What is the personal data market and who has access to it?

The personal data market is worth billions of euros and growing each year, but individuals have no means to participate in the market for their own data.

While personal data is in theory perfectly distributed across individuals, the value created from it is captured by a relatively small number of companies at an impressive scale. In fact, the world’s biggest technology and banking companies derive substantial value from the sourcing and productisation of personal data — enabled by a thriving shadow economy of data brokers who collect, pool, and monetise detailed personal data profiles on individuals [1].

In this article I provide a brief introduction to the data market and its main actors. Realising that data is valuable is the first step towards taking ownership of our personal data treasures.

Everything is data and data is everywhere

Most people think of data way too narrowly and in terms of their touch points with data in their work or personal lives. But it is important to conceptualise data more broadly. One can think of data as the abstraction of the world into representational forms, and therefore the very building blocks from which information and knowledge are created [2].

This definition is very broad, but it helps to grasp some of the economic potential of data. Knowledge is power. Data as the raw material to generate knowledge can be extremely valuable for private and public organisations across every sector and geography. No one can afford not to harness data and whoever has the best data gets an edge over the competition. This conceptualisation explains why some of the most valuable enterprises of our times are the ones that have managed to build quasi data monopolies. It also shows the economic potential of trading data directly in what we call the data market.

What is the data market and how big is it?

There is a huge market for data already and it is growing exponentially. The European Commission estimates that only in Europe the market for direct transactions of data products and data services is worth €100 billion [3]! This is staggering by all standards. The notion of direct transactions means that this estimate does not even include Google or Facebook selling targeted ads based on user data (which is a more indirect form of data monetisation). So how much of this is personal data? Although there are no exact numbers, we can expect it to be a significant share of the data market.

Who trades our personal data?

You might ask “wait, I’ve never sold my personal data?” — so who does in your place? Ironically, we as individuals have no seat at the table when it comes to trading our own data (yet). Instead, personal data is collected and monetised by companies that we directly interact with (first-party data) and by intermediaries that buy our data from these companies (third-party data).

Such intermediaries are also called data brokers. They buy data from all kinds of sources that have collected personal data, such as retailers, websites and apps, payment providers, banks, etc., then consolidate this data, and finally sell it for a profit. Data buyers can be corporations, marketing agencies, hedge funds, or public organisation, you name it. You might have never heard about data brokers but chances are that they know you pretty well. Some data brokers collect thousands of data points on hundreds of millions of individuals containing extremely sensitive and private information [1].

The reality is that whenever we interact with a third-party in the online and offline world, we leave data traces behind. This data is often transacted in the data market, without explicit awareness nor compensation for individuals.

Change is coming

Regulators all over the world are now coming to terms with the importance of creating fair data markets. European regulators are paving the way for self-sovereign data ownership and data portability in the General Data Protection Regulation (GDPR), open banking data in the Revised Payment Services Directive (PSD2), and open access to public datasets in the Data Governance Act [4,5,6]. The latter explicitly mentions the need to establish new kinds of personal data intermediaries to represent individuals in the data economy and create an open market for personal data.

Where can you start?

These data intermediaries can pool and monetise data on behalf of individuals and redistribute profits back to them. To be sustainable and ethical, this must happen in a secure, controlled, and privacy-preserving way. One such intermediary that allows you to securely monetise your banking data is Unbanks. Check out their website for more information on how to start profiting from your own data.

Sources

[1] Crain, M. (2018). The limits of transparency: Data brokers and commodification. New Media & Society, 20(1), 88–104. https://doi.org/10.1177/1461444816657096

[2] Kitchin, R. (2014). The data revolution: Big data, open data, data infrastructures & their consequences—Sage research methods. Sage Publications Ltd.

[3] European Commission (2017). European Data Market SMART 2013/0063 Final Report. https://ec.europa.eu/newsroom/dae/document.cfm?doc_id=44400

[4] Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 (General Data Protection Regulation). European Parliament, Council of the European Union. https://eur-lex.europa.eu/eli/reg/2016/679/oj/eng

[5] Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market. European Parliament, Council of the European Union. http://data.europa.eu/eli/dir/2015/2366/oj

[6] COM/2020/767. Proposal for a Regulation of the European Parliament and of the Council on European data governance (Data Governance Act). European Parliament, Council of the European Union. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020PC0767