When the Cambridge Analytica scandal broke in early 2018, it changed the way most of us view data. It transformed before our eyes from simple collections of words and numbers into election-influencing, world-changing bytes of information – and that was a big moment.
All of a sudden, we became aware of how dangerous it is. How influential it is. How valuable it is.
Since then, the conversations around data have changed.
Earlier this year, The Economist published a piece titled, ‘The world’s most valuable resource is no longer oil, but data’ – but how true is that, exactly?
Data as commodity
The five most valuable firms in the world, Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft, make an unthinkable amount of money each year – and it’s only increasing.
According to The Economist, the big five “collectively racked up over $25bn in net profit in the first quarter of 2017. Amazon captures half of all dollars spent online in America. Google and Facebook accounted for almost all the revenue growth in digital advertising in America last year.”
Perhaps unsurprisingly, a big chunk of that wealth comes from data.
“Far from gouging consumers, many of their services are free (users pay, in effect, by handing over yet more data),” The Economist explains.
Facebook and other social media platforms are the most clear-cut example of this. The services are ostensibly free to use, but, in exchange, users hand over everything from their date of birth to their email address to the location of the restaurant they went to the night before – all without giving it a second thought.
And the beauty of the value of data is that it is self-perpetuating. The more a company has on its customers, the more it understands them. This, in turn, means they can improve their products/services, thus earning more customers, and collecting more information.
The Economist gives Tesla’s success as a prime example of this process, noting that “The more data Tesla gathers from its self-driving cars, the better it can make them at driving themselves—part of the reason the firm, which sold only 25,000 cars in the first quarter, is now worth more than GM, which sold 2.3m.”
In this respect, big data has value in its ability to shape the modern world. However, it is difficult to assign it a quantifiable price tag.
How oil matches up
As the two resources go, oil and data are very different creatures. Oil is old, is used and sold in long-established industries, and has a universally-understood value. And, most unlike data, oil is a resource that is rapidly decreasing.
So, can we reliably compare the two? Not everybody thinks so.
“Data isn’t the new oil, in almost any metaphorical sense, and it’s supremely unhelpful to perpetuate the analogy,” WIRED argues. “Oil is literally a liquid, fungible, and transportable commodity. The global market is designed to take a barrel of oil from the Ghawar oil field in Saudi Arabia and, as frictionlessly as possible, turn it into a heated apartment in Boston or a moving commuter bus in New York. With data, by contrast, the abstract bits are functionally static.”
Wired goes on to say that, yes, big data is valuable – there’s no denying that – but it’s only valuable to certain people. In fact, if the average person was given access to a corporation’s data (which is probably about as likely as the average person stumbling across a vat of crude oil in their back yard), it wouldn’t be all that useful.
“Sure, you could maybe sell some of that data—there are companies that would love to know Amazon’s sales data or Google’s search queries or Uber’s routing and pricing history,” WIRED writes. “But here’s the key thing: Those interested outside parties are competitors, and the owners of the data would never in a million years sell it. Uber isn’t selling data to Lyft, Amazon isn’t selling data to Walmart, and Airbnb sure isn’t selling user lists to Hotels.com.”
Oil, on the other hand, has value to the average person. It can power our cars, our homes, our devices.
As we’re all well aware of by now, though, the world’s oil supplies are very rapidly running out, and renewable resources are slowly taking its place. While that may mean a surge in value for now, it also means non-existence of value in the near future.
The future of data
Data may be niche in its monetary value, but the impact it has on the wider world as a whole is comparable to that of oil. Already, it is spurring medical advances, saving the environment, and – as we saw with the likes of Tesla’s huge sales boost – generally making the products and services we use more finely-tuned to our needs. And that’s just scratching the surface.
“In recent years [companies] have discovered that data can be turned into any number of artificial-intelligence (AI) or “cognitive” services, some of which will generate new sources of revenue,” The Economist explains. “These services include translation, visual recognition and assessing someone’s personality by sifting through their writings—all of which can be sold to other firms to use in their own products.”
In a way, both sides of the oil vs data argument are correct. We can’t commodify data in the same way we can goods and services, so having a simple ‘which has more financial value’ head-to-head doesn’t make sense. They are valuable in different ways, for different reasons. The main difference, however, is that data’s value will stick around for much, much longer.