Pros and Cons of Big Data: Competition and Privacy

A White House report references the pros and cons of big data, including its impact on economic competition and privacy.

Big data is a general term used to describe the voluminous amount of unstructured and semi-structured data that a company creates: data that would take too much time and cost too much money to load into a relational database for analysis. 

Now, companies are looking to cloud computing in their data centers to access all the data. 

In this regard, Lightwave Logic reports that the inherent speed and bandwidth limits of traditional solutions and the potential of organic polymer devices offer an opportunity to increase bandwidth, reduce costs, improve access speed, and reduce power consumption at both the device and system level.

As an example, the White House report notes that a traditional retailer can look at what products you decided to buy, while digital retailers look at what you searched for, what you were shown, and what you ultimately decided to buy. 

In addition, because online retailers control the search results and site design for each individual separately, they can use this data to personalize their experience in a way that traditional retailers never could. 

Big data

Because of this, user data can have increasing returns in terms of scale and scope, especially at smaller initial scales. The result is that data can serve as a barrier to entry for new companies that reduces competition. 

In addition, the flexibility of the digital environment greatly facilitates the process of conducting experiments by significantly reducing the cost and increasing the scale at which companies can conduct experiments. 

The data collected from experiments can be used to further improve product quality and user experience, but can also be used to set prices, manipulate behavior, or implement price discrimination strategies that ultimately lead to consumers being worse off. 

This research raises important questions about how consumer data are collected and used, how technology can harm consumers in some settings, and whether this suggests a role for regulation.

Related to the discussion above about «free» products, users often pay for services with their data, as the «price» is the associated loss of privacy without additional compensation.