Data has been called the “new oil” of the information age, an asset used by corporations to reshape markets and increase their market power and profits.[i] On the Internet, we see the rise of new “big data” platforms such as Google, Amazon, Apple, Facebook and others that accumulate ever increasing information on consumer behavior, interests and needs. While this data unquestionably increases the efficiency of the economy in numerous ways, what is in question is whether consumers are ultimately benefitting significantly from those productivity gains or whether that surplus is being largely captured by these “big data platforms.” Worse, the increasing loss of control of private data by individuals seems to be leaving them vulnerable to economic exploitation by a range of corporate actors.
These big data platforms, what Jaron Lanier calls “siren servers” in his book, Who Will Own the Future?[ii], attract consumers with a variety of services that encourage those users to part with personal data which in turn is analyzed and combined with private information from other users in massive networks of computers. These big data platforms use that analysis to reshape markets – “disrupt” in Silicon Valley parlance – and channel an ever-greater share of economic wealth into the hands of these big data platforms.
There is a particular concern that “free services” on the Internet use consumer data for the benefit not of those users but for third party corporate customers of those data platforms, particularly advertisers who drive a large portion of the revenue model of the online Internet economy. While much of that advertising no doubt serves traditional advertising goals of strengthening brand awareness or promoting new products to consumers, the rise of behavioral profiling of consumers using the private data extracted by these big data platforms increases the use of advertising for more exploitative practices. Big data platforms user profiling aids those advertisers in extracting the maximum profit possible from consumers in the overall economy. Advertisers can deliver ads not just to the users most likely to be interested in the product but can tailor prices for individual consumers in ways that can maximize the revenue extracted from each purchaser. Consumers can be profiled and offered higher prices, unaware that other customers are getting better deals, while financially struggling households are tagged as vulnerable and offered economically exploitative services such as payday and subprime loans.
Control of more data seems to be the key to dominating particular economic sectors and such dominance in turn yields more data from consumers, so the dynamics of big data is fueling market concentration in industry sectors across the economy. Not only does control of user data in a sector create barriers to entry against new firms, companies with large troves of unique data about consumers more easily repurpose that data for new uses that allow them to dominate new industry sectors.
Since the rise of big data has coincided with the stagnation of incomes for average households, social justice advocates should be raising concerns that, alongside traditional explanations of rising inequality such as deunionization, globalization, and automation of unskilled jobs, the concentration of data into ever fewer corporate hands is helping to drive economic inequality in the broader economy. Given the direct consumer harms and economic inequality being driven by use of that data, taking on the power of these big data platforms should be a far higher priority for social justice advocates.
[i] In 2011, the World Economic Forum declared that personal data was emerging as a “New Asset Class.” http://www.weforum.org/reports/personal-data-emergence-new-asset-class
[ii] Jaron Lanier, Who Will Own the Future?