Data Monopoly

Data monopoly in different businesses

Data monopoly is when a single company or entity controls a significant portion of a specific type of data or data market. This can happen in a number of ways, such as through acquisitions of smaller companies, exclusive partnerships or agreements, or simply by having a large and dominant market share. In a data monopoly, the company or entity in control significantly influences market prices, terms of service, and data access. This can lead to reduced competition, innovation, and potential privacy concerns. Additionally, a data monopoly can make it difficult for other companies to enter the market, which can stifle economic growth. Big Tech companies have used their unchecked access to private personal information to create in-depth profiles about nearly all Americans and to protect their market position against competition from startups. Data monopoly can be a concern in many areas, including data-driven industries such as advertising, finance, healthcare, and transportation. The antitrust laws of many countries are in place to prevent such monopolies.

History

The concept of data monopoly was introduced by TODO.

The Monopoly of Attention

Mechanics under the attention marketplace

We pay for goods and services in the fiscal marketplace with legitimate currencies, while in the attention marketplace, we pay with our attention. The key performance indicators (KPIs) of attention-based companies often include the following core metrics: monthly active users (MAUs), time on site, and a handful of engagement metrics unique to the platform—likes, shares, views, comments, etc. These metrics are then used to evaluate the amount of attention paid to a platform. For example, more MAUs (people using the site) means there are more eyeballs to engage potentially. Time on site tells companies how long those MAUs are paying attention to their website or app—although more time on site could mean someone left their tab open. More MAUs spending more time on site means multiple factors of more attention paid. From there, other engagement metrics (clicks, swipes, shares, comments, etc) can be used to define the most common activities, which ones lead to more engagement, how and why, etc.

Nature of attention economy

Although referred to as the "attention economy," companies are not primarily seeking attention but rather data. This is why they are defensive about being labeled as addictive services. While they may not intend to harm society or create addictions, users' engagement on the platform results in valuable data when they pay attention. Data is now considered one of the most valuable assets in the world due to its non-rivalrous nature, meaning it can be replicated for free with little to no loss in quality and used simultaneously by an infinite number of people, which is a departure from traditional rivalrous goods. Rivalrous goods, such as books, cars, or oil, can only be used by one person or entity at a time. Photocopying a book, for example, takes time and money, and the copy may deteriorate over time. This is a limitation of rivalrous goods. In contrast, data does not have this limitation. Data can be utilized in various ways, such as conducting research, developing products, training AI and ML systems, and through data brokering operations or targeted advertising, all resulting in financial gain. Additionally, one set of data can be used by multiple companies, creating a network effect where all parties become increasingly reliant on the original source.

Network effect

In short, network effects are mechanisms in a product or business where every new user makes the product, service, or experience more valuable for every other user. As a network becomes larger and denser, its value to the user grows exponentially. It is often cited as a key factor in the concentration of markets in the technology industry. This creates an advantage for companies with a large user base, making it difficult for new companies to enter the market and compete. These companies at dominant positions, like Google and Amazon, will be able to attract many buyers, sellers, viewers, and content providers, creating a self-reinforcing cycle. As more people use these platforms, new buyers, sellers, viewers, and content generators are more likely to continue using the dominant platforms rather than trying new or small-scale competitors. This further solidifies the positions of these big companies and makes it harder for new entrants to break into the market.

Over-collecting Data and Data Misuse

the Cambridge Analytica scandal

The Cambridge Analytica scandal was a political and data privacy scandal that took place in early 2018. It involved the unauthorized harvesting of millions of Facebook users' personal data by the political consulting firm Cambridge Analytica. The data was allegedly used to influence voter opinion and decision-making during the 2016 US Presidential election and the Brexit referendum in the UK.

Cambridge Analytica was hired by the campaign of US President Donald Trump and by Leave.EU, a pro-Brexit group, to target voters with personalized political advertisements. The firm obtained the data of tens of millions of Facebook users through an app that paid users to take a personality test and granted access to their Facebook profiles and their friends' profiles. This was a violation of Facebook's rules and the company claimed that they were unaware that the data had been misused. However, a whistleblower, Christopher Wylie, who had worked at Cambridge Analytica, stated that Facebook was fully aware of the situation and had ignored warnings about it. The scandal raised questions about the responsibility of social media companies to protect their users' data and the ethical use of such data in political campaigns.

The data harvested by Cambridge Analytica was later revealed to have been accessed by Russian agents who used it to spread disinformation during the 2016 US Presidential election. This added another layer to the scandal, with concerns about the role of foreign interference in democratic processes.

In the aftermath of the scandal, Facebook faced numerous legal challenges and fines, including a $5 billion settlement with the Federal Trade Commission (FTC) in July 2019. The company also faced criticism for its role in spreading false information and amplifying divisive political messages.