Data: are we headed towards shared control?
Over the next decade we will enter a new era of shared control of personal data – in fact it is already on the cards
Regulation and social dissatisfaction are prompting the movement towards the shared control of data. What is the evidence for this shift? Three emerging trends – data interoperability, data collectives, and data unions.
The first is data interoperability
This will transform the data market, but what is it? While data portability – as envisaged by GDPR – is simply the ability for individuals to obtain their data from data collectors, data interoperability is the development of standards that enable data to be transferred between organisations in real time.
Interoperability will make it far easier for users to take their data and their business elsewhere – as well as giving businesses, governments and other industries access to data that can supercharge their understanding of the environments in which they operate.
Data interoperability is not inevitable, and we predict that – just as with personal data regulation today – the US, APAC and EU take different routes. We suspect the EU would be the most disruptive of any regulations as interoperability is already a key component of the EU’s strategy for data.
The effectiveness of interoperability regulation will be related to its scope. Too limited and nothing will change – because consumers will have little reason to switch from dominant platforms. Full interoperability, on the other hand, could weaken these platforms.
At WPP, we believe interoperability has the potential to reconfigure the digital business model in which customer data is both currency and product. At present, there is value in collecting large volumes of data, holding that data close, and generating financial returns by selling it – or through advertising and customer marketing.
In a scenario where the scope of interoperability is extensive, advertising platforms and data resellers would have to differentiate themselves through the quality, not quantity, of the customer profiles they offer – customer data would no longer be a volume game. We would expect to see ever more complex and unique user profiles, stitched together from multiple sources of data, and tailored to the needs of advertisers. We predict the process of profile-building might itself become a specialist activity – one which companies find easier to outsource than master.
The second trend is data collectives
The imminent demise of third-party cookies is putting more pressure on companies to find alternative sources of consumer data and is turning second-party data into a business-critical topic. Data collectives – in which organisations share aggregated, anonymised and privacy compliant data – are beginning to gain traction, and we think these may be commonplace by 2032.
Data collectives fall into two camps: those created for commercial benefit, and those created for social good. The latter are already well-established, and we anticipate strong growth in these as businesses adopt a more purpose and value driven agenda. Collectives for commercial benefit are a more challenging proposition with companies nervous about sharing data with competitors and reluctant to face the technical challenges.
We believe the commercial benefit outweighs the competitive risk in data collectives and could help match the might of the data monopolists – giving all organisations the potential to create rich data profiles by combining data from sources that were previously unavailable. We believe that by 2032 contractual and governance standards for data sharing will have been established.
The final trend is data unions
These are the vehicles through which individuals can manage access to – and earn money from – their own data. In this model, individuals permit a data union to collect, host and use their data in return for payment or some other value.
An entertainment streaming union would manage the collection of user data from multiple streaming platforms and make it available to interested organisations. The data union would give its members the option to determine which organisations could access the data. Perhaps, in the future, we will choose to allow universities, charities, and B-Corp registered businesses to access our data but exclude industries we dislike.
Data unions are not a new idea, but they have faced two significant challenges: the technical complexity of managing access and payment, and the difficulty of persuading enough individuals to join to make the data set valuable. Blockchain can solve the technology challenge.
The challenge of achieving viable scale, however, remains. It is something of a catch-22. Companies will only pay for the data if the data set is large enough or of sufficient quality, but individuals are unlikely to join a union without the promise of tangible (probably financial) reward and these rewards are likely to be very low value.
Data unions have great potential as a source of customer data for advertisers and as an alternative for companies who struggle to collect first-party data, but we think they will find it difficult to achieve the necessary scale for success until interoperability regulations are in place.
These are still early days
Data control is complex, and this area of digital development is still immature. We believe interoperability could have a significant impact, and models such as collectives and unions are worth watching, but these initiatives will, however, be constrained by what might be termed “data nationalism”.
Regardless of how data control develops, what is abundantly clear is that the value of data will be in figuring out how it will be used, and therefore how it needs to be modelled and accessed, rather than in simply collecting it.
17 May 2022
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