Data economy explained

A data economy is a global digital ecosystem in which data is gathered, organized, and exchanged by a network of companies, individuals, and institutions to create economic value.[1] [2] The raw data is collected by a variety of factors, including search engines, social media websites, online vendors, brick and mortar vendors, payment gateways, software as a service (SaaS) purveyors, and an increasing number of firms deploying connected devices on the Internet of Things (IoT).[3] Once collected, this data is typically passed on to individuals or firms, often for a fee. In the United States, the Consumer Financial Protection Bureau and other agencies have developed early models to regulate the data economy.[4]

Storing and securing collected data represent a significant portion of the data economy.[5]

Data economy categories

Big data economy

Big data is defined as the algorithm-based analysis of large-scale, distinct digital data for purposes of prediction, measurement, and governance.[6] [7]

Human-driven data economy

The human-driven data economy is a fair and functioning data economy in which data is controlled and used fairly and ethically in a human-oriented manner.[8] [9] The human-driven data economy is linked to the MyData Movement and is a human-centered approach to personal data management.[10]

Personal data economy

The personal data economy is created by individuals using personal data, which people supply either directly or indirectly. Consumers become suppliers and controllers.[11] [12]

Algorithm economy

In an algorithm economy, companies and individuals can buy, sell, trade, or donate individual algorithms or apps pieces, by leveraging dedicated marketplaces.[13] [14]

Transition to data economy

Market size

The size of the EU data economy was estimated to be more than €285 billion in 2015, representing over 1.94% of the EU GDP. Key sectors in the data economy either are or are on the way to becoming data-driven. For example, the manufacturing, agriculture, automotive, smart living environments, telecommunications, healthcare, and pharma industries are at the core of the data economy.

Benefits

Management of personal information makes everyday life easier and adds to well-being. A unified procedure opens up opportunities for user-oriented innovations and business activities.

Individuals have control over the data concerning themselves. Individuals can actively define the services and the conditions under which their personal information is used. The service providers worthy of people's trust can also get access to significantly more extensive and varied data e-services.

Challenges

Approaches to data breaches are problematic. Challenging issues include compensation to victims, incentives for enterprises to invest in data security, and uncertainties for corporations about regulatory burdens and litigation risks.[15] Furthermore, data portability might decrease interest in innovations.

Regulation

The regulation of the data economy is closely linked to privacy. The present approach is flexibility, finding a balance between protecting privacy and allowing citizens to decide for themselves. The European Union GDPR regulation is one cornerstone of this new regulatory framework.[16] [17] A new paradigm for data governance is needed, with data ethics as a central component in all regulatory reforms.[18]

Criticism

The data economy raises concerns about regulatory uncertainties and incoherence, privacy, ethics, the loss of control of data, and the ownership of data and related rights.[19] [20] [21] Mathematical models and algorithms based on them are too often opaque, unregulated, and incontestable.[22]

Some concerns have been raised about internet companies controlling the flow of data and using it to gain power.[23]

The critiques expressed in the 2012 General Data Protection Regulation (GDPR) draft of the European Commission have now led to concrete regulations:

“This is why it is time to build a stronger and more coherent data protection framework in the EU, backed by strong enforcement that will allow the digital economy to develop across the internal market, put individuals in control of their own data and reinforce legal and practical certainty for economic operators and public authorities.”[24]

See also

Further reading

External links

Notes and References

  1. Web site: Data Market Study 2021-2023. First report on policy conclusions. European Commission. 7 May 2021 . 7 August 2023.
  2. Sestino . Andrea . Kahlawi . Adham . De Mauro . Andrea . Decoding the data economy: a literature review of its impact on business, society and digital transformation . European Journal of Innovation Management . 2 August 2023 . 10.1108/EJIM-01-2023-0078. 260405973 .
  3. Web site: The Data Economy: 2016 Horizonwatch Trend Brief. Chamberlin. Bill. Horizon Watch. IBM Expert Network. 20 August 2018.
  4. Van Loo. Rory. 2018-07-01. Technology Regulation by Default: Platforms, Privacy, and the CFPB. Georgetown Law Technology Review. 2. 2. 531.
  5. Information Technology and Innovation Foundation (2017). Post-Hearing Written Submission Nigel Cory Trade Policy Analyst Before the United States International Trade Commission Investigation No. 332-56 Global Digital Trade I: Market Opportunities and Key Foreign Trade Restrictions [PDF file]. Retrieved from http://www2.itif.org/2017-usitc-global-digital-trade.pdf
  6. Book: Flyverbom . Mikkel . Madsen . Anders Koed . Sorting data out – unpacking big data value chains and algorithmic knowledge production . Die Gesellschaft der Daten. Über die Digitale Transformation der Sozialen Ordnung . January 2015 . 10.4135/9781412985871 . 9780803972377 .
  7. Web site: 5 Things Managers Should Know about Big Data Economy . Satell . Greg. . 7 September 2018.
  8. Web site: Human-Driven Data Economy . Sitra . 7 September 2018.
  9. Web site: Prepare for a new human-driven data economy HealthTech Wire . May 23, 2018 . HealthTech Wire HIMMS Europe . 7 September 2018.
  10. Web site: Dehaye . Paul-Olivier . PersonalData.IO helps you get access to your personal data . December 21, 2017 . Open Knowledge International Blog . 7 September 2018.
  11. Web site: Syrjänen . Tuomas . The Rise of the Personal Data Economy . January 24, 2018 . GreenBook Blog . 7 September 2018.
  12. Book: Personal Data: The Emergence of a New Asset Class . World Economic Forum . 40 . January 2011 . 7 September 2018.
  13. Web site: What is the Algorithm Economy . Techopedia . 4 October 2017 . 7 September 2018.
  14. Kumar . Abhishek . Finley . Benjamin . Braud . Tristan . Tarkoma . Sasu . Hui . Pan . Marketplace for AI Models . 2020 . cs.CY . 2003.01593.
  15. Daly . Angela . The introduction of data breach notification legislation in Australia: A comparative view . Computer Law & Security Review . 2018 . 34 . 3 . 477–495 . 10.1016/J.CLSR.2018.01.005 . 67358435 .
  16. News: Davies . Jamie . It turns out regulating the data economy is really hard. . 27 August 2018 . Telecoms news . August 2018.
  17. Web site: Abate . Serafino . Is the data economy self-healing, or should economic regulation be considered? . GSMA . 27 August 2018. 13 August 2018.
  18. Maya . Uppaluru . The U.S. Needs a New Paradigm for Data Governance . Harvard Business Review . Harward Business Review . 7 September 2018 . April 16, 2018.
  19. Web site: Wendehorst . Christiane . Cohen . Neil . Weise . Steve . Feasibility Study ALI-ELI Principles for a Data Economy . European Law Institute . 20 August 2018 . August 25, 2017 .
  20. Crabtree . Andy . Lodge . Tom . Colley . James . Greenhalgh . Chris . Mortier . Richard . Haddadi . Hamed . Enabling the new economic actor: data protection, the digital economy, and the Databox . Personal and Ubiquitous Computing . November 2016 . 20 . 6 . 947–957 . 10.1007/s00779-016-0939-3 . free . 10044/1/52734 . free .
  21. Tene . Omer . Polonetsky . Jules . Big Data for All: Privacy and User Control in the Age of Analytics . Northwestern Journal of Technology and Intellectual Property . April 2013 . 11 . 5 . 20 August 2018.
  22. Book: O'Neil . Cathy . Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy . September 6, 2016 . Crown Publishing Group.
  23. News: The world's most valuable resource is no longer oil, but data. The Economist. 2018-11-20. en.
  24. Web site: Proposal for a regulation of the European Parliament and the Council on the protection of individuals with regard to the processing of personal data and on the free movement of such data (General Data Protection Regulation GDPR). COM(2012) 11 final . European Parliament . 20 August 2018.

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