A data economy is a global digital ecosystem in which data is gathered, organized, and exchanged by a network of vendors for the purpose of deriving value from the accumulated information. Data inputs are collected by a variety of actors including search engines, social media websites, online vendors, brick and mortar vendors, payment gateways, software as a service purveyors, and an increasing number of firms deploying connected devices on the Internet of Things. The gathered data is then passed to individuals or firms which typically take a fee. Data collected and managed in the data economy must be stored on dedicated servers. These servers can be located on-premises for access from a single physical location, or off-premises. The data will reside in data centers and will remain available for access and exchange via internet-based applications, referred to collectively as the cloud. Storing and securing collected data represent a significant portion of the data economy.
Data economy categories
Big data economy
is defined as the algorithm-based analysis of large-scale, distinct digital data for purposes of prediction, measurement, and governance.
Human-driven data economy
The human-driven data economy is a fair and functioning data economy in which data is controlled and used fairly and ethically in a human-oriented manner. The human-driven data economy is linked to the MyData Movement and is a human-centered approach to personal data management.
The personal data economy is created by individuals using personal data, which people supply either directly or indirectly. Consumers become suppliers and controllers.
Algorithm economy
In an algorithm economy, companies and individuals can buy, sell, trade, or donate individual algorithms or apps pieces.
Transition to data economy
Market size
The size of the EU data economy was estimated to be more than €285 billion in 2015, representing over 1.94% of the EU GDP. Key sectors in the data economy either are or are on the way to becoming data-driven. For example, the manufacturing, agriculture, automotive, smart living environments, telecommunications, healthcare, and pharma industries are at the core of the data economy.
Benefits
Management of personal information makes everyday life easier and adds to well-being. A unified procedure opens up opportunities for user-oriented innovations and business activities. Individuals have control over the data concerning themselves. Individuals can actively define the services and the conditions under which their personal information is used. The service providers worthy of people’s trust can also get access to significantly more extensive and varied data e-services.
Challenges
Approaches to data breaches are problematic. Challenging issues include compensation to victims, incentives for enterprises to invest in data security, and uncertainties for corporations about regulatory burdens and litigation risks. Furthermore, data portability might decrease interest in innovations.
Regulation
The regulation of the data economy is closely linked to privacy. The present approach is flexibility, finding a balance between protecting privacy and allowing citizens to decide for themselves. The European UnionGDPR regulation is one cornerstone of this new regulatory framework. A new paradigm for data governance is needed, with data ethics as a central component in all regulatory reforms.
Criticism
The data economy raises concerns about regulatory uncertainties and incoherence, privacy, ethics, the loss of control of data, and the ownership of data and related rights. Mathematical models and algorithms based on them are too often opaque, unregulated, and incontestable. Some concerns have been raised about internet companies controlling the flow of data and using it to gain power. The critiques expressed in the 2012 General Data Protection Regulation draft of the European Commission have now led to concrete regulations:
