The Data Boom Is Here — It’s Just Not Evenly Distributed

The leading digital platforms control access to an increasing share of the world’s data. Here’s why we need policies that level the playing field.

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Joseph Schumpeter was deeply worried about innovation. The renowned economist, who coined the term creative destruction, championed entrepreneurship as the engine of economic growth but feared that small players lacked the key resource needed to implement their pathbreaking ideas: capital. Fortunately, he turned out to be wrong. Since the 1950s, a thriving ecosystem of angel investors and venture capitalists has supplied enough money to startups for their ideas to change the world.

But the data age has revived Schumpeter’s concern that innovators could be blocked from accessing the resources they need. As Big Tech becomes evermore powerful thanks to the vast troves of data that the major platforms have collected, and innovation becomes increasingly data-driven, entrepreneurs and enterprises may find it difficult to seize new opportunities. Keeping the engine of innovation running will require access not only to capital but to data as well.

For many innovators exploiting digital technologies — especially AI and machine learning — great ideas need to be paired with relevant data to create a viable product. Without mountains of suitable training data, safe and reliable autonomous vehicles will remain a pipe dream. The same is true for AI-based medical diagnostics or predictive maintenance systems. We require great volumes of data to develop voice and image recognition, as well as for use cases such as fraud detection, product recommendation, and protein folding. Whether a brilliant idea can make “a little dent in the universe” (to quote Steve Jobs) or at least be turned into a successful product increasingly depends on access to data.

While great ideas can spring up anywhere, access to data is not evenly distributed. Today, the collective we refer to as Big Tech — Google/Alphabet, Amazon, Facebook/Meta, Apple, and Microsoft — has a far greater capacity to collect data than startups and smaller competitors do. Even large corporations in other sectors often have only limited ability to access relevant data.

Lacking access to data, small would-be competitors can only hope to be bought up by Big Tech — which is precisely the dynamic witnessed in Silicon Valley over the past 15 years. An analysis by Stanford Law School’s Mark Lemley and Andrew McCreary showed that at the turn of the century, most successful Silicon Valley startups went for an initial public offering, whereas by the 2010s, most were bought up by incumbents.

Topics

Frontiers

An MIT SMR initiative exploring how technology is reshaping the practice of management.
More in this series

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