Data, and specifically very large databases, are the new sources of competitive advantage, says Tim O'Reilly, founder and CEO of O'Reilly Media, and one proof of that is the sold-out initial Strata, Making Data Work Conference that his organization has created. Video of the interview here.
“If you look back 30 years, hardware was the source of lock-in,” he said Wednesday on the Siliconangle.tv webcast from the Strata Conference. When the PC came along, IBM thought hardware would continue to be the key to value. That mistake caused it to open the door to Microsoft as the industry evolved to commodity hardware, and software became the new source of lock-in.
“At that time I started asking myself what would be the next source of competitive advantage,” he said. “Eventually I decided it was large databases over the Internet.” People do not think about it that way most of the time, “but when you pick up your smartphone and ask for the nearest Chinese Restaurant, it becomes obvious. That data isn't on the smartphone, it's downloading in real time based on where I am. And it all starts to become part of consumer expectations.”
This is going to drive a major change in views about privacy, he argues. People may want to block the data on their location, but then “suddenly a whole lot of apps don't work.” So they will release that data to get the value of apps that can provide location-specific information, for instance.
The problem is that these big databases only become really valuable when they have all the data, which means that a lot of what is now considered private information needs to become public. And that will require restructuring of some industries and a redefinition of certain classes of harm and how misuse of the data is penalized.
The healthcare industry provides an obvious example. For instance, HIPAA includes strong privacy requirements for personal health data, in large part to prevent insurers and employers from discriminating against people with health problems. But a lot of beneficial things could be done with that data if it were public and available for analysis. So, O'Reilly says, a better way to prevent that discrimination would be to provide strong legal penalties to prevent it rather than trying to keep personal health information private, which today is a losing battle in any case.
What the industry really needs, he says, is innovative tools that individuals can use to manage their personal data effectively. That would allow people to control what happens with their data rather than having the feeling that they have lost control, which will make them more comfortable with releasing that data so that it can be used to provide services they want and to solve problems such as determining what medical procedures are effective at curing or managing specific diseases and which are really a waste of money. That, he says, could contribute to solving the problem of spiraling healthcare costs, which threaten to bankrupt the country. And that would benefit all of us.