Barrier to Entry and Disruptive Innovation Potential in Big Data Markets: A Literature Review
Posted: 3 Jun 2019
Date Written: May 14, 2019
The present regulatory debate on Big Data is significantly focused on the disruptive potential of data accumulation. This paper offers a comprehensive literature review of the current discourse on whether accumulated data creates an entry barrier for new and fringe players. The discussion is intended to throw greater light on key factors that may form the determinative core of Big Data’s potential to create market power that raises antitrust regulatory concerns. In the course of discussion, we take brief illustrative instances of online platforms and sports gaming& betting industries to observe the role played by network effects and data analytics in this context.
The term “big” as the name suggests, refers to large data sets. These data are so voluminous that traditional data processing software are inadequate to manage them. Stored data is aggregated which is a process in which information is gathered and expressed in a summary form. The collected data is analyzed through tools of analysis that aid in turning unstructured bytes into information that are both descriptive as well as predictive. Predictive data is especially highly valued for businesses. Big data analytics used for this analyze large volumes of transaction data as well as other data sources that may not be assessed by conventional business intelligence programs.
Data collected and accumulated by firms is currently being compared to “oil” as an extremely valuable resource in present times. Big Data is expected to be significant in the market for internet of things (IoT). The IoT ecosystem is likely to have over 20 billion interconnected devices by 2020 and represents a market of $17 trillion (about the same as the current GDP of the United States). With the advent of IoT, more objects and devices are connected to the internet, gathering data on customer usage patterns and product performance. Aside from being used by companies to attract more customers based on this information and run operations efficiently, the massive data gathered can be used to serve significant social concerns in healthcare, crime prevention, disaster management and other significant concerns. Governments globally have incorporated Big Data as a priority agenda along with healthcare and national security. In the coming years, it is expected to revolutionize human lives.
Despite significant innovations and advantages that are set to revolutionize businesses and the larger economy as we know it today, competition agencies and scholars globally have argued that amassing large amounts of data has disrupted current markets. The concerns around growing power of big tech monopolies, violation of customer privacy and resulting impact on innovation and consumer welfare in the long run are a prominent theme in the technology narrative today. This paper provides an analytical literature review of the discourse on competitive advantages conferred by Big Data to assess its disruptive potential in current markets.
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