Data Monopolies September 2015
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A recent Harvard Business Review article by Kira Radinsky of SalesPredict argues that big data poses a significant risk to free market competition because companies that stockpile data can prevent others from entering a market. For example, Google's vast quantities of user data have made it difficult for Microsoft and other potential search providers to compete effectively. Radinsky says that the influence of big data is spreading and that a wide variety of industries and applications could face challenges from data monopolies in the future.
Some regulators are already dealing with data monopoly issues. For example, The European Union has launched an antitrust case alleging that Google manipulates its search results to favor some of its own services. In 2014, a group of taxi firms and drivers in Maryland sued Uber for violating the state's antitrust laws.
In his 2013 book Who Owns the Future?, Jaron Lanier argues that, when industries move into big data, they become vulnerable to new monopolies because data-driven software is often a winner-takes-all market where a small number of players collect most of the data and value. Lanier says, "When a technology becomes software-mediated, the structure of the software becomes more important than any other particularity of the technology in determining who will win the power and money when the technology is used."
Areas that could be affected by data monopolies are varied. General Electric has created Predix, a software platform for the industrial Internet of Things (IoT). Monsanto and John Deere are stockpiling significant amounts of agricultural data. IBM has a partnership with Apple and others to collect healthcare data. Similarly, software platforms that Google and Apple are developing for cars might use big data advantageously and extend the companies' mobile-technology duopoly.
Big data—including data generated by the IoT—is changing sectors as diverse as energy, healthcare, manufacturing, agriculture, insurance, consumer electronics, and education. Within these and other sectors, new opportunities to collect and leverage data are emerging. In their 2013 book Big Data, Viktor Mayer-Schönberger and Kenneth Cukier point out that technology start-ups and existing data specialists sometimes spot these new opportunities ahead of a sector's existing players.
Organizations need to pay careful attention to how new data in their sectors is generated, where that data resides, and what new data-driven services are emerging. These factors could be critical in determining the competitive landscape of the future.
If Lanier and Radinsky are right, then a small number of organizations may reap significant rewards from big data while other organizations fail to benefit (and will perhaps even be harmed by new data monopolies).
Rather than wait for defeat by data specialists, ambitious organizations within sectors may try to create new software structures with the goal of achieving data dominance (GE, Monsanto and others are arguably taking this approach already). Of course, if big data really is a winner-takes-all market, then this strategy carries significant risk.