“It would make for a far more efficient market if consumers were consciously aware of the trade-off occurring with regards to their data, and were able to participate in the value-chain of their data, beyond the opacity of a free app or service that appears unrelated to data sales.”
Matt Hogan, Datacoup, CEO – Founder
Recap – Data Economy 101
In our previous article, we elaborated the data economy taking into consideration different aspects. Briefly, we discussed the basic fundamentals and general attributes of the data economy, its potential economic impacts and economic benefits of data from policy making point of view. As a result, we have proposed a framework for the data economy and developed the action plan for all the related players in the new economy. (Beginning Node, 2019)
In our opinion, data exchange market is the most important topic under the data economy which needs to be expounded further.
Understanding the Fundamentals of Data Exchange Market
Making data available from the physical objects via IoT or other ways is the key fundamental feature of the digital transformation which will be basis of the data economy. Amalgamation and interlinking of these date will boost their value. On the other hand, the potential value of the consolidated data has not been fully acknowledged by the governments, organizations, society and individuals. Having fully integrated data from different sources such as producers, consumers, other stakeholders in the data economy ecosystem will unleash the real potential of the data. (PwC, 2018)
In conclusion, what is data exchange market is establishing platforms where data are shared between various stakeholders. A data exchange provides access to data points from around the world to fuel data-driven activities. A data exchange opens a door for all the stakeholders accessing to as many data points as it is needed, hence it can be used to fill in any gaps of information.
On the other hand, we can observe that none of the players in the data economy ecosystem are fully convinced to share their data. Why?
- Security Issue. Players are afraid of security risks and worried about losing control over their data.
- Complexity. Players contemplate the data exchanges as a very complex process, hence unleashing its potential value requires high financial expenditure .
- Lack of Custodian. Due to the fact that the level of information regarding implementation of the data exchange market is very limited and not common, players are extremely skeptic whether it is right time to be part of it or not.
What would be possible if players were in a position to exchange data with other companies without losing control over their own data?
What would be possible if players were in a position to get adequate level of information about the implementation phase and then easily go to implementation phase, plug and play their data with our stakeholders effortlessly?
If we remember from Data Economy 101, we have discussed the potential value of the data exchange market which will be hit the edge of € 150 billion by 2025 in Europe. (Beginning Node, 2019) The earlier the data economy ecosystem players conceive the importance of data exchange, the faster the market increase its maturity level.
CASE STUDY – Personal Data Exchange Platform Datacoup
Datacoup is one of the most known example for the personal data economy (PDE). It directly reaches out to individuals in order to purchase their data directly from them. Basically, the platform allows individuals to connect all their data (Eg. social media, credit card) and consolidate them in the single place. Once consolidation is completed, data is ready to enter in the data exchange market. As of today, only Datacoup is purchasing individuals’ data. In near future, the platform will allow other potential data purchasers like brands, retailers, media agencies, wireless carriers, insurance companies, and banks to purchase individuals’ data.
Understanding The Roles of Governments in Data Exchange Market
As one of the most prominent player in the data economy and protection of personal privacy, governments dominate a vital role in the data exchange market. (Eggers, 2013)
Government as Data Producer. In the course of doing business, government entities are able to collect huge amount of the data which will allow them to release large government data sets to the public, free of charge. Organizations, society and individuals exploit this data to create valuable products and services, doing it faster and more cheaply than government could on its own.
Government as the Data Consumer. Government entities are one of the biggest customer segments in the data exchange market. From traffic patterns to web search trends, from demographics to statistics on student achievement, government entities need all type of data, and they spend a great deal of time and money collecting it.
Government as the Data Orchestrator. Governments orchestrate different players in the market to boost the impact of data exchange market. In addition to that governments also provide platforms to foster thriving data markets.
CASE STUDY – India’s Unique Identification (UID) program
UID program has brought the concept of personal data as currency by developing an exclusive set of biometric and demographic for each citizens in India’s (~1.21 billions). The government and organizations have been able to utilize from data through various ways such as building lender confidence to extending microfinance to remote areas to introducing new personalized health care services. (UIDAI, 2013)
Beginning Node, B. N. (2019). https://baslangicnoktasi.org/en/data-economy-101-data-oil/. Istanbul: www.baslangicnoktasi.org.
Datalanscape. (2019). The European Data Market Monitoring Tool. http://datalandscape.eu/european-data-market-monitoring-tool-2018.
Eggers, W. D. (2013). Government’s role in facilitating the exchange. Deloitte.
PwC. (2018). Data Exchange As a First Step Towards Data Economy. PwC.
UIDAI. (2013). The Unique Identification Authority of India (UIDAI). https://uidai.gov.in/about-uidai/unique-identification-authority-of-india/about.html