Data Economy: path to prosperity or a dystopian future?

The data economy has given rise to the world’s most powerful corporations. Can better data protection and privacy standards deliver fairer and more equitable outcomes?

Searching for information on Google, buying a gift on Amazon, liking a cat video on Facebook or ordering your favorite Chinese food on Seamless, you actively, and most likely unknowingly, leave behind rapid, real-time trails of your personal data.  The production, collection, distribution and consumption of this data –yours and billions of others participating – form the data economy.

Machine learning algorithms use a vast amount of personal data stored in the “cloud” to detect patterns and relationships that eventually influence what we buy, where we go, what we wear, how much we spend and so on. These digital footprints, left behind by nearly 4 billion Internet users, allow data firms to create enormous value.

The five largest firms in the world today – Amazon, Apple, Facebook, Google and Microsoft – are major actors in the data economy with a combined market value of nearly $4 trillion in 2018. These corporations, along with many others in the data economy, capture, store, transport, analyze, trade and sell data. Their data troves give them immense market power, allowing them to capture enormous economic gains.

Unlike capital, natural resources or labour, data is non-depletable. Even when used simultaneously by many entities, data does not diminish in quantity or value. The value of data also depends on its unique characteristics. While an individual data point may be of little worth, its value can multiply rapidly when combined and analyzed with other relevant data. These particularities largely explain the rise of data monopolies, potentially undermining the welfare of consumers.

Recent events have also prompted concerns about trust, privacy and security in the data economy. The frequency and size of data breaches have been increasing at alarming rates worldwide and their costs are being borne by individuals. Even if not stolen by skillful hackers, our data may still end up in unauthorized hands, as firms have been known to share personal data without explicit consent or knowledge of the users.

Developing countries find themselves at a particular disadvantage. As economic activities shift to the digital space, protection and privacy standards of personal data will largely determine the cost of data and comparative advantages of developing countries. Enhancing consumer protection and managing cross-border flow of data will be critical for developing countries and the ability of their firms to compete in the global market.

The challenge we face is how to make the data economy work for all. The premiere issue of the UN DESA Frontier Technology Quarterly explains why the unique characteristics of the data economy matter and how broader data rights can help create a more level playing field. The publication also calls for appropriately valuing data transactions, enhancing privacy and security standards and exploring innovative regulatory approaches.

As economic activities increasingly move into cyberspace, how we shape the data economy today will ultimately define the global economy tomorrow.

Continuing our pioneering work on Frontier Technologies for Sustainable Development, the Development Research Branch in the Economic Analysis and Policy Division of UN DESA has launched the new Frontier Technology Quarterly, delving deeper into specific aspects of new technologies. The Frontier Technology Quarterly series will be available at:

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