International Finance

Your data is the new oil

A business has the ability to know more about its customers than those customers will ever know about the business

For the first time in history, a business has the ability to know more about its customers than those customers will ever know about the business. While modern companies have always divided customers into large demographic swaths, what’s happening now is dramatically different. Consumers no longer need to be clumsily lumped into groups demarcated by wide ranges and ‘one size fits all’ phrases.

Everything that happens online can be traced, tracked and drilled down to the individual. This hasn’t been a predictable evolutionary change; it’s been a sweeping metamorphosis.

While people are fond of talking about a digital fingerprint, that analogy falls far short of what’s really happening. Fingerprints can reveal where a person has been or confirm someone’s identity, but in the hands of a data-savvy company, the information you generate online can be viewed much more holistically. In effect, you have a digital double that reveals not only where you’ve been, what you’ve bought and what media you’ve consumed, but can even be used to predict what you’ll do.

Companies know so much about individuals because they constantly collect data that can then be bought, sold, stored, analysed, clustered and compared to other data. Sometimes a company’s core business depends on gathering a certain type of information, like Fitbit monitoring a user’s heart rate, but data can also be gathered inadvertently, like a robot vacuum cleaner mapping a home while routinely performing its chores. Either way, companies are free to buy and sell this information, making tremendous amounts of money off users in ways those users never agreed to.

When it comes to social media, people literally give away their privacy by checking a box and agreeing to terms of service on a scrolling contract no one ever reads. The basic services provided by platforms like Facebook, Twitter, LinkedIn and Instagram may feel free to the average user, but the companies behind those platforms profit immensely by selling the data their users generate. This isn’t a business practice that simply developed over time. It was always the plan.

Users who share more, have more connections, and use more platforms are seen as more ‘valuable’, so their data is sold at a premium. The fact that users can be quantified this way brings to mind the quote attributed to Andrew Lewis: “If you’re not paying for it, you’re not the customer. You’re the product being sold.”

Roger Haenni is co-founder
and CEO of Datum

When it comes to the ability to collect data at scale, then take that data and drill down to the individual, the barn door can’t be closed, but just because the horse has gotten out doesn’t mean we need to let it run all over the field. We can put up fences.

The technical ability to let individuals sell the data they generate is rapidly becoming a reality. This is a big step towards corralling companies in the data marketplace. However, data isn’t just bought and sold; it’s also stored. This is where security becomes an issue. Fortunately, a fence is being built for that, too.

Blockchain was one of the biggest buzzwords in 2017. Don’t expect it to go away anytime soon, if ever. Because of blockchain technology, cryptocurrency is on a meteoric rise, but entities like Bitcoin and Ethereum aren’t the only ones to benefit from the security of a decentralised system.

This past May, 143 million records were taken in the Equifax breach, which means almost half of all US citizens were affected. This happened because Equifax stores its information in one central database, but blockchain technology is the solution to this, making it possible to implement a secure by design data storage network where each individual record is encrypted and only the owner of that record has the key.

Until now, database security relied on firewalls, but this is no longer enough. Given enough time, hackers chisel through. Meanwhile, governments find ways to slip in, too. When it comes to the blockchain, it’s not an issue of hackers needing more time to adapt or governments writing new rules. The blockchain simply can’t be compromised. This is the benefit of decentralising storage and taking data silos out of the picture entirely.

The dominance of one company in the data marketplace can also have a waterfall effect on other players. For example, Apple’s HealthKit sits under its Health app. But, HealthKit is also used by developers of other apps. These apps gather a wide range of information — from blood pressure to calorie intake — and feed what they collect back to Apple. This allows for the creation of a composite profile of an individual’s health. If HealthKit becomes so prevalent in health app development that using it is an unwritten requirement for anyone wanting to enter the market, Apple could conceivably own all the health data in the world. They may be an exceptionally solid company, but is it right for any single entity to own something so far reaching?

Data is being likened to oil, but I prefer to think of this as oil in its earliest days, when it still held untapped potential. Companies have used this gush of information to generate phenomenal wealth. Now it’s time for individuals to stake a claim in a market that only exists because they make it possible with every online decision, website search, and movement of a smart phone.

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