There’s a big data gold rush, but at what cost?
When a request for two coffees at a new delicatessen drew an offer to serve the cups for free, there was obviously a catch. By the time I had filled a form in with a name, e-mail address and time of visit, my data had been captured. A vista into the world of commercial intelligence was opened. I had exchanged information and enjoyed a milkbased infusion of caffeine.
The exercise in data mining is part of a larger gold rush. Last week I dropped in on a seminar on policing and big data in central London. The theme was predictive policing based on exploiting technology, something billed as the most important development in street-level crime prevention.
A sceptical audience asked if this blend of artificial intelligence, information harvesting, data mining and analytics was really a substitute for human endeavour.
It is the question of our age. Alphabet, the owner of Google and YouTube, describes its mission as organising the world’s information, making it universally accessible and useful.
Critics would caveat that holds true only up to a point. John Lanchester, the English journalist and author who wrote Whoops!: Why Everyone Owes Everyone and No One Can Pay, perhaps the best work on the global financial crisis, explored the success of Alphabet and fellow giants of the data age in a recent essay. His view was that firms with user numbers in billions have reached saturation point yet not completed the quest for dominance.
In daily life the effects of digital disruption permeates across society. Politicians used to think the phenomenon could be harnessed even as endeavours from newspapers to department stores were ravaged. Many earnest speeches featured managerial thoughts about such themes as diplomacy in a networked world. The digital beast has since feasted on Western politicians, allowing some to rise, others to fall and some to plod on in a zombie-like haze.
Having reordered the world, the task facing the disrupters, according to Lanchester’s study, is to multiply their operations and monetise the data flow. There are many fears the gatekeepers can’t be controlled as they exploit big data to entrench the revolution.
But the shift is also a moment of vulnerability. The monopolistic position of Alphabet, Facebook, Amazon, Apple, Alibaba, WeChat and the rest makes them giant targets as well as predators.
The Americans would say we have seen this rodeo before. The digital transformation is analogous to the oil revolution of the 20th century.
Listening to the policemen make their pleas for human endeavour, I thought of their counterparts a century ago. Would the car really be a substitute for a constable walking the streets? I’d bet there were warnings that there was too much to lose.
Data is packaged in bytes. Think of a megabyte as an equivalent of a 40-gallon barrel. With so few companies dominating the trade in barrels or bytes, it would be absurd to say transactions can’t be taxed.
As Teddy Roosevelt took on the cartel and broke up Standard Oil, so too could today’s monopolists be corralled.
When the larger operators multiply from within, the purpose is to shore up their position. Swallowing up small rivals allows them to exploit more information, not necessarily in new ways. Ensuring more actors lead the digital revolution would promote greater innovation, not less. Other critical battles litter the landscape. The arguments over privacy rights, well-rehearsed but incomplete, are just a starting point.
Perhaps the most telling struggle could revolve around monetising the technology.
The small Baltic nation Estonia likes to think of itself as a digital trailblazer. It has pioneered the concept of E-citizenship. For the equivalent of Dh440 anyone can set up an electronic persona that allows them to conduct commerce as an Estonian. One (American) holder recently told me of his trade in Bitcoin and how he uses a payments card set up through his Estonian citizenship to make purchases of up to Dh17,500 a month in shops drawing on his Bitcoin balances.
In other words, he had found a medium of exchange and engages in activity that makes Bitcoin a currency. Across the eurozone the rise of crypto-currencies feeds into a separate debate taking on a life of its own. Frustrations with the strictures of the German-dominated euro has led to suggestions that countries could issue electronic debts to parallel their conventional fiscal budgets. Silvio Berlusconi, the former Italian prime minister, recently suggested Italians could deal in a parallel currency. That brought a rebuke from the European Central Bank that there was only one legal currency in the eurozone.
China has already gone a step further by banning crypto-currency transactions. The move came after an official report warned such transactions were “disrupting the socioeconomic order and creating a greater risk”. Algorithms put a price on data but tell us nothing of the cost.
The digital revolution is analogous to the oil revolution of the 20th century