Data as the new oil?

I was alerted to an interesting write up on “fungible data” which tried to explain whether data is the oil or sunlight. Having too much data leads to “concentration of power” where firms argue that it is “secure”. In typical Economist fashion, it raises dichotomies than answering the question straight away.

Data should be understood in context- healthcare data generated by say, hospitals are valuable to insurance companies, but it doesn’t scale up well. Insurance companies can create “risk pools”, but it doesn’t project to population-level data. Likewise, advertisers track every move on the webpages to “profile” individuals (and there has been a generous push back from the browsers as well). Yet, digital targeting hasn’t improved to the extent that reflects from the pitch decks of executives. Similarly, enterprises may not realise the importance of taking actionable information on data they generate- for example, how consumers interact with various services that firms offer.

If we fail to understand the context, then why they hullabaloo? There have been clarion calls for “democratising data” but how many individuals understand the value of their data anyway? Data at scale is only valuable in terms of pennies (in dollar-denominated rates).

I think it is crucial because businesses then run “algorithms” to glean insights. How well those insights translate into real future earnings and returns on investment? That is an open question which needs to be debated.

For example, the much-maligned WhatsApp (a chat application), makes money off from your contact lists. Facebook makes shadow profiles of nearly everyone on the planet. It feeds the critical ingredient- “people you may know” and is erringly accurate. It utilises several signals- contact list, distance proximity, web browsing activity, data from phone calls and nearly every aspect of your digital footprint to generate its secret sauce. Data, when used in this context, is useful for a social media company that promises to connect everyone on this planet (and in turn drive up its valuations). Networking (active or passive) has been turned into a digital currency. If you run an ad network, it is only to scale up the behavioural psychology and mass manipulation at scale (which underpins its potential abuse of power). As it remains walled off without an active auditing, it remains the hotbed of disinformation which only acts as an echo chamber for confirmation biases. People seek value in what they assume they know to gain validation from others who hold similar opinions.

Data concentration is usurious for democracies as well. As corporations grow in influence with excessive lobbying power at their disposal, the conceptual democracy becomes a joke. Governments have their constitutional obligation for the greater common good and as such, this concentration of data would only lead to more strife.

I personally don’t subscribe to fanciful libertarian notional concept of “open data” because individuals alone or collectively are unaware of the value. I am more in favour of holding it as a public good, under the charge of elected representatives answerable to the public at any given point. It is middle of the road approach, and like healthcare, the benefits should flow to all.