Hal Varian from Google: Like oil, data must be refined before it's valuable
The analogy of data as the new oil is true in some ways but only stretches so far, says Dr Hal Varian, Chief Economist of Google.
Dr Varian is one of the world's most famous economists and co-author of Information Rules, the 1999 book that first laid out many of the concepts taken for granted in business today.
Almost 400 people gathered in LT1 and The Hub at Melbourne Business School to watch Dr Varian present on "Machine Learning, Data and Competition" on October 16.
"Raw data itself is not really worth that much. You've got to analyse it and process it to be able to come up with information, knowledge and understanding that helps you apply it to real-world problems," Dr Varian said.
Dr Varian said one of the biggest differences between data and oil was that data could be consumed by more than one person.
"Some people say data is the new oil. My view is that it's like oil in one way, in that it has to be refined to be useful," he said.
"From an economic point of view, unlike oil data is non-rival. If I have a barrel of oil and I give it to you, then I lost a barrel and you gained a barrel. But if I have some data or information and I share it with you, then we both have the same information."
Dr Varian's presentation also touched upon competition between internet companies and the latest developments in data portability.
"At Google we have a service called Takeout which has been around for seven years, where where you can download any of the data that you have provided to Google – your email data, your images, your photos, your documents," Dr Varian said.
"But one of the things we discovered is that we had this capability to take out the data, but there was very little to take in. That is, once you've taken out your email data from Google, then what do you do with it?
"We just announced a few weeks ago a data transfer project where the big internet companies – particularly the founding ones, Google, Facebook and Twitter – are offering APIs that allow you not only to take data out but also to plug data in and do this kind of transfer from one provider to another.
"We think that's an important thing to do and really have encouraged other companies to join this coalition on data portability."
Data portability has been a hot topic in the financial sector in Australia this year thanks to new open banking rules that will let customers transfer their data from one bank to another.
Australian Bankers Association CEO Anna Bligh spoke about open banking in her opening address to the Competition in Banking Conference at the School in June, saying it would be "transformative" for the sector.
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