ICYMI: New Analysis Highlights Misconception In Calls For Mandatory Data Sharing
American Action Forum’s Will Rinehart writes about the potential misconception of arguments for required data portability – namely that data is not the same as processed data.
According to Rinehart, “data is ubiquitous, but what isn’t widespread is understanding what kind of information you might have and doing something useful with it.”
Leading tech services already provide data portability on a voluntary basis, reducing switching costs for consumers, but a regulatory requirement based on the false notion that data is a significant barrier to entry is misguided.
Rinehart joins professors Daniel Sokol and Jingyuan Ma in noting there are a litany of examples where data was not a determinant in competition. He also echoes Economist Mark MacCarthy and CCIA’s Jakob Kucharczyk in rebutting the misleading analogy between data and oil.
Below are some additional points that may be helpful.
According To AAF’s Will Rinehart, Data In And Of Itself Is Not What Powers Leading Technology Companies, But Rather The Innovations In How This Data Is Processed. “Most of the proposals for creating data portability, however, miss what makes data valuable, and thus what gives these companies such power… Rather, it is the structure and processing tools around the data that drive these platforms.” (Will Rinehart, Why A Data Portability Act Might Not Be An Effective Policy Path,” American Action Forum, 2/6/28)
Rinehart: “Data Is Ubiquitous,” But Innovative Structures And Uses Are Not. “Data isn’t the most important asset in the digital economy, but the talent needed to make that data useful is crucial. Herein lies the flaw with the ‘new oil’ analogy. Saudi Arabia has a tremendously valuable asset in the volume of its oil because the ability to process oil is well known and relatively simple. Not so with data, however: Data is ubiquitous, but what isn’t widespread is understanding what kind of information you might have and doing something useful with it.” (Will Rinehart, Why A Data Portability Act Might Not Be An Effective Policy Path,” American Action Forum, 2/6/28)
Professors Daniel Sokol And Jingyuan Ma Observe That Little, If Any, User Data Is Required As A Starting Point For Most Online Services. “The examples above suggest an important policy lesson–low entry barriers are a common attribute in online data markets. The data requirements of new competitors are far more modest and qualitatively different than those of more established markets. Little, if any, user data is required as a starting point for most online services. Instead, firms may enter with innovative new products that skillfully address customer needs, and quickly collect data from users, which can then be used towards further product improvement and success.” (Daniel D. Sokol And Jingyuan Ma, “Understanding Online Markets And Antitrust Analysis,” Northwestern Journal Of Technology And Intellectual Property, 10/12/17)
Economist Mark MacCarthy Notes Users Already Provide Many Services With Duplicate Information, Limiting Exclusive Collection. “Firms can sometimes use technical, legal and contractual barriers to exclude people from access to data that they have collected, but the information itself can often be collected from other sources. Broadband providers and banks will not let others extract the email addresses of their customers from their databases. But users can provide that information to many other companies and institutions. Users typically engage with multiple providers of the same service. According to Deloitte, 81 percent use more than one online shopping service, 74 percent use multiple online news providers, 72 percent use more than one online travel service, and 70 percent use multiple email, instant messaging or video calling services. These alternative suppliers can access very similar behavior and preference data about their customers.” (Mark MacCarthy, “Data Is Not The New Oil Or The Infrastructure Of The Digital Economy,” CIO, 1/24/18)
CCIA’s Jakob Kucharczyk Notes That Data Is Only Valuable “If One Can Derive Meaningful Insights From It.” “Unlike oil, which is used once, then burns up in combustion, data is regenerative, meaning it can be used over and over again. It lives on and gains new life each time it is shared or used in a way that adds value to someone. It builds knowledge, meaning, and value the more it is interlaced with other data. However, data is only valuable if one can derive meaningful insights from it. Large amounts of data is useless if nothing meaningful can be derived from it. That contrasts sharply with oil.” (Jakob Kucharczyk, “Data Is Not The New Oil,” BlogActiv, 7/19/17)