October 1, 2017    4 minute read

GDPR: Will This Trigger the Meltdown of “Data Oil”?

Tech Crackdown    October 1, 2017    4 minute read

GDPR: Will This Trigger the Meltdown of “Data Oil”?

Last Wednesday, the US Department of Justice filed a case in California challenging Google on contempt of court for defying a court warrant on sharing data linked to 22 named email accounts.

This sounds similar to the case against Microsoft last year but they managed to win the court battle with the ruling on 14th July 2016 which absolved Microsoft from producing information stored in its data centre at Dublin, Ireland.

The Economist had demanded a new approach to antitrust rules on the burgeoning data economy or the new oil, highlighting the unstoppable dominance of internet giants Google, Amazon, Apple, Facebook & Microsoft with their collective profits exceeding $25B in Q1 2017 by dealing with “data oil”.

And then a roaring public statement on 15th August 2017 by a niche AI startup bracing itself up from Silicon Valley: “hiQ believes that public data must remain public, and innovation on the Internet should not be stifled by legal bullying or the anti-competitive hoarding of public data by a small group of powerful companies.”

Finally, EU regulators are clamping down on the “data oil”. With GDPR (general data protection regulation) going live in May 2018, whether it is Google or Facebook or LinkedIn whose business models thrive on public data – as the “controller” of all data associated with a “data subject” – they will now need to rethink on their models of allowing the machines and associated “processors” to distribute data across geographies, and implement new solutions to provide full transparency with respect to each of the GDPR regulations like “the right of access”, “the right to be forgotten” and so on.

Many companies across EU may not even have enough time to get their act together. Given the immense cost to comply with these regulations and the repercussions of non-compliance (a penalty of€20m or 4% of global turnover, whichever is higher), some companies have already wiped out or stopped keeping a record of data subjects.

Alternative Solutions

Is there a smarter solution which overlays on the existing distributed architectures of the controllers?  The answer may be in Artificial Intelligence (AI). The AI-powered neural graphs of some niche startups do have the capability to self-learn from scattered raw data and show in real time all the hotspots of data associated with the data subject across the estate of the controller as well as each and every processor. This could give full transparency to compliance officers.

But then why is Google citing enormous technical issues when they already have AI-powered “DeepMind” in their arsenal, which is handling far more complex data-related problems in industries? In response to the court warrant Google lamented “…at that time it received the warrant, the tool it used to collect information responsive to SCA warrants was data location agnostic; it did not identify where on Google’s network data was stored….it would take several months to make significant progress on the development of long-term solutions to such a complex technical issues”

Social Media Meltdown

One of the intriguing GDPR regulation is the “Right to Data Portability”, which will be a boon to AI startups that may want to leverage and scan the public profile data for driving intelligent insights. Earlier in May this year, Microsoft tried to wield its muscle power on behalf of LinkedIn for preventing the niche startup hiQ Labs from scrapping the public profile data on LinkedIn. But on 14th August hiQ managed to win a win a preliminary injunction in San Francisco against LinkedIn wherein the US Federal Judge also ordered LinkedIn to immediately remove any system controls or technology obstacles which LinkedIn might have initiated to stop hiQ from accessing public profile data on their site.

Microsoft had spent a hefty $26.2bn to buy out the high valued LinkedIn, which prides itself on its almost half a billion subscribers, of which only 0.4% (approximately 2m) are paid subscribers. Consequently, the data economy of LinkedIn is driven by a phenomenal 99.6% voluntary subscriber base, each of whom, as per the new GDPR regulation, can rightfully demand from LinkedIn for their “structured and machine-readable format data” to be transferred as-is to any new “controller” of their choice.

This finally gives the power back in the hands of the “data subjects” whose content is being milked by the social media giants to drive their ad-rich economies. And this may have a huge repercussion on the valuation of the internet giants riding on huge volumes of voluntary public data and broadcasting their legal control over it.

For a long time, regulators have harangued financial institutions, but they are now finally clamping down on internet giants and tightening the regulatory noose on so-called “data oil” to ensure that the interests of the data subject are fully protected.

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