GAFA: The big question around data
In today’s digitally inclined lifestyle, Google, Apple, Facebook and Amazon (collectively known as GAFA) touch almost every aspect of our existence, harvesting vast amounts of data about their users in the process. And unlike European regulators, who have done more to protect consumer rights in dealing with GAFA (including slapping Google with a considerable €2,4bn fine in a recent antitrust case), US regulators have until now been reluctant to poke the bear.
But is this about to change? The data harvesting issue is set to become even more contentious in future. If it was not apparent already, we are living through yet another gold rush. But this time it is data that is the coveted resource. Data is fuelling business and driving everything from planning, design and marketing to analytics. Plus, it is the foundation of mankind’s next giant leap to artificial intelligence (AI).
Unlike previous gold rushes, figuring out who the gold belongs to is a big problem. Who owns your data? Take this conundrum for example: A business is selling a product on Amazon Marketplace. A customer searches Google before clicking onto the retailer and buying the product. Does Google own the data or does Amazon? What about the business that is piggybacking on Amazon's infrastructure? Or does the customer own their own data?
The big take-out:
Rogerwilco’s Charlie Stewart is questioning issues brought to the fore around data protection and regulation. GAFA is becoming ever more powerful and this has serious implications for other companies trying to enter the market. It also plays on fears around data privacy, and questions whether tighter regulations around data would be a good or bad thing.
The reality is that they each own a portion of the data. However, regulators don’t appear to like the fact that the tech GAFA is using is so sophisticated and so good at stitching multiple data points together. Though they may own only a small piece of the overall data chain, they actually have a complete overview of everything. Google, for example, is now able to track offline spend in bricks and mortar stores of customers who have clicked on these merchants’ online ads. This does little to assuage fears of all-knowing, all-watching companies.
Moreover, with Amazon’s recent purchase of food retailer Whole Foods, the monopoly question has been raised once again. Pending approval by US regulators, Amazon will now be not only a huge online player in the grocery department, but offline as well, with more than 450 Whole Foods stores worldwide. If Amazon’s current size is stifling competition, what type of power will this new purchase portend?
Add to this, in the course of their regular business activities, GAFA has accumulated gigantic pools of data. With this at their disposal, how does it impede the emergence of new companies? While it could be treated as simply having an evolutionary advantage in a competitive marketplace, where does it leave companies that could have come up with the next big thing, but do not have the data required to rocket them off? This becomes even more pertinent when considering what is required in developing artificial intelligence.
For the intergovernmental Organisation for Economic Co-operation & Development (OECD) these are real problems, considered serious enough for a meeting to be convened late last year on how to bring competition policy to the big data era. Unfortunately, it also goes to show that regulators are unsure to what extent to deal with the issue.
In the absence of regulation, GAFA is flourishing, all sharing a spot on last year’s top five companies stateside by market capitalisation. Plus, potentially heralding further big things for the future, their research and development (R&D) is swinging, with Amazon.com and Alphabet (Google’s parent company) ranking number one and two respectively on Bloomberg’s list of annual R&D spending.
Strict regulation of GAFA could end up being a Pyrrhic victory, holding unforeseen consequences for the future. Undeniably, GAFA has changed the way we live. They have made it easier and cheaper for us to find the things we need, and on a grander scale they are building our collective future. The nub of the issue is that if regulators clamp down, GAFA's share price will take a knock, affecting not only much needed R&D but ultimately making us, the consumers, the biggest losers.
* Stewart is the CEO of Rogerwilco.