Digitalization of society and the economy is a new phenomenon in our world. It influences societies and economies. And, in turn, is influenced by them. Digitalization exists because data can be created, and at a rapidly increasing pace. Digitalization is the entirety of activity based upon the existence of data. Data exist because we need to observe the real world and, in some cases, to control it; each bit of data carries information that is related to the world. Data exist because we can extract them, which means transforming images, text, writing, or measurements into bits, bytes, gigabytes, petabytes. By doing that we create economic value: Data acts as a new form of capital, “data capital”. By its nature, data capital favors the owners of conventional capital (i.e., material assets, cash, and intangible assets such as brand value or intellectual property).

 

Data capital, without any human intervention either political or economic, mechanistically favors (i) larger organizations[1] over smaller ones, and (ii) organizations that can use data over organizations that cannot (or can, but to a lesser degree). By “mechanistically”, we mean without the intervention of human will; in other words, imbalances are created due to the nature of the evolution taking place with regard to technology trends. These imbalances are driven by the nature of data and by the digitalization process. So, for example, a social network is favored over a local grocery store. Then we can say that digitalization mechanistically creates imbalances.

 

Those organizations that have data and digital technology-based platforms have—by using the lever effect inherent in the nature of data—accumulated huge amounts of cash puts them in a dominant position compared to the competition, including compared to other industrial companies. The evolution of the market value not only of each of the GAFAs but also of numerous other digital technology platforms over the last 15 years is an excellent illustration of this.

Digitalization also creates imbalances between digital platform-based technological ecosystems (e.g., the ecosystem present in the Bay Area), on the one hand, and industrial ecosystems (e.g., automotive, around, for instance, Nagoya—or “Toyota City”—Munich, or Detroit; or aeronautics, around Toulouse, Birmingham, or Hamburg), on the other. Digitalization also creates imbalances between small companies and large companies, since it modifies the nature of work—not only by bringing about job losses due to automation but also structurally. Finally, digitalization can create imbalances between the private and the public sector. And these imbalances are growing as time passes, and at an increasingly fast pace.

 

We are familiar with the idea that technology is neutral, and that its impact depends only on how it is used. But this traditional view has become untenable: technology, by its nature and in its complex interplay with industry, the economy, and society, is no longer neutral. By its nature, it favors specific parts of society and the economy. Thus, it contributes to the creation of imbalances. And it is important first to understand this, and second to start identifying and implementing mitigation mechanisms.

 

[1] By “organization” here, we mean a large spectrum of organizations, including corporations, clusters of corporations (which may take the shape of formal or informal trusts), countries, associations of countries such as the European Union (EU) or the Association of Southeast Asian Nations (ASEAN), and any other type of organization with economic interests.