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A data economy is a global digital ecosystem in which data is gathered, organized, and exchanged by a network of companies, individuals, and institutions to create economic value. The raw data is collected by a variety of factors, including
search engines Search engines, including web search engines, selection-based search engines, metasearch engines, desktop search tools, and web portals and vertical market websites have a search facility for online databases. By content/topic Gene ...
,
social media Social media are interactive technologies that facilitate the Content creation, creation, information exchange, sharing and news aggregator, aggregation of Content (media), content (such as ideas, interests, and other forms of expression) amongs ...
websites, online vendors,
brick and mortar Brick and mortar (or B&M) is an organization or business with a physical presence in a building or other structure. The term ''brick-and-mortar business'' is often used to refer to a company that possesses or leases retail shops, factory produc ...
vendors,
payment gateway A payment gateway is a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payment processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. The ...
s,
software as a service Software as a service (SaaS ) is a cloud computing service model where the provider offers use of application software to a client and manages all needed physical and software resources. SaaS is usually accessed via a web application. Unlike o ...
(SaaS) purveyors, and an increasing number of firms deploying connected devices on the Internet of Things (IoT). Once collected, this data is typically passed on to individuals or firms, often for a fee. In the United States, the Consumer Financial Protection Bureau and other agencies have developed early models to regulate the data economy. Storing and securing collected data represent a significant portion of the data economy.


Data economy categories


Big data economy

Big data Big data primarily refers to data sets that are too large or complex to be dealt with by traditional data processing, data-processing application software, software. Data with many entries (rows) offer greater statistical power, while data with ...
is defined as the algorithm-based analysis of large-scale, distinct digital data for purposes of prediction, measurement, and governance. This involves processing vast amounts of information from various sources, like social media, sensors, or online transactions, using advanced computer programs (algorithms). These algorithms help uncover patterns, trends, and insights that would be impossible to identify manually, enabling applications such as predicting consumer behavior or optimizing city traffic systems.


Data barter

Data barter occurs when goods or services are exchanged for customer data, typically at a zero monetary price. This phenomenon is common in digital services such as free apps, where the value of the data collected can be substantial. Data barter may not be captured by traditional GDP measures, leading to potential underestimation of economic activity.


Partial data barter

In the process of economic transactions, firms acquire data about customers: the goods they purchased, the time at which they shopped or perhaps a means of payment, zip code or operating system. This data is valuable to firms. Firms that value such data should have an extra incentive do more transactions to gather more data. To do more transactions, a firm needs to lower its price or offer a higher-quality product at the same price, to induce more customers to come. Profit maximization dictates that firms that value data should offer customers lower prices (per unit of quality or quantity). This decline in the price, which is compensated for by the transfer of valuable data, is referred to as partial data barter.


Human-driven data economy

The human-driven data economy is a fair and functioning data economy in which data is controlled and used fairly and ethically in a human-oriented manner. The human-driven data economy is linked to the
MyData The Presidential Innovation Fellows program is a competitive fellowship program that pairs top innovators from the private sector, non-profits, and academia with top innovators in government to collaborate on solutions that aim to deliver signifi ...
Movement and is a human-centered approach to personal data management. This means that individuals have the ability to decide how their personal information is used and shared, ensuring transparency and accountability. It also aims to create systems where data contributes to societal benefits without compromising individual rights.


Personal data economy

The personal data economy is created by individuals using personal data, which people supply either directly or indirectly. Consumers become suppliers and controllers.


Algorithm economy

In an algorithm economy, companies and individuals can buy, sell, trade, or donate individual
algorithm In mathematics and computer science, an algorithm () is a finite sequence of Rigour#Mathematics, mathematically rigorous instructions, typically used to solve a class of specific Computational problem, problems or to perform a computation. Algo ...
s or apps pieces, by leveraging dedicated marketplaces.


Transition to data economy


Market size

The size of the EU data economy was estimated to be more than €285 billion in 2015, representing over 1.94% of the EU GDP. Key sectors in the data economy either are or are on the way to becoming data-driven. For example, the
manufacturing Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of the secondary sector of the economy. The term may refer ...
,
agriculture Agriculture encompasses crop and livestock production, aquaculture, and forestry for food and non-food products. Agriculture was a key factor in the rise of sedentary human civilization, whereby farming of domesticated species created ...
, automotive, smart living environments,
telecommunications Telecommunication, often used in its plural form or abbreviated as telecom, is the transmission of information over a distance using electronic means, typically through cables, radio waves, or other communication technologies. These means of ...
,
healthcare Health care, or healthcare, is the improvement or maintenance of health via the preventive healthcare, prevention, diagnosis, therapy, treatment, wikt:amelioration, amelioration or cure of disease, illness, injury, and other disability, physic ...
, and pharma industries are at the core of the data economy.


Benefits

Management of personal information makes everyday life easier and adds to well-being. A unified procedure opens up opportunities for user-oriented innovations and business activities. Individuals have control over the data concerning themselves. Individuals can actively define the services and the conditions under which their personal information is used. The service providers worthy of people's trust can also get access to significantly more extensive and varied data e-services.


Challenges

Approaches to data breaches are problematic. Challenging issues include compensation to victims, incentives for enterprises to invest in data security, and uncertainties for corporations about regulatory burdens and litigation risks. Furthermore, data portability might decrease interest in innovations.


Regulation

The regulation of the data economy is closely linked to privacy. The present approach is flexibility, finding a balance between protecting privacy and allowing citizens to decide for themselves. The European Union
GDPR The General Data Protection Regulation (Regulation (EU) 2016/679), abbreviated GDPR, is a European Union regulation on information privacy in the European Union (EU) and the European Economic Area (EEA). The GDPR is an important component of ...
regulation is one cornerstone of this new regulatory framework. A new paradigm for data governance is needed, with data ethics as a central component in all regulatory reforms.


Criticism

The data economy raises concerns about regulatory uncertainties and incoherence, privacy, ethics, the loss of control of data, and the ownership of data and related rights. Mathematical models and algorithms based on them are too often opaque, unregulated, and incontestable. Some concerns have been raised about internet companies controlling the flow of data and using it to gain power. The critiques expressed in the 2012 General Data Protection Regulation (
GDPR The General Data Protection Regulation (Regulation (EU) 2016/679), abbreviated GDPR, is a European Union regulation on information privacy in the European Union (EU) and the European Economic Area (EEA). The GDPR is an important component of ...
) draft of the European Commission have now led to concrete regulations: :“This is why it is time to build a stronger and more coherent data protection framework in the EU, backed by strong enforcement that will allow the digital economy to develop across the internal market, put individuals in control of their own data and reinforce legal and practical certainty for economic operators and public authorities.”


See also

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Algorithms In mathematics and computer science, an algorithm () is a finite sequence of mathematically rigorous instructions, typically used to solve a class of specific problems or to perform a computation. Algorithms are used as specifications for per ...
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Artificial intelligence Artificial intelligence (AI) is the capability of computer, computational systems to perform tasks typically associated with human intelligence, such as learning, reasoning, problem-solving, perception, and decision-making. It is a field of re ...
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Blockchain The blockchain is a distributed ledger with growing lists of Record (computer science), records (''blocks'') that are securely linked together via Cryptographic hash function, cryptographic hashes. Each block contains a cryptographic hash of th ...
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Cloud computing Cloud computing is "a paradigm for enabling network access to a scalable and elastic pool of shareable physical or virtual resources with self-service provisioning and administration on-demand," according to International Organization for ...
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Cloud computing security Cloud computing security or, more simply, cloud security, refers to a broad set of policies, technologies, applications, and controls utilized to protect virtualized IP, data, applications, services, and the associated infrastructure of cloud com ...
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Data Data ( , ) are a collection of discrete or continuous values that convey information, describing the quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpreted for ...
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Data analysis Data analysis is the process of inspecting, Data cleansing, cleansing, Data transformation, transforming, and Data modeling, modeling data with the goal of discovering useful information, informing conclusions, and supporting decision-making. Da ...
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Digital economy The digital economy is a portmanteau of digital computing and economy, and is an umbrella term that describes how traditional Brick and mortar, brick-and-mortar economic activities (production, distribution, trade) are being transformed by the ...
* Digitization economics *
Electronic business Electronic business (also known as online business or e-business) is any kind of business or commercial activity that includes sharing information across the internet. Commerce constitutes the exchange of products and services between businesses, ...
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Electronic commerce E-commerce (electronic commerce) refers to Commerce, commercial activities including the electronic buying or selling Goods and services, products and services which are conducted on online platforms or over the Internet. E-commerce draws on tec ...
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E-commerce E-commerce (electronic commerce) refers to commercial activities including the electronic buying or selling products and services which are conducted on online platforms or over the Internet. E-commerce draws on technologies such as mobile co ...
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GDPR The General Data Protection Regulation (Regulation (EU) 2016/679), abbreviated GDPR, is a European Union regulation on information privacy in the European Union (EU) and the European Economic Area (EEA). The GDPR is an important component of ...
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Information economy Information economy is an economy with an increased emphasis on informational activities and information industry, where information is valued as a capital good. The term was coined by Marc Porat, a graduate student at Stanford University, wh ...
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Information society An information society is a society or subculture where the usage, Content creation, creation, information distribution, distribution, manipulation and information integration, integration of information is a significant activity. Its main drive ...
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Internet of Things Internet of things (IoT) describes devices with sensors, processing ability, software and other technologies that connect and exchange data with other devices and systems over the Internet or other communication networks. The IoT encompasse ...
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Knowledge economy The knowledge economy, or knowledge-based economy, is an economic system in which the production of goods and services is based principally on knowledge-intensive activities that contribute to advancement in technical and scientific innovation. ...
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Knowledge market A knowledge market is a mechanism for distributing knowledge resources. There are two views on knowledge and how knowledge markets can function. One view uses a legal construct of intellectual property to make knowledge a typical scarce resource, ...
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Machine learning Machine learning (ML) is a field of study in artificial intelligence concerned with the development and study of Computational statistics, statistical algorithms that can learn from data and generalise to unseen data, and thus perform Task ( ...
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Network economy The network economy is the emerging economic order within the information society. The name stems from a key attribute - products and services are created and value is added through social networks operating on large or global scales. This is i ...
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New economy The New Economy refers to the ongoing development of the American economic system. It evolved from the notions of the classical economy via the transition from a manufacturing-based economy to a service-based economy, and has been driven by ...
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Open data Open data are data that are openly accessible, exploitable, editable and shareable by anyone for any purpose. Open data are generally licensed under an open license. The goals of the open data movement are similar to those of other "open(-so ...
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Platform economy The platform economy encompasses economic and social activities facilitated by digital platforms. These platforms — such as Amazon (company), Amazon, Airbnb, Uber, Microsoft and Google — serve as intermediaries between various groups of users, ...
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Virtual economy A virtual economy (or sometimes synthetic economy) is an emergence, emergent economy existing in a virtual world, usually exchanging virtual goods in the context of an online game, particularly in massively multiplayer online games (MMOs). Peop ...


References

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Further reading


Building a European Data Economy

data.europa.eu: The size and trends of the EU data economy

Principles for a Data Economy (American Law Institute and European Law Institute)


External links


Human-driven data economy (Finnish Innovation Fund, Sitra)

MyData Global Network

Open Knowledge International
Data Data ( , ) are a collection of discrete or continuous values that convey information, describing the quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpreted for ...