Data is not the new oil

Susan Brommer | 12 November 2021 | data science

The world runs on data. Everywhere we are, data is gathered, organised, and exchanged. This is done by all kinds of actors like search engines, social media websites, governments, vendors, and devices on the Internet of Things.

You may have heard the phrase ‘‘data is the new oil.’’ The idea behind this is that data is just like raw oil, in the sense that data is not valuable in and of itself. Value is only created when we gather it completely and accurately, process it properly, and do this in a timely manner. Just like oil. But that is where the analogy stops. In reality, data is nothing like oil.

For a start, oil is scarce and difficult to extract. But data is neither scarce, nor difficult to come by. We have an abundance in data. Every day we produce quintillions of bytes. And it’s getting increasingly easy to produce this much data.

Second, oil is a commodity that we can only use once. Data, on the other hand, can be reused over and over again. If you use some data, then somebody else can still use it as well. You may argue that the data loses some value as it gets more widely used. This is true, but contrary to oil, the data does not disappear after one use.

Lastly, more oil means more value. More data also means more value, but in a different way. More oil increase the quantity of the oil, and that’s where it gets its value from. More data, however, usually increases the quality of the data, and that is where data gets its value from. This does not hold for oil: more oil does not increase its quality.

To conclude, our world is driven by data just as it was driven by oil some decades ago. However, data is not scarce, can be reused, and behaves differently with respect to quantity and quality. This means data is fundamentally different than oil.