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02 Sep 2021, 23:37
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“Data is the new oil” is one of those deceptively simple mantras for the modern world. ...The wildcatting nature of oil exploration, plus the extractive exploitation of a trapped asset, seems like an apt metaphor for the boom in monetized data.
The metaphor has even assumed political implications. Newly installed California governor Gavin Newsom recently proposed an ambitious “data dividend” plan, whereby companies like Facebook or Google would pay their users a fraction of the revenue derived from the users’ data. Facebook cofounder Chris Hughes laid out a similar idea, and compared it to the Alaskan Permanent Fund, which doles out annual payments to Alaskans based on the state’s petroleum revenue. As in Alaska, the average Google or Facebook user is conceived as standing on a vast substratum of personal data whose extraction they’re entitled to profit from.
But data isn’t the new oil, in almost any metaphorical sense, and it’s supremely unhelpful to perpetuate the analogy. 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 frictionless 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.
...Accounting rules don’t call for tech companies to specify their data as a separate asset on the balance sheet, but by any reasonable valuation, Amazon’s purchase data is worth an immense fortune ... to Amazon...because Amazon has built an expansive ecommerce presence, a ruthlessly efficient recommendation and advertising engine, and a mind-bogglingly complex warehouse and fulfilment operation around the data on those hard drives. Ditto Google, Uber, Airbnb, and every other company you’d identify as an “oil field” in this tired metaphor.
...[T]here are companies that would love to know Amazon’s sales data, Google’s search queries, or Uber’s routing and pricing history. 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.
Where does this leave proposals around a “data dividend”? Beyond being implausible, they are problematic for several reasons.
For starters, the dividend will likely be paltry, and nowhere near the $1,600-per-person Alaska oil dividend...[M]ore foundationally, why would Facebook or Google owe you anything? ... You wilfully used a service and generated data that wouldn’t otherwise exist. What you get in return is Facebook itself, for which you’ve not paid a nickel... Google likewise uses your searches and resulting clicks as a training set for its search algorithm. None of these modern marvels is cheap to maintain. You’re not contributing to some limited pool of data on whose resulting revenue you can stake a claim; you’re an infinitesimally small part of a data cooperative whose benefits accrue to the very users that generated it.
...Ultimately, the majors like Google and Facebook will raise the castle walls around their data (and users) ... It’ll be first-party data all around: Publishers, apps, and ecommerce all huddling around their data and user piles, projecting that data externally in data-safe ways if absolutely necessary, but not otherwise.
No, data isn’t the new oil. And it never will be, because the biggest data repositories don’t want it to be.
The metaphor has even assumed political implications. Newly installed California governor Gavin Newsom recently proposed an ambitious “data dividend” plan, whereby companies like Facebook or Google would pay their users a fraction of the revenue derived from the users’ data. Facebook cofounder Chris Hughes laid out a similar idea, and compared it to the Alaskan Permanent Fund, which doles out annual payments to Alaskans based on the state’s petroleum revenue. As in Alaska, the average Google or Facebook user is conceived as standing on a vast substratum of personal data whose extraction they’re entitled to profit from.
But data isn’t the new oil, in almost any metaphorical sense, and it’s supremely unhelpful to perpetuate the analogy. 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 frictionless 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.
...Accounting rules don’t call for tech companies to specify their data as a separate asset on the balance sheet, but by any reasonable valuation, Amazon’s purchase data is worth an immense fortune ... to Amazon...because Amazon has built an expansive ecommerce presence, a ruthlessly efficient recommendation and advertising engine, and a mind-bogglingly complex warehouse and fulfilment operation around the data on those hard drives. Ditto Google, Uber, Airbnb, and every other company you’d identify as an “oil field” in this tired metaphor.
...[T]here are companies that would love to know Amazon’s sales data, Google’s search queries, or Uber’s routing and pricing history. 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.
Where does this leave proposals around a “data dividend”? Beyond being implausible, they are problematic for several reasons.
For starters, the dividend will likely be paltry, and nowhere near the $1,600-per-person Alaska oil dividend...[M]ore foundationally, why would Facebook or Google owe you anything? ... You wilfully used a service and generated data that wouldn’t otherwise exist. What you get in return is Facebook itself, for which you’ve not paid a nickel... Google likewise uses your searches and resulting clicks as a training set for its search algorithm. None of these modern marvels is cheap to maintain. You’re not contributing to some limited pool of data on whose resulting revenue you can stake a claim; you’re an infinitesimally small part of a data cooperative whose benefits accrue to the very users that generated it.
...Ultimately, the majors like Google and Facebook will raise the castle walls around their data (and users) ... It’ll be first-party data all around: Publishers, apps, and ecommerce all huddling around their data and user piles, projecting that data externally in data-safe ways if absolutely necessary, but not otherwise.
No, data isn’t the new oil. And it never will be, because the biggest data repositories don’t want it to be.
1. That data is the new oil
a) is a metaphor to describe the possible exploitation of valuable data.
b) is an analogy to explain how data hasn’t been monetized as oil has been.
c) is a misleading notion about the hidden value of a trapped asset like oil.
d) is an accurate depiction of the unexplored value of hoarded da
2. According to the author, the flaw in comparing oil and data held by companies is that
a) accounting rules don’t call for tech companies to specify their data as a separate asset.
b) owners of data would not sell it away for anything less than a fortune.
c) the data is worthless for anyone other than the companies that hold it.
d) the data is useful only in a specific ecosystem built by the owners of data
3. Which of the following statements best expresses the overall argument of the passage
a) Drawing comparisons between monetization of data and that of oil is not apt.
b) While oil is globally valuable, the same is not true for data.
c) Oil can be directly encashed, but data needs to be processed to extract its true value.
d) Oil’s fungibility makes it valuable, unlike data hoarded in its repositories
4. Which of the following strengthens the author’s stance on whether service providers like Facebook or Google ‘owe you anything’?
a) User data is collected by the service provider without explicitly stating so.
b) No amount of data is insignificant enough, if a service provider wants to monetize it.
c) Individual user information isn’t as useful as collective user information.
d) Users will shift to a different service provider if companies such as Facebook and Google start charging for their services.
05 Sep 2021, 23:57
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Sajjad1994, this is a CAT question. Could you move it to the appropriate forum please ?
