Web 3.0 will be a gamechanger for businesses
Many of us probably dropped the jaw a bit when Facebook recently lost 13 billion USD as a consequence of the scandal surrounding the improper management of personal data. We have since then furthermore seen large telecom companies declare hand on heart that they will not sell customers’ location data anymore. These two strikes of lightning have made two things lightning clear: 1) The stock market understands the value of storing and making use of personal data. 2) Firms understand in all seriousness the risk associated with not handling personal data properly. Data security – and information security – will therefore be a key factor for companies going forward. Combined with other elements, this will give firms in the digital world a position which makes it possible to continue – and to an even larger degree – utilize and make use of user data.
Personal data has most certainly become ‘the new asset class’. And with GDPR – the General Data Protection Regulation – data ownership has irreversibly been given to the end user. Or the data source so to speak. As a consequence, it will be hard for the huge databases from the Web 2.0 paradigm to continue their as-is-practice, i.e. where the big tech companies to a large extent could privatize and monopolize the economic value of personal data. With Web 3.0, personal information storage will become much more decentralized!
“Business leaders should be wary of Web 3.0, because this ‘user-utopia’ is here and it is happening!”
We can already see examples of platform companies providing users with secure encrypted personal data libraries from which the user can share data with the companies he or she trusts and want to interact with on a case-by-case basis. This will also have the implication that in order for companies to gain permission to use the end user’s data, they will need to focus much more on their online databrand e.g. credibility, likeability, brand proposition, raison d’être (the big why), USP’s, communication, data policies and data ethics, clarity of speech in the permission statements, benefits, user-friendliness, convenience, transparency etc. They should not least have a data-centric approach to IT security including what is called Data-Centric Audit and Protection (DCAP), which is specifically about data security rather than firewalls, networks, software-systems and hardware – not to forget data culture. With Web 3.0. we will see a de-monopolized Internet, which will be further accelerated by the Internet of (every)Things and the successful websites of Web 3.0 will be permeated by a well thought out databrand. Business leaders should be wary of Web 3.0, because this ‘user-utopia’ is here and it is happening!
However, many can claim to know prophecies of the future and have far foreseeing vision. So let’s review rationally at what we know – let’s wander down the PEST-road (political, economic, social and technological).
“The power dynamic between firms and users has experienced a shock treatment and we have barely begun to grasp what has actually happened”
Political focus on privacy and user-control
We have seen great political and regulatory enthusiasm about increasing privacy. Nothing indicates that this will not continue… We have just now seen and experienced GDPR which gives the citizen comprehensive owner-rights over data. GDPR also makes it possible for the citizen to take action against firms, on the basis of Article 20, and have his or her data transported between firms. And GDPR is not just a Europe phenomena – it’s setting the global standard right now especially for businesses with cross-boarder operations. A new law was passed in California by the end of June 2018 which is now the most extensive regulation of data management in the US. This also gives the citizen opportunity to sue firms if data breaches occur. The PSD2 regulation is another driver behind the de-centralization of data stores in the financial sector and it is likely that a PSD2 for insurance will also be implemented one day soon. The power dynamic between firms and users has experienced a shock treatment and we have barely begun to grasp what has actually happened.
Economic growth in data-generating devices and new data-business models
The stock market has, as mentioned, definitely started to react to the importance of personal data and privacy mishaps.
“…the cost of managing data as part of the business model have risen and so has the associated liabilities”
And with GDPR, the current ratios for valuing network based Web 2.0 companies will likely change. Ratios such as Average Revenue Per User (ARPU) and Monthly Active Users (MAU) are not very sufficent ratios for company valuation after GDPR. Simply put, the cost of manageing data as part of the business model have risen and so has the associated liabilities. With increased risk associated with Web 2.0 business models, the rationale for embarking on more web 3.0-like business models will be higher for many companies and institutions (for more on valuing the effects of privacy regulation on the cost base, please read this great article by GDPR and privacy analyst Chiara Rustici). IoT is also estimated to generate far more than 14.4 trillion USD globally in 2020, and this omens that the amount of data points will increase significantly with IoT. As a consequence, we can count on seeing many more firms which offer secure and encrypted storage of those personal data already in 2019. These will change the data infrastructure as we currently know it. Right now, it is primarily capitalistic activists who are driving forward Web 3.0, but the majority of the market will catch on eventually as we will begin to be able to meassure the immense liabilities associated with the current data business models.
Social consciousness of the value of personal data and changing user demands
Generally speaking, we are seeing an increased focus on personal data both in news columns and on screens, which contribute to increasing the awareness of personal data among citizens. The GDPR fines that the whole world is waiting for with anticipation will be an unfortunate catalyst for further user awareness regarding ones own personal data. The MyData movement is on a rise and great things are happening in fx Helsinki and France. ‘Personal Data Week’ as well as other similar international campaigns have also been held in the US in 2018. A quick search on the internet shows that unions and consortiums, such as TheDataUnion.eu, The Personal Data Trade Association and Personal Data Ecosystem Consortium, are popping up everywhere. These initiatives create attention, put focus on and lobby for citizens to be more enabled and empowered to claim their rights over their data. But more importantly, the MyData movement repressents a powerful philosophy about data ownership og retaliation mechanisms empowering the data owner – the individual. The new systems and infrastructures that are coming will also create new user expectations to data security and the opportunity for the user to claim his or her data. The data marketplace is taking shape and data brokers are emerging. We currently see companies responding to this by re-considering their ‘My Site’ universe on their web pages, making personal data much more transparent and actionable for the end-user. And from here, the right to data portability will eventually be enabled.
“It is very likely that we will see users demanding high ethics in terms of data-usage, user-friendliness, and security regarding their information”
Just like how Amazon and Netflix has changed our patience when it comes to movie and tv-shows – don’t we all remember the 60-seconds-long menu- and copyright warning sequences, which were a custom in the DVD universe. It is very likely that we will see users demanding high ethics in terms of data-usage, user-friendliness, and security regarding their information.
Technologies promoting privacy and control
The growth within Privacy-Enhancing Technologies (PET) is in full swing. Encryption technology is gradually as advanced as Usain Bolts leg muscles and the technology is being used in several places. The development within Cryptography and Differential Privacy has made important progress. This technology is about preventing loss of privacy whilst the same data is being used aggregated where they create value, improve AI, and create innovation and new products.
There you have it…
“Web 3.0 is about baking a larger data-pie and maximizing the benefits by inviting the user to have a seat at the table”
But Web 3.0 should not be seen as a threat for the giant tech-firms’ existence as much as it should be seen as a rescue operation. Because while the practices of the tech-giants in Web 2.0 might be useful for some it is not sustainable in the long run. They simply cannot continue ahead with the digital decency and dignity parked at home in the startup-garage because of the risk of a big techlash that lurks in the horizon. And this will be harder on the big tech-firms but worst of all on all of us who sit in the dark if the doors close and the lights are out until the generators have cooled off.
Anyways, all business leaders should look out for this opportunity for developing new competitive advantages in regards to the data economy. Web 3.0 is about baking a larger data-pie and maximizing the benefits for all by inviting the user – the data subject – to have a seat at the table.
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