Data Standardization: Technical Barriers and the Role of Government - Part 7


Bethany Walsh

Sep 17, 2021

Data standardization helps support a competitive distributed data collection ecosystem. As mentioned above, data standardization can increase the enthusiasm of companies to collect and share data. Therefore, the data market can be more competitive, and the company's ability to integrate different data sets will reduce its dependence on the single data source.

Some companies may accumulate significant and lasting market power, which is partly based on the inheritance control of a large amount of data. The comparative advantage shared by these companies depends in part on the scale and scope of data collection and analysis and network effects. It is difficult for any competitors to overcome these comparative advantages by collecting data, especially when the exchange cost is high. However, this difficulty can be overcome if competitors combine data collected from multiple sources. Therefore, the lower the cost and obstacles of data portability and interoperability, the stronger the potential competitive pressure of large data collaborators. Since the data is non-conflicting and usually easy to replicate, the data collector can share its data with many potential users to further strengthen the competition. The scale of this potential competitive pressure depends on the willingness of data collectors to cooperate or share their proprietary data.

Increasing thinking at the international level may change some welfare of data standardization. Localization standards can create entry barriers for foreign competitors and reduce the interoperability of domestic datasets. More importantly, data standards will affect the international competitiveness of domestic companies, whether promoting or restricting. Inefficient standards may bring high compliance costs to domestic companies and limit data integration, thus limiting the competitiveness of domestic companies to participate in the international market. In fact, the debate over data-driven comparative advantage is no longer limited to private companies. Governments are beginning to re-recognize how the advantages of data-driven production, investment, employment and trade models have a significant impact on the welfare of their citizens.


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