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‘Covid effect’ shows why UK needs new digital regulator and action by local authorities to drive common ownership of data and open access

A complete rethink of how digital data is collected, owned and used is needed urgently to prevent a handful of big tech companies dominating people’s lives for decades to come, according to a new report from IPPR. 

Otherwise the huge global firms whose value has soared since the Covid-19 pandemic will exert ever-increasing control over the most valuable elements of the fast-growing digital economy, the report says. 

Analysis by IPPR has found that six dominant digital companies – Facebook, Alphabet, Apple, Microsoft, Netflix and Amazon – saw their combined market valuations rise by $1.9 trillion since the pandemic began, an increase of 38 per cent. (See chart in notes). 

By comparison, over the same period the average value of all stocks remained roughly unchanged in the US, while it fell 16 per cent in the European market and 22 per cent in the UK. 

IPPR argues that the pandemic has caused society to become even more dependent on data, through homeworking and increased medical surveillance needed to combat the virus. The rapidly rising valuations of the leading digital companies during the Covid-19 crisis reflects the expectation that they stand to gain disproportionately from this change, says an accompanying blog by the report’s author, James Meadway, on the think tank’s website. 

The report argues that competition policy alone is not the answer, and that ways to pool, share and use data must be developed, so it can be used for public benefit rather than private profit. 

To achieve this the report calls for a series of changes by national government including: 

• Create a new UK Office for the Digital Commons, with strong powers to regulate existing digital service providers. It would have a duty to intervene in favour of open data, and to ensure public benefit from all data. 
• Establish a widely understood definition of a new kind of ‘data trust’, distinct from conventional trusts, and ensure resources are available to promote their creation and use. 
• Protect valuable UK digital data, such as that derived from the NHS, from unfair international exploitation – notably in trade deals after the UK leaves the EU. 

It also recommends steps to bring the value created by data under local and regional control, as is already being pioneered by innovative cities such as Amsterdam and Barcelona. Local authorities, metro mayors and devolved administrations can do the same in the UK, the report urges, including by:  

• Using their procurement powers, begin building a local digital commonwealth by compelling companies to share data as a pre-condition of winning a service contract, and to build the use of data for local public good into their guidelines. 
• Pushing for locally collected data to be made open to use by others in anonymised form as a matter of course, as with TfL’s open-source data on transport use in London. 
• Ensure that newly developed digital infrastructure, such as smart power grids, is held under local and democratic control. 

James Meadway, Associate Fellow at IPPR and author of the report, said:   

“Covid-19 risks further increasing the economic and social dominance of Big Tech, with stock market valuations skyrocketing as society becomes more dependent on data through homeworking and increased medical surveillance. 

“This Covid effect means their power to affect and influence our daily lives is becoming increasingly removed from public control. It also represents a loss to us all, as most of the value of trillions of gigabytes of data, derived directly from us every year, is held privately by these companies instead of being available for the common good. 

“We need to use the national regulation of data to develop a broader concept of a digital commons, with data derived from us held and used for the public good. A first step should be establishing a new Office for the Digital Commons, with the power to regulate big tech companies and enable shared and open-source use of our valuable data assets.” 

Carys Roberts, IPPR’s Executive Director, said:  

“Crises can accelerate and make permanent pre-existing trends. The pandemic is set to strengthen the role of data in our economy, and the power of tech giants who are most able to harness it. 

“IPPR’s Commission on Economic Justice argued in 2018 that data and digital infrastructure should be organised as a collective good. This paper sets out how that task can be achieved, through reform to regulation, management, ownership, and control, involving multiple levels of government. 

“National and local policymakers must shape the economy that will emerge on the other side of this crisis, even as immediate measures to halt the virus continue. Failure to take urgent action now could mean we find ourselves lacking the tools or capacity to fix mistakes years down the line.” 

James Meadway, the report’s author, is available for interview. 

CONTACT 

David Wastell, Head of News and Communications: d.wastell@ippr.org  

NOTES TO EDITORS 

The IPPR paper, Creating a Digital Commons by James Meadway, is available for download at: http://www.ippr.org/research/publications/creating-a-digital-commons

An accompanying blog by the report’s author will be published on the following page: https://www.ippr.org/research/read 

James Meadway, IPPR Associate Fellow, was previously economic adviser to the Shadow Chancellor, John McDonnell MP, and is a former chief economist at the New Economics Foundation.

CHART: The value of six big tech firms has grown by between 11 and 71 per cent since the pandemic began - a total increase in their market capitalisation of 38 per cent, or $1.9 trillion. Meanwhile, the rest of the economy suffered:

IPPR’s Centre for Economic Justice was set up in 2019 to widen and deepen the work of the Commission on Economic Justice.  The Commission’s final report, Prosperity and Justice: A plan for the new economy, is available here.

IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence. www.ippr.org