by Andrew White | April 2, 2019 | Comments Off on The War on Data Continues
Two articles I spied in the last few days really nailed for me the “war on data”. By “war” I mean to say the onslaught of public policy being mooted that play the efficiencies of the market off against so called benefits of the individual. Even as I write this down I am reminded me of my conversation with my colleague, Saul Judah, just the other week where he reminded me of one of my most re-read and ear-marked books, the Sovereign Individual from 1997.
Here are the two articles I refer to:
- Europe Takes on the Tech Giants (leader for) and The Power of Privacy, The Economist, March 23-29th ,2019
- Singapore Bill Hits False Online Reports, Wall Street Journal, April 2nd,2019
In the first, the leader article, the key paragraph that got me thinking was this:
“A German proposal says that a dominant form must share bulk, anonymized data either competitors, so that the economy can function properly instead of being ruled by a few data-hoarding giants. (For example, all transport firms should have access to Uber’s information about traffic patterns.) Germany has changed its laws to stop tech giants buying up scores of startups that might one day pose a threat.”
This is quite a wake-up call for me. One of the very reasons why business grow successful is that they get good at exploiting data for better business outcomes. The better the firm, presumably the larger they become. Firms like Google, Amazon, Facebook and a few more are exploiting efficiencies of scale in data collection, data management, and market understanding. Perhaps they go too far with that insight, and they influence the market too much. Modesty forbids me to enter the political dialog here, so let’s just focus on the market side of the conversation.
First, if firms are said to be dominant, are they not a monopoly? Or do we mean “near-monopoly” with the term, “dominant”? Don’t we have enough public policy to prevent monopolies from forming? Second, if these firms are not monopolies, might we assume that the very reason they gained such power is through data accumulation? If such firms now have to give that data away, how can they preserve their competitive edge?
Will the argument shift from “owning the data” to “owning the algorithm”? Didn’t we only just conclude that data was more important than the algorithm? If data remains the more valuable of the two, why will giants keep farming the data only to have to give it away? The whole point is that data is the secret to success – the very reason why such platforms emerge…
The second article leads to another angle. Here is a quote from the article:
“The legislation requires social-media companies to circulate corrections if content posted on their platforms is deemed by the government to be false and able to harm the public interest in Singapore. In some cases this would be required even if the offending content didn’t originally appear on their platforms, and could apply to traditional media as well.”
I started thinking about the unintended consequences. While laudable – no one likes fake news though after all, we have had fake news for millions of years (Chameleons are experts at it) – won’t this lead to a huge increase in overhead and management to cater to all the possible complaints, counter-complaints, and complaints about complaints? How will small firms, startups looking to compete with social-media organizations, be able to accommodate the cost of this level of response?
Won’t the unintended consequence here be the suppression of small, lean, nimble startups, and competition overall? Perhaps the regulation will only apply to firms of a certain size. Or maybe it will only apply to firms of a certain jurisdiction. I really don’t know. But it does seem quite onerous.
So taken together the articles suggest a gradual, even rampant, increase in interest in those firms that control most of the data (for a market) from those that do not, in the interest of those that create the data in the first place. All because data has become such an important and strategic weapon. In fact if we use the term “data” liberally, it is the only weapon that matters. But how will firms behave going forward?
Multi-sided platforms were called out as superior to lop-sided platforms a few years ago, but that was determined on the premise that data flows from either side. If data on such platforms were fake, the costs to comply will inhibit small-sided platforms from getting going. If you are a large multi-sided platform with lots of data, you might have to share some or all of it to others. All told the onslaught of regulation on data and data uses continues apace. You cannot take your eyes off of the space.
Even more reason to keep alert and explain to the grand-kids why we can’t retire, yet. This stuff is just too darn interesting to ignore.
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