Author Nikos Kostopoulos
Big Data has gained increasing prominence in business and government spheres. As it has emerged as a powerful tool and revenue generator for online businesses, concerns have arisen about its effect on personal privacy and its ability to exert pernicious influence over personal behavior. Perhaps understandably, governments and regulators – particularly in Europe – have lately begun to attempt to address these concerns with a series of regulations and proposed taxes. While we appreciate the intent of such initiatives, we believe the real solutions to the problems posed by Big Data can only come from entrepreneurialism, not bureaucracy.
The term ‘Big Data’ refers the collection of vast amounts of information that can be analyzed to reveal patterns and trends and optimize decision making. Businesses use Big Data to streamline their operations and tailor products to their customers’ wants. This data can be collected from anything that is connected to the internet– including smartphones, computers, even cars. It is what gives the Internet of Things (IoT) intrinsic value , and it plays a key role in the development of Artificial Intelligence. However, this collection of data also poses risks: many people feel that having their data collected and used in this way infringes on their personal privacy. Therefore, in order to create a stronger sense of security, governments and businesses feel a responsibility to ensure that personal data is protected.
To that end, in mid-April, German chancellor Angela Merkel proposed the introduction of a tax on the collection of data. Merkel argued that since physical goods have an assigned value and are taxed accordingly, and because digital data is used by companies for commercial gain, the collection of data should be “considered in the German tax system.” Merkel is not the first leader to recognize the importance of big data and of optimizing the way it is used. The European Commission has made it clear in publishing its Digital Transformation monitor that regulations must allow a swift and flexible way to accommodate innovative technologies. Chancellor Merkel has urged scientists to suggest ways to price data, and warned that a failure to address data issues would lead to a deeply unfair world where some would take advantage of data without any consequence. In March, the EU unveiled a digital plan to address tax avoidance on the part of digital businesses, proposing a 3% tax to be levied on the sale of user data. The tax is expected to generate €5 billion a year for EU members. Along with GDPR and other initiatives, this has made Europe the leader in this arena, despite the fact that 90% of data is owned by US-based companies.
The intentions of the Chancellor and other leaders is to close the gap between traditional business models and those of the digital world, creating an equitable standard that involves an understanding of the true value of Big Data in the current marketplace. Merkel’s proposal is rooted in the idea that data has a tangible value as a raw material, and that it can play an important role in conducting business in the modern world. This idea is correct, but Merkel’s proposed remedy could well end up doing more harm than good.
Merkel’s plan, which treats data as a tangible raw material, requires an overarching data valuation on the part of the government. It should not be the role of government to decide the real value of a market, and only innovation, partnerships, growth and solutions will address the underlying issue of underpricing of data – if this exists. As we move forward from the early adoption stage to mainstream products and businesses, the free market will gradually back up their decision making through Big Data, with the market supporting entrepreneurs and data producers who create value.
What these discussions reveal is that Big Data has undeniable value in the digital economy. However, addressing Big Data-related issues cannot be as simple as a tax readjustment, or any other government action for that matter. Only the market itself is capable of addressing existing loopholes in the nascent technology. We are not blind to the geopolitical factors driving much of this regulatory push. The European Union is currently investing 1.5 billion euros to boost its investment in artificial intelligence by about 70% in order to compete with Asia and United States, who have to date invested far more. But constant innovation from the private sector combined with the passion of big data scientists, AI experts, Blockchain engineers and hard-working entrepreneurs will ultimately yield the most powerful solutions to Big Data issues.
Quadrant Protocol stands as an example of how the market can develop its own solutions for Big Data. Quadrant is a blockchain-based data protocol with a goal of creating a transparent, trustworthy and fluid flow of data transactions. In doing so, it ensures that all data providers, including the original creators of the data, receive proper compensation whenever their data is used. The trustless and transparent nature of blockchain technology provides a way of building trust between transacting parties before the data is mapped. To further that trust, Quadrant is anchored in the Ethereum Mainnet, ensuring the transparency of the side chain and eliminating the possibility of any manipulation by another node within the network. The difficulty of a coordinated hacking attempt on Quadrant and the Ethereum network provides a high level of security. All of this serves to increase trust and dampen any fears relating to the collection and transfer of data.
We invite governments to work closely with the big data ecosystem as the only way to guarantee that the technology will continue to flourish. We welcome the words of the European Commission’s VP for the Digital Single Market, Andrus Ansip: “Without data, we will not make the most of artificial intelligence, high-performance computing and other technological advances. These technologies can help us to improve healthcare and education, transport networks and make energy savings: this is what the smart use of data is all about.” The innovation taking place in the blockchain space is well poised to develop an equitable solution to issues surrounding Big Data. Quadrant Protocol and others enable everyone to take part in the creation of new data solutions. The only way of ensuring authenticity and an equitable distribution of rewards is to allow entrepreneurs the ability to lead the development of these technologies and develop solutions that work for everyone.