Data Standardization: Technical Barriers and the Role of Government - Part 5

Bethany Walsh

Sep 17, 2021

The using standards is driven by the forces of demand and supply. Although many common principles of standardization apply to data, data standardization is more complex. Data standardization can improve interoperability, reduce consumers' exchange costs, and limit duplication, so it is also related for the potential harm such as the risk of inefficient standards being locked. Besides, data standardization may bring high compliance costs to all market participants, resulting in higher prices and less competition. Data standardization can also have a negative impact on competition by enhancing the costs of some competitors. Finally, they may make coordination and collusion easier.

Data standardization may increase incentives for data collection, organization and storage, resulting in more accessible data. This is because expanding the potential use of data will increase the value of data, and the interoperability of different data sources can reduce investment risk. By reducing the cost of data portability and enabling more market participants to use data, data standardization may also be an incentive to increase data sharing.

However, the fundamental role and uses of data in the economy are diverse, which increases the complexity of welfare analysis and raises issues beyond the fields of economics, society, politics and law. Take the digital configuration file as an example, the more accurate the data is, the more personalized the data subject processing is. In the economic field, individuals will receive product that are more in line with their preferences, but may have higher prices, price discrimination or lower quality. In the social field, individuals may receive more targeted relationship suggestions to meet their previous interests, which may also limit their views.