Is data the “new oil” of the future?

Is data the “new oil” of the future?
Source: Towfiqu Photography/Getty

In a 2017 article, The Economist announced that “the world’s most valuable resource is no longer oil, but data,” pointing to the unstoppable growth of America’s tech giants, which the newspaper alleged was akin to the dramatic rise of oil and industrial monopolies in the 19th century.

That data constitutes the new oil of the future is now a mainstream idea. The soaring advertising revenues of social media platforms like Facebook, Inc., which are assisted by data-driven algorithms, stand testament to this.

Yet data, like oil, is not in and of itself valuable unless it is refined. The proliferation of digital data raises new questions about safeguarding personal information and the transparency of its use, especially in a world where data is fast becoming a strategic resource worth fighting over.

What is my data?

In the modern world, the proliferation of the internet, aided by smaller and cheaper smartphones and other hardware, is inescapable. In the United States, for instance, around 90% or more of adults have internet access or use the internet in some capacity.

Devices as varied as watches, phones, computers, televisions and speakers can all connect to the internet and gather data from their users, which then gets transmitted back to developers, in one way or another. According to The Economist, it is access to these devices that has made data “abundant, ubiquitous and far more valuable,” especially for companies looking to maximize their advertising revenues.

For most ordinary people, using the internet and its services leaves behind a digital footprint. This “footprint” can include personal details ranging from consumer preferences, browsing habits, location, personal connections and likes and dislikes. It is from this data that social media companies, the oil barons of the 21st century, derive much of their success and profit.

The new oil

For social media companies like Facebook and e-commerce giants like, Inc., data is the fuel helping to drive much of their success. As investor Hilton Augustine Jr. told TMS, “as oil fueled the industrial revolution, data (big) has ushered in the information revolution.”

In the case of Facebook, the vast majority of the social media platform’s revenue comes from advertising. The collection of user’s data, their interests and disinterests, can help to fine-tune and micro-target advertising on a user-by-user basis. According to Kalev Leetaru, this is achieved by “algorithmically mining every second of their unwilling and unwitting users’ lives.”

Essentially, the collection of data from users – in Facebook’s case, over 2.6 billion of them – is ultimately a project in making advertising more unique and users on the platform more susceptible to it.

However, data harvested from consenting users can be valuable outside of advertising too. As the coronavirus pandemic has shown, location data – data on who an individual has met with and where they have been – can be valuable for reasons of public health. “Track and trace” apps have proliferated in response to the COVID crisis and, when used correctly, can be invaluable in helping to stem the spread of what is a highly transmissible novel virus.

Yet data in and of itself is not valuable. A trove of data on a user’s interests, their likes, dislikes and browsing habits, is useless without algorithms and systems developed to match this data with relevant advertising and other data sets.

It’s no wonder that tech giants have placed such a premium on acquiring data analytics firms and startups when data is perceived to be central to maximizing advertising revenue and future success with their audiences.

In one example cited by Augustine, Tesla uses “millions of miles of location data” to “improve the accuracy of its self-driving AI engine that gets immediately updated to every other Tesla on the road.”

Elsewhere, in the last year, Google has strengthened its data analysis through the acquisition of the business data analytics startup Looker for US$2.6 billion. Apple, meanwhile, acquired the AI speech recognition startup Voysis in an effort to further fine-tune the vast amounts of data collected via its speech recognition services.

It is “harnessing the power of data,” according to Augustine, that will bring about the “next revolution.”

The dangers of data

The “data revolution” has not arisen without controversy.

In particular, the last few years have seen rising scandals over the misuse of users’ data by social media platforms.

The data mining and political consulting firm Cambridge Analytica accessed the data of about 50 million Facebook users while working in conjunction with Donald Trump’s 2016 presidential campaign and Leave. EU, one of the organizations attempting to secure Britain’s withdrawal from the European Union. In doing so, Cambridge Analytica was able to micro-target voters.

Big data has also proved valuable for authoritarian states’ efforts to control their populations.

China has invested heavily in facial recognition software and smart lamp posts in Hong Kong became a centerpiece of protesters’ fears that authorities were attempting to track and trace facial recognition data to pin down individual protesters for arrest.

Alongside facial data, data from phones, such as the location data beamed continually from modern smartphones, has also prompted fears that it will be used by authorities to isolate those who have taken part in mass protests.

The acquisition of big data is increasingly a geostrategic battleground. Like oil in the past, data is now a strategic resource increasingly disputed between nations.

Tensions between the US and China illustrate the central role data plays in modern international disputes, with the US claiming that data acquired on the Chinese-owned social media app TikTok is being sent directly back to the national security apparatus of the Chinese Communist Party.

Ultimately, the impact of big data has yet to fully reveal itself. Data remains a valuable resource for driving up advertising revenue and coordinating responses to pandemics.

Yet the proliferation of data, in the sense that every citizen has a data log, is increasingly prompting new concerns about individual privacy and the potential for such backlogs of data to be abused by bad actors.

Like oil, data can fuel what Augustine. terms the “information revolution” and create new industries and opportunities in society. But users should not become complacent about who, how and why their data is being used.

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