Many have made the claim. The infographic above illustrates the reasons for it. How true is this bromide?
From The Economist to The World Economic Forum, observers have posited the notion that digital data has exceeded the economic value of the world’s oil supplies. Intel CEO Brian Krzanich is reported to have made this claim in 2016 in an address to the Los Angeles Auto Show in support of Intel’s $250 million investment in autonomous automobiles.
Shortly thereafter, Robert Enderle, president and analyst for the company that bears his name, took issue with the claim. He observed that “Neither data nor oil is inherently good or bad. They just are”. Therefore, value is derived from the usefulness and benefit provided to consumers by these commodities.
As we all know, oil is a finite commodity, the scarcity of which increases its value in today’s economy. However, that remains true only if the use to which oil is put is valued by the economy it serves. If energy were derived from horse manure and provided a greater value to the global community than oil, we might all be running horse farms.
First, the value of oil is determined by its usefulness and accessibility. The energy application of oil is obvious to us because it has “fueled” the world’s economy in the industrial age. As the economy grew more dependent on petroleum products (fuel, plastics, lubricants etc.) its apparent scarcity (cartel controlled) only made it more valuable. The combination of usefulness (increasingly positive) and its accessibility (a declining variable) created a commodity over which wars have been fought. Can you imagine paying over $4 a pound for horse manure? You might if you needed it to get to work, take vacations and fly across the country.
If data is considered along the same lines, the analogy holds true in some respects, but fails in others. First, digital data is not a finite commodity. As it explodes exponentially, data becomes overwhelmingly prolific. IBM Cognitive Legal has predicted that by the end of 2020, the quantity of digital data will double each day. A daily exponential curve is unimaginable to our finite minds.
However, how useful is this overwhelming pile of data? Not very much, right now.
Despite its ever growing quantity in exponential terms, most data sits in repositories (servers and data bases) with no benefit being derived as it amasses.
Enter Artificial Intelligence (AI) and Machine Learning (ML). We were intrigued when Amazon began to anticipate our reading interests, our product needs and and our secret desires shared only with Amazon. When did you first notice that Google was recording your travel routine and suggesting when you should leave to return to places not on your calendar?
Add Siri or Alexa to the mix and casual conversations began to generate recommended product purchases. Is it helpful that Gmail suggests how to end your sentences for you? That was a privilege reserved for our significant other. Things began to get creepy.
However, very little data in the mountainous digital cavern we call “the cloud” have been accessed, analyzed or used for beneficial purposes.
AI and ML have clearly created conveniences and deep concerns at the same time. Instead of beneficial purposes being served by those who generate the data (users of social media, subscription applications, Software as a Service technology), the data contributors now realize that “their” data is being used to the economic benefit of those who now “own” it. Every time we check the “I agree” box, the data we generate over time belongs to the service provider we have trusted to use it wisely.
That trust has proven to be unworthy. To get a frightening view of how our personal digital data profile can be used for nefarious purposes, take two hours to view Great Hack, the Netflix documentary focused on Cambridge Analytica and its work in election campaigns.
Who enjoys the economic benefit of digital data today? Those who hold it, rather than those who provided it. Especially troublesome is that all your health care data is “yours” but owned, used and economically deployed by the health care enterprise (hospital, clinic, insurer) that you gave it to.
In this regard, Enderle was correct. Data serves only private proprietary interests when the digital data cartel owns, uses and exclusively benefits from the unimaginable treasure trove of exponentially growing data repositories. Oil has no commodity value until made available to the consumers who need it.
How can digital data truly become more valuable than oil? That will happen when AI & ML are trained to analyze the mountains of unused data just as crude oil was refined and its beneficial uses were discovered creating value for the consumer.
We are currently in a state of unrealized data exploration. As AI and ML become trained to create integrated solutions of public benefit using massive shared data (not siloed), the benefit of the data and its exponential expansion will create far more economic value than oil or any other commodity.
Realizing the untapped potential of digital data will require a transformed culture of collaboration which combines the privacy and security of individual data ownership with the option to share “our” truly anonymized data for mutual benefit. When the global data treasury becomes appropriately accessible for human benefit, those companies which have developed their own integrated AI business strategy will separate from the pack of their industry competitors.
The ironic comparison between the value oil vs. data lies in the contrast to the state of oil before its uses were discovered, refined and deployed. An industry rose up to “exploit” the value of a currently unknown asset.
Unlike oil, digital data’s combination of usefulness (increasingly positive) and its accessibility (an exponentially growing variable) creates a commodity to which oil cannot compare. Oil was merely a messy ugly substance that was difficult to clean from surfaces to which it was applied. Rockefeller, Hunt and Getty became “oil barons” by turning oil into a commodity of great public value.
Data will become more valuable than oil as “data barons” deploy AI & ML to make the intangible asset of digital knowledge tangible.
Mr. Bridgesmith has over 40 years experience in legal professional services and numerous business ventures involving digital technologies. He has represented, trained, and consulted with organizations large and small in most industries. He is currently a Managing Partner of Accelerate InSite with a focus on AI Strategies.