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You may have heard something about “data being the new oil” or some such. Just as petroleum drove economies in the 20th century, so will digital information in the 21st. I really started hearing about this framing after a May 2017 cover story by The Economist. The piece had a pretty snappy lede:
An oil refinery is an industrial cathedral, a place of power, drama and dark recesses: ornate cracking towers its gothic pinnacles, flaring gas its stained glass, the stench of hydrocarbons its heady incense. Data centres, in contrast, offer a less obvious spectacle: windowless grey buildings that boast no height or ornament, they seem to stretch to infinity. Yet the two have much in common. For one thing, both are stuffed with pipes. In refineries these collect petrol, propane and other components of crude oil, which have been separated by heat. In big data centres they transport air to cool tens of thousands of computers which extract value—patterns, predictions and other insights—from raw digital information. Both also fulfill the same role: producing crucial feedstocks for the world economy. Whether cars, plastics or many drugs—without the components of crude, much of modern life would not exist. The distillations of data centres, for their part, power all kinds of online services and, increasingly, the real world as devices become more and more connected. Data are to this century what oil was to the last one: a driver of growth and change. Flows of data have created new infrastructure, new businesses, new monopolies, new politics and—crucially—new economics. Digital information is unlike any previous resource; it is extracted, refined, valued, bought and sold in different ways. It changes the rules for markets and it demands new approaches from regulators. Many a battle will be fought over who should own, and benefit from, data.
Data and oil do have “much in common.” But some pretty big differences, too, as this Michael Mandel chart shows:
It’s almost like the analogy isn’t really insightful at all. As tech analyst Ben Evans has put it, “What data, analysed in what ways, deployed how, updated how?” Some interesting links on the subject: