The Economist’s Leader this week is both fascination and excellent. It is called, The New Titans, and How to Tame Them. As you may surmise, the article concerns Amazon, Facebook and Google.
The article itself is written as a note from their imaginary (they surely have one or more, each) internal chief strategist. The note highlights the obvious connection between the market position and dominance these titans exhibit and the profits they may exact, and the implied possibility of abuse of market power. Even at that level the article and its findings are compelling. We are all at the potential mercy of such behemoths. But the article takes an additional tack. The ‘markets’ to which the titans are aligned are not the only, or even most, important aspect of potential control.
Yes, Amazon dominates US e-commerce (the article suggests it might be as much as 40%) but the firm has more pricing data than anyone else. Yes, Facebook has more personal data than anyone else, but it also has the largest ‘social graph’ that describes relationships between us all. The underlying point to which the article centers, and concludes, is that these firms dominate and because, or as a result, have more data about the markets they serve than anyone else. Thus the article is about data as a source of market power.
The end of the analysis concludes with a trade-off. The potential for regulation and how it may help limit the risk of market abuse is discussed. Perhaps firms maybe required firms to share data from their treasure troves with others. Perhaps consumers will be permitted to sell their data as it it where a real asset (we know it is); today we give it away freely all the time. Any change in how data is regulated, priced, or owned, will likely have significant implications for more than just these titans. The Economist concludes that something has to give.
Europe’s GDPR regulation is a current and pressing attempt to shift control of consumer data from business to the consumer who creates it. The US has nothing quite like GDPR, yet. China – I don’t know myself but I assume not, given its political organization. Should the US moot such a shift in data control, or ownership, the markets we know of today may very well get reordered. That’s the point of the article. The problem though may not end with the titans. It could well impact everything.