout time based on an infinite loop of learning and prediction, helping almost all industries to make better decisions from the bottom up:
- In agriculture, data enhance farmers efficiency by enabling them to monitor each plot of land and determine the precise inputs needed for their crops to thrive;
- Fintech players such as LendUp are able to make better loan decisions by examining users’ repayment history and how it correlates with various aspects of users’ profiles and behavior;
- Within autonomous vehicles like Waymo’s, data analysis forms the foundation for real-time traffic control then prediction and fleet operations;
- In health science, data helps to speed up the R&D of medicine or allow decision-makers to better allocate the limited resources of healthcare workers;
- For national security, a state-of-the-art use case can be the UK’s using big data to develop counterterrorism practices in terrorist and roots of radicalization identification.
At a smaller scale, related to the data monetarization practices of the internet company, the more data one owns the more accurate its user researches, portrait, and understanding are; from that, companies are able to target the right people with the right message, offering, or method in real-time. However, a harmful case can be traced back to the Cambridge Analytica and Facebook scandal in 2018 where the former sold leaked psychological profiles to political parties so the campaign runners know how to deliver influential messages to alter people’s behavior and thinking regarding the election. Within one organization, not only sales and marketing but other functions and departments like human resources, operations, public relations also rely on data to improve internal performance and relationship with stakeholders. In a nutshell, data is valuable and machine-readable information which can be used to solve problems for individuals, enterprises, societies, and the planet as a whole.
“When we have all data online it will be great for humanity. It is a prerequisite to solving many problems that humankind faces.” — Robert Cailliau
The transition from data to big data
In the past, the question that internet companies want to answer is how to acquire users' information at a scale; but the problem they want to solve now is how to maximize the vast amount of data they can gather. In McKinsey’s article, American Express’ Chief Risk Officer stated that they ‘have a lot of data’ and might not use them all while AT&T’s Senior VP confirmed that they have ‘a rich wealth of data’ and need to build the right team to work with those data. Historically speaking, it was around 2005 that people began to realize how much data users generated through online platforms and services, Hadoop was developed, and NoSQL began to gain popularity; then in 2007, the term big data — referring to massive complex data sets from multiple sources — is introduced to the masses in a Wired article (ref: Oracle, Builtin). Between 2013 and 2020 alone, Deloitte estimated that the global volume of digital data is expected to multiply 40 times or more. Contributing to this growth is tech hardware; digital, always-on, and IoT devices escalate the amount of newly created and uploaded data at an unprecedented pace. Despite the chip shortage and COVID-19, IoT Analytics expects the global number of connected IoT devices to be 12.3 billion active endpoints in 2021 then become 27 billion IoT connections in 2025. This evolution is equipped with the exponentially rising demand for data experts and data solutions.
Back in 2012, Harvard Business Review published an article titled: “Data Scientist: The Sexiest Job of the 21st Century” aligning with the projection of the U.S. Bureau of Labor Statistics that data scientists and related occupations are among the fastest-growing occupations which might increase more than 31% between 2020 and 2030. Nowadays, it is reasonable to say that many tech companies are actually data companies using technology to harness and convert those data into profitable practices. A handful of names in the top 100 largest companies by market cap or Fortune 500 Global offer data-based platforms or services in their core business such as Alphabet, SAP, Meta, Amazon, Accenture, Alibaba, Oracle, JD.com, Tencent. Similarly, the list of recent hottest US IPOs or most valuable startups of 2021 includes Snowflake, Confluent, Qualtrics, ByteDance, Plaid, and Databricks to name a few.
Blockchain paving a new way
Since the booming of the internet, data privacy and security have consistently been a hot-button issue; Mary Meegan even addresses it as “one of the defining social and cultural issues of our era” in a 2019 Forbes article. Also, there are critics regarding the imbalance in power between individuals and corporates over data usage and collection, which Meegan implied as “a multi-billion dollar war chest of information to use against [users]” or Barratt called it a “one-sided trade” with the major benefit directed to enterprises rather than individuals.
Positively, there seems to be a possible approach to tackle this problem with the rise of blockchain technology in recent years. A study conducted by MIT Media Lab and Tel-Aviv University scholars in 2015 concluded that combining a blockchain with an off-blockchain storage solution had enabled users to be the owners of their data without compromising security or limiting companies’ and authorities’ ability to provide personalized services. Furthermore, in 2020, a group of scholars from the University of Saskatchewan’s MADMUC Lab successfully conducted an experiment of their new blockchain-based platform for sharing user profile data that allows users to retain control of the sharing and earn rewards. However, from the law perspective, Thomson Reuters’ legal research acknowledges that some blockchain technology features (ex: using encryption and verifying data integrity) can help mitigate or cater to privacy concerns but its distributed peer-to-peer network architecture is not fully integrated with GDPR’s and CCPA’s traditional notion of centralized controller-based data processing yet. Broadly, Accenture’s research states that blockchain has the potential to give us greater control over our healthcare and well-being, provide greater insight into the origins and quality of the product we consume, fasten financial transactions while being simultaneously more transparent and private, and help business to operate more efficiently with less risk; however, Accenture also points out there are vulnerabilities in blockchain applications and advanced security needs to be embedded in every blockchain technology stack. In short, blockchain technology is promising yet far from perfect and has a lot of room for improvement or being compliance with the legislation.
Owning and securing your own data
In the meantime, instead of just patiently waiting for a completed infrastructure or solution, individual users like you and me can actively avoid having our data exploited to some certain extent. For Apple customers, since iOS 14.5, we have been able to see more information of data privacy on the App Store and opt out of being tracked across apps and websites owned by other companies. Then in iOS 15, Apple has leveraged the privacy protections to Mail, individual app privacy control, Siri’s audio recording, iCloud+, Photos limited library access, and secure paste. For other internet activities, there are more private and paid options we can consider such as Neeva or DuckDuckGo instead of Google, ProtonMail instead of Gmail, LBRY instead of Youtube, or Cyrus for end-point personal security, Reklaim for data control and monetization. On blockchain, many projects are being built to tackle these bottlenecks including Streamr, DATA, Cere, or Ceramic among others.
I believe that the transformation is underway due to the shift in consumer acknowledgment and behaviors as well as the rising adoption of blockchain. My vision for the future lies in transparency, enhanced security and privacy, ethical data monetization, and fair ownership of data. To be specific:
- Paid and private alternatives becoming more popular: the rising of incumbent challengers will lead to a more distributed market share of the internet, shrinking the power concentration throughout time.
- Giant internet companies, as a result, might need to adjust their operations to retain users and explore new revenue streams, potentially through freemium models, sharing and distributing revenues with users, partnering with web3 players.
- Leveraging users’ data ownership: individuals will not passively rely on major companies’ services but rather actively look for options to secure and monetize their own data with endpoint, D2C data security and digital identity exchange where users are rewarded for completed profiles and voluntarily participant in marketing activities.
- Newly formed distributed data infrastructure helps to secure user privacy, triggers a new form of identity management and verification, allows decentralized data storage and server hosting, and enables users to actively monetize their own data while retaining their privacy and providing on-chain organizations and enterprises the access to data at scale. And the legal system would also amend its system to be compatible with blockchain technology.
Author’s Notes: Things are happening at a faster pace than expected. I finalized this article on January 2nd; and as of January 20th, Facebook and Instagtam are reportedly planning to let users create and sell NFT and Twitter is rolling out verified NFT avatar while the European Parliament has backed major limits on behavioral advertising
The bottom line
Data has always been an omnipresent part of economics and science; organizations consider it as an asset or competitive advantage. But technology has brought it to the next level — the lifeblood of the digital world. Now, data should no longer be only an enterprises’ asset but our personal asset which we should have the right over its usage and distribution and thus be compensated accordingly. The ability for people to own and control their data should be considered a civil right and a priority in the social infrastructure of the future.
“I challenge today’s data monarchs and the next generation of leaders to put their energies into data and AI that serve humanity first, instead of designing platforms bent on controlling humanity with money as the primary goal.” — will.i.am per The Economist