New data economy

Key takeaways:

  • Data economy is growing quickly

  • Siloed data limits competition and prevents best use of data

  • Wealth and insights from data are not fairly distributed

  • Data sovereignty of people and nations is under question

  • Data leaks and data misuse are abundant

  • Privacy is becoming a selling point

  • Fair data economy is the answer

  • Swarm tackles all these issues

In recent years, data has become a major asset for enterprises and even an acquisition target, especially personal data. The large data hoarding companies have become very powerful as they monopolize the data and hold control over what happens to it and how it can be used (“Who Will Benefit Most from the Data Economy?,” 2020). A lot of potential for knowledge and insights is locked in the data, siloed and inaccessible or not easily accessible. That not only stimmies competition between companies, but also allows for certain nations to emerge as leaders in the emerging data economy based on services, with others being left behind (“Who Will Benefit Most from the Data Economy?,” 2020). Data sovereignty of nations has come under questions, with legislation demanding keeping the data within national borders (“Governments Are Erecting Borders for Data,” 2020).

The asymmetric distribution of wealth generated by the current data economy has been put forward as a major humanitarian issue (“Who Will Benefit Most from the Data Economy?,” 2020). Better data will lead to better efficiency and larger profits. The larger a company's dataset, the more it can learn from it, attract more users based on better insights and a circle is in motion, to make and support large data hoarding companies. A large company controlling data could also monopolize a particular market, setting prices for the data and keeping them artificially low.

Monopoly on data has also allowed multinational companies to make large profits, keeping them but also the data to themselves. This does not allow the data to fulfil any more transformative role for the society.

Relatively crude measures exist for estimating the size of the data economy, yet for the USA, estimations are that it was between $1.4trn-2trn in 2019 (including software and intellectual property) (“A Deluge of Data Is Giving Rise to a New Economy,” 2020), while projection for the EU27 data economy by the European commision are at €829bln in 2025 (up from €301bln in 2018) (European Commission, 2020b).

It was only in the last years that data leaks and data misuse has taken the headlines in the media. Every person, unless living a totally isolated life, surely got a sense of the problem from massive media coverage (“List of Data Breaches,” 2020). And a lot of people could find their own name on some list of leaked data. On the other end, personal data was also sold and used to influence or even manipulate people (“Britain Moves to Rein in Data-Analytics,” n.d.; Murphy, 2019) - either to buy a product or to vote for some political party.

The global digital transformation forces even traditional companies to collect and process customer data in ever larger quantities either directly or indirectly to keep on top of the market and make investment decisions. Organizations ignoring the privacy risks and caught lacking in protection could spend more on the compliance costs than their compliant competition. The fines can be rather large, with the Equifax breach fine reaching in excess of 575$ mio (Swinhoe, 2020b), British Airways 230$ mio, etc. But perhaps even more damaging is the loss of business and trust on the side of the customers and investors (Swinhoe, 2020a).

The consequence of this is a bad popular opinion about the actors in the data economy - the companies handling the data, especially larger ones storing the data, and those doing analytics on it. Although individuals have different tolerance levels for the privacy they wish to keep, a general lack of trust in the data economy and handling of personal data is present (“A Lack of Trust in Data Giants May Wreck the Hopes for a Better Digital Future,” n.d.).

Privacy itself has become a selling point for some, advertising themselves as the solution (“Twitter and Microsoft Show Data Privacy Is Moving from Sticking Point to Selling Point,” 2019). Yet, the individuals still have no choice but to trust these organizations on this point, as no oversight is possible in practice.

An Artificial Intelligence (AI) arms race is unfolding, with most countries being left behind as "data colonies" (Harari, Y., 2020) and the USA and China the emerging superpowers. The EU whitepaper on artificial intelligence stresses trustworthiness as a crucial prerequisite for the uptake of artificial intelligence and puts Europe in the right light by recognizing its attachment to values and rule of law as well as its capacity to build relevant products (European Commission, 2020a).

Governments are increasingly filtering flows of data, using reasoning of protecting their citizens, sovereignty and national economy (“Governments Are Erecting Borders for Data,” 2020) and strive to keep data inside their borders. The flows of data have become the topic of the actions of the World Trade organization (European Commission, 2020a).

Whole countries could have problems if they miss out on the spoils of data economy emergence. At the United Nations Conference on Trade and Development the issue of countries becoming just exporters of raw data and payers of insight, has been pointed out (“Who Will Benefit Most from the Data Economy?,” 2020).

All this is counterproductive to making the data available for service providers and the development of a data economy that would benefit the individuals, society and organisations in the best way possible. Trust has to be regained in how personal data is handled for the economy to flourish. Legislation, such as the GDPR, attempts to do that to a degree, therefore we light GDPR related issues in the whitepaper. But trust can only be restored if appropriate, personalized levels of privacy can be achieved which is where technologies based on Swarm and other emerging decentralized technologies can come a long way.

Ideally, free flow of data would be possible, enabling a prosperous data economy, enhancing the quality of life for the people and distributing the proceeds fairly between the parties involved and preserving individual privacy. Some would call such a state the Fair data economy (Suokas, 2020). And although such a thing does not yet exist, it is within our reach and should be in our sights.

The problems on the way to achieving it are multifaceted - they are related to business, society, legal and technology. We will attempt to address them here to provide you with insight needed for your organisation to take further steps and how Swarm fits into the picture.

Do note that although we are mainly addressing personal data in the whitepaper, Swarm storage is also appropriate for other kinds of data and use cases. And although we are tackling GDPR related questions, similar questions arise in many jurisdictions, as GDPR is being used as an example legislation by many.

We are sure your organisation is among those wanting to take the step in the right direction and wanting to contribute to a fair data economy, not only for the society's benefit, but also take part in the data economy for the benefit of your stakeholders.

The companies that triumph in the fair data economy will be the leaders of tomorrow!