Data has firmly established itself as the primary commodity to be mined in the 21st Century. Coming hot on the heels of Microsoft’s $26 billion purchase of LinkedIn, the 2016 summer saw an intensification of the global dash-for-data.
Harnessing the power of this unending stream of data is now the top priority for many businesses, be they global conglomerates or rapidly growing start-ups.
Deriving meaningful insight from largely unstructured data sets is incredibly challenging, particularly for organizations that have only recently become attuned to the idea that the information they hold about their customers is probably more valuable than the goods and services they currently sell to them.
Some industries have been quicker to respond to the opportunity data presents than others—advertising and retail, for example.
The growth of cloud computing means that in the financial services market a start-up can build retail-focused algorithmic trading platforms in ways that simply would not have been economically viable just a few years ago.
Effectively pricing the true value of data is hard enough for those immersed in the sector – for ‘data newbies’ it is likely to be much tougher.
The discounted cash flow models that are the mainstay of the ‘old economy’ are much less effective in a digital world where true value is determined by the level of insight that one can derive from any given data pool.
There is also the risk that seemingly valuable data can turn out to be utterly worthless.
The issue of ownership must be rigorously considered. Who actually owns the data being acquired is often far from certain, as are the appropriate consents to process that data in accordance with applicable law.
Further questions arise with respect to who bears liability if in the course of negotiations or shortly after a deal it turns out there has been a cyber-attack and that proprietary data is put up for sale on the dark web.
The dash for data will also place an increased burden on the respective regulatory and competition authorities reviewing and evaluating such deals.
The European Authorities have made great strides coming to terms with the evolving landscape but questions remain including whether competition law will be applied to data and analytics in the same way the law is applied to physical goods and services.