The Centre for Economic Justice CREATING A DIGITAL COMMONS James Meadway August 2020 THE IPPR CENTRE FOR ECONOMIC JUSTICE The Centre for Economic Justice at IPPR is our ambitious initiative to provide the progressive and practical ideas for fundamental reform of the economy. We want an economy where prosperity and justice go hand in hand. The Centre for Economic Justice will carry forward the work of the acclaimed IPPR Commission on Economic Justice, producing rigorous research to show how the Commission’s ten-part plan for the economy can be put into practice. www.ippr.org/cej ABOUT IPPR IPPR, the Institute for Public Policy Research, is the UK’s leading progressive think tank. We are an independent charitable organisation with our main office in London. IPPR North, IPPR’s dedicated think tank for the north of England, operates out of offices in Manchester and Newcastle, and IPPR Scotland, our dedicated think tank for Scotland, is based in Edinburgh. Our primary purpose is to conduct and promote research into, and the education of the public in, the economic, social and political sciences, science and technology, the voluntary sector and social enterprise, public services, and industry and commerce. Other purposes include to advance physical and mental health, the efficiency of public services and environmental protection or improvement; and to relieve poverty, unemployment, or those in need by reason of youth, age, ill-health, disability, financial hardship, or other disadvantage. IPPR 14 Buckingham Street London WC2N 6DF T: +44 (0)20 7470 6100 E: [email protected] www.ippr.org Registered charity no: 800065 (England and Wales), The progressive policy think tank CONTENTS Summary ..........................................................................................................................3 Introduction ....................................................................................................................7 1. The data economy today .........................................................................................8 Big Data and the platforms ....................................................................................9 Dynamics of platform markets ............................................................................ 11 The platform lifecycle ............................................................................................ 12 Beyond the tech platforms ...................................................................................15 Tax and competition policy are not enough .................................................... 17 Anti-trust is only part of the answer ..................................................................18 Energy use and environmental impacts ............................................................19 The threat to public data .....................................................................................20 Action needed now .................................................................................................22 2. Emerging challenges ..............................................................................................24 Internet of things and 5G ......................................................................................24 The rise of artificial intelligence .........................................................................25 The economic impacts of artificial intelligence ..............................................26 Against the ‘robot tax’ ............................................................................................28 Predictive algorithms .............................................................................................29 Opacity and systemic risk .....................................................................................29 AI funding ..................................................................................................................30 Data, AI, and intellectual property ..................................................................... 31 Patent risks ...............................................................................................................32 Patents and intellectual property laws are not driving AI ...........................33 3. Recommendations ..................................................................................................35 References ....................................................................................................................42 IPPR | Creating a digital commons 1 ABOUT THE AUTHORS James Meadway is an associate fellow at IPPR. ACKNOWLEDGEMENTS The author would like to thank Peter Wells, Francesca Bria, Rowland Manthorpe and the staff at IPPR. Funding for the this report was generously provided by Sir Trevor Chinn, Julian Richer and Martin Taylor. Download This document is available to download as a free PDF and in other formats at: http://www.ippr.org/research/publications/creating-a-digital-commons Citation If you are using this document in your own writing, our preferred citation is: Meadway J (2020) Creating a digital commons, IPPR. http://www.ippr.org/research/publications/ creating-a-digital-commons Permission to share This document is published under a creative commons licence: Attribution-NonCommercial-NoDerivs 2.0 UK http://creativecommons.org/licenses/by-nc-nd/2.0/uk/ For commercial use, please contact [email protected] 2 IPPR | Creating a digital commons SUMMARY We are in the early stages of the emergence of a new, digital economy, and the consequences of this are beginning to be felt across society. The collection, storage, analysis, and application of data will become the dominant feature of economic and social life within the next few years. This will include innovations like the growing capabilities of artificial intelligence (AI), based on data-intensive machine learning techniques, while the presence of 5G and the spread of cheap and ubiquitous sensors, potentially present in virtually any produced object, heralds a quantitative expansion in the sheer volume of digital information that can be processed, and a qualitative shift in how we live our lives as a result. Technologies from smart grids to autonomous vehicles become plausible realities in a world of ubiquitous data; but so, too, do the obvious possibilities of mass surveillance, the disappearance of meaningful privacy – and, from the point of view of building a just and democratic economy, the concentration of power and wealth in fewer and fewer hands. Already, we’ve seen a stark tendency towards the latter, with digital technologies reinforcing existing inequalities and disrupting economic structures – as indicated by the huge churn in the world’s largest companies, from oil majors to data giants, in the decade since the crash. The Covid-19 pandemic has accelerated these tendencies markedly. Cheap and simple methods to control infectious diseases, in the absence of a vaccine or a cure, have been known for centuries, but the appeal of data- based solutions to the problems of tracing and tracking contacts amongst those suspected of carrying the virus has been hard to resist for governments across the world. Contact-tracing apps have created new, and frequently more intrusive, techniques for mass surveillance and data-gathering, with mixed (at best) results. The shift to homeworking, following the imposition of social distancing measures, has placed increased strains on existing infrastructure, and incentivised the development of new software for the monitoring of those working from home. Where a physical presence in the workplace is unavoidable, additional biological and health surveillance to check for the possible presence of Covid-19, and to enforce social distancing – as in the use, in Amazon warehouses, of infra-red tracking. Governments across the world have actively sought the assistance of data companies, from the tech giants to new AI start-ups, in the monitoring and processing of data – with the side-effect (intended or not) of reinforcing the tech giants’ dominance. This expansion of the data economy and its greater presence in every part of our lives is likely to prove irreversible, whatever happens to the virus, a belief reflected in the soaring US stock market performance of Big Tech. The underlying economics of data produce outcomes like these. Data, defined as information about the world that can be collected and analysed to extract meaning and generate value, has peculiar properties that make it quite distinct from the raw material (the ‘new oil’) it is sometimes described as. In the language of economics, it is ‘non-rival’ but also ‘non-fungible’. Non- rival means that the same piece of data can be used over and over again, in multiple applications by multiple users, without damaging its fundamental value. The implication is that it can be repeatedly reproduced at minimum cost. But it is also non-fungible, in that any single piece of data cannot be replaced by another. One can of oil is much the same as another; but one data point about your weekly shopping is not the same as someone else’s. IPPR | Creating a digital commons 3 In combination, these two properties give rise to the distinctive economics of data: the value of any single data point can be minimal, but the fact that it is unique – and still contains meaning – means that in aggregate it can become immensely valuable. The underlying drive, then, is always to both aggregate as much data as can be found, so as to analyse and