Data Is the New Gas
Every step we take leaves a digital footprint: when we google the meaning of a new meme, buy coffee at Starbucks, listen to music on Apple Music, like a neighbor’s photo, click a viral title, watch a new episode of “Game of Thrones.”
And the more gadgets we have, the more data is collected about us. Companies are trying to get to know us better in order to sell us more goods and services. Sometimes they know more about us than we know about ourselves.
Jack Ma, the creator of Alibaba, once said that data is the new oil. Hence, the phrase we now hear everywhere, and some even use its alternative version: “data is the new gas.”
Today, we’ll try to figure out whether this is really the case or not.
Your guide to data protection is here.
What data are we talking about?
Not about all data. Big Data is a huge array of heterogeneous information that cannot be processed manually or by ordinary programs such as MS Excel. For example, the annual sales statistics of a single store is ordinary data. But the information about which products this year were purchased by customers of all supermarkets in the country, at what prices, with what discounts, and what reviews they left about it in social networks – that is Big Data. To collect, process, and use it, you need special tools and technologies.
Until recently, companies managed traditional types of assets – property, money, intellectual property. However, the digital age has brought a new type of asset: data. This is the raw material from which forecasts, insights, and very big money are made.
According to The Economist, in the 21st century data will play the same role as oil and gas in the 20th century. That is, it will become the main factor of growth and change. Online services run on data, like cars running on gasoline and factories running on gas or oil.
The article about personal information protection is here.
What happens with our data?
At first, internet companies used the collected data to target ads. However, with the rise of artificial intelligence technologies, it became clear that data can be turned into AI services that will become a new source of profit.
Numerous AI startups are creating smart services for all occasions: from the analysis of X-ray images to precision farming (they tell the farmer which areas of the field to spray herbicides on). Moreover, the thresholds for entering the AI market are decreasing:
- Computing power is growing.
- Sensors and hardware are getting cheaper.
- Powerful machine learning tools (e.g. TensorFlow from Google, DMTK from Microsoft) are open to any programmer.
The main competitive advantage in the artificial intelligence market is the data itself. And, unlike software, corporations are not in a hurry to share it. IBM analysts characterize the state of the data market as an oligopoly, where large players control most of the market. Only 20% of the data is on the internet; the remaining 80% is stored in the bowels of companies and organizations. That’s why David Kenny, manager of IBM’s Watson AI business service, considers data to be the currency of the future.
The magic of data helps to improve the product and attract more users, which will in turn generate even more data that will attract even more users. Data is the fuel of the modern advertising market. The world’s IT giants are rushing with their free internet to Third World countries to make money on the data of the offline population. However, at conferences, it is usually called eliminating digital inequality and the desire to make the world a better place.
The leadership of Google, Facebook, Microsoft, and Amazon in artificial intelligence is large because they own the huge amounts of data needed to train smart algorithms. If you also want to make money on AI, you will either have to collect or buy data, which will only become more expensive as AI develops.
What’s wrong with Google? Read more here.
In the data economy, it is no longer so crucial whether an IT project pays off. When there is a large audience, and data collection is established, monetization of the data is a lucrative business. In this light, the $68 billion valuations of the loss-making Uber, which many consider a bubble, no longer seems completely absurd. The most expensive startup in the world owns the largest array of data on the personal transportation market (more than 5 billion trips).
And consider Tesla – not just a fashionable electric car, but a database of driving with a total distance of more than two billion km. It gives the company a head start in creating self-driving technology. The developer of self-driving cars, Waymo (owned by Alphabet), has an order of magnitude less data so far.
The most valuable asset of the bankrupt gambling company Caesars Entertainment was data on 45 million loyalty program members. The value of this data was estimated at $1 billion.
Corporations can afford to buy companies that own the user base they need. This explains many of the largest transactions of recent years. Facebook bought Instagram and WhatsApp, Microsoft bought LinkedIn, etc. This is of concern to the anti-monopoly authorities. In the agreement on the takeover of WhatsApp, Facebook promised not to combine the data of the two companies, but last year it began to do so. For this, the European Commission fined the social network $122 million.
The data economy requires new approaches from regulators. They will have to be no less inventive than those they regulate. To prevent the dictate of monopolies, the authorities are obliged to share data with new projects. For example, in Germany, insurers must share statistics on insurance cases with small firms.
According to the GDPR, internet services are required to obtain explicit consent from users on how their data will be used and allow them to export their data for transfer to other companies.
To compete with the giants, smaller players can gather data cooperatives. For example, the largest German media combined big data from thousands of their sites on the common Emetriq platform to reduce their dependence on Google and Facebook, which control 85% of the global advertising market.
It is much more challenging to trade data than oil or gas legally. Each dataset is unique; such an asset is difficult to evaluate. There is no legal framework yet; each contract is written from scratch and contains dozens of pages about how the buyer will use and protect the data.
There are interesting examples of barter: the UK National Health Service provided DeepMind (an AI division of Alphabet) with access to anonymized data of 1.6 million patients, so that smart algorithms could help doctors treat patients with kidney failure.
Return our data
What does all this mean for users? The data-driven approach leads to the fact that IT products are becoming more convenient, and the content is becoming more interesting. People are too used to free online services and do not realize at whose expense they really come. So, another popular aphorism was born: “If you’re not paying for the product, you are the product.”
There are many battles ahead of us over who should own the data and earn money. De facto, the data is owned and managed by the platforms that collect it, and as a result the data can be copied and sold many times. This carries the risk of leaks and misuse, which can cause harm to the user.
The potential for conflict is that people do not understand what data is being collected about them and how it will be used. They consent to unreadable user agreements drawn up in the interests of business and allow the transfer of data to a third party. In the future, our data may testify against us.
Let’s be realistic: most people will never leave social networks and will not stop using shareware services. But strict restrictions on the use of data will lock this incredibly valuable asset in private data centers and kill hundreds of future intelligent services that could really make the world a better place. And keeping our data is not free for companies. In order to store the growing digital wealth, they have to buy new servers and pay for electricity.
If you decide to leave the internet, you can read the article about how to do it here.
The Europeans propose to create personal data exchanges that will allow users to monetize their digital DNA. This approach will give ordinary people back control over the collection and use of information about them. A whole niche of startups has emerged in the West that help people manage their data: CitizenMe, Datacoup, Mass Network, Hub of All Things, Cozy, Digi.me and others. And the Taiwanese startup Bitmark does this with the help of blockchain.
Data today is the fuel of the digital economy. We are already used to many free services and applications that exist only at the expense of the data that we feed them daily. The data market is a multibillion-dollar market. Therefore, it is essential to protect your data from outside interference.
Today, the best way to avoid outside influence on your data is to use the anonymous, decentralized Utopia P2P ecosystem. It is devoid of censorship, online surveillance, or data collection. Furthermore, all registration is anonymous: no one knows any user’s real identity.
Utopia is equipped with all the necessary tools for messaging, browsing, chatting, making online payments, and even mining.
A 30-minute ecosystem test will help you evaluate all the advantages of a private and closed internet.
You can compare Utopia with other popular services here.