Data ownership is leading the next tech megacycle

Unsurprisingly, the next megacycle in tech is blossoming in Brazil. The fast-rising region’s ecosystem has matured since 2012, leading to unprecedented legislative reform, tech innovation, and a massive rise in global investments.

Like the classic advice “follow the money,” the last major tech shifts from computing, telephony, internet, and mobile advances have evolved in parallel to more advanced payment methods that helped consumers and businesses capitalize on them. The world is shifting from software to data — the lifeblood of training AI.

The convergence of Big Tech, finance, and government has enabled a new data economy. While AI is considered the next big thing, it’s only part of the story because data is the “oil” that fuels AI. The first movement in the megacycle was the General Data Protection Regulation (GDPR) when the EU championed data privacy in 2016. Brazil stepped up and created comparative data privacy rights and is investing heavily in data infrastructure and regulation to enable citizens to capitalize on their personal data.

Many of the billions of dollars in AI investments have come from tech giants led by Amazon, Google, and Microsoft. Much of that money is returning to those strategic corporate investors in the charges they bill back for access to their expensive cloud platforms.

There’s a brewing “cog in the wheel” for Big Tech companies and others — from biotech and healthcare innovators to large banks, big brands and their marketing agencies, and even governments — as the mostly free access to our collective personal data will likely dry up by the late 2020s: The same data that powers our AI systems that we collectively produce in droves needs to be monetized, monitored, and curated.

Yet, a new data-sharing system that disperses ownership and control of that mission-critical data to everyday citizens could create new models upon which startups can innovate. Our data could power an entirely new data economy that could benefit every person who participates in it or not, based on their decision-making.

In brief, the unrestricted use of personal data is ending. And it’s leading to the next megacycle.

Data privacy will evolve into data ownership rights in 2024

Our data could power an entirely new data economy that could benefit every person who participates in it or not, based on their decision-making.

The next tech megacycle — one in which everyday citizens worldwide own and control their personal data that powers AI — began about a year before the global COVID pandemic. In early 2019, Apple CEO Tim Cook’s essay in Time magazine calling for a landmark package of reforms to protect and empower consumers helped spark a cultural and legislative shift away from unrestrained access and harvesting of our personal data. Apple has committed to much more sustainable business operations moving into 2030, so we see an attempt at better aligning one of the world’s most valuable tech brands with clear and compelling social responsibility.

Concerning these issues, Cook wrote: “In 2019, it’s time to stand up for the right to privacy — yours, mine, all of ours. Consumers shouldn’t have to tolerate another year of companies irresponsibly amassing huge user profiles, data breaches that seem out of control, and the vanishing ability to control our own digital lives.”

Since then, more data-privacy regulations have emerged, and the ability to track consumers’ shopping habits and preferences has diminished. Some of the world’s most progressive thinkers, such as California governor Gavin Newsom, have called for various forms of a “new data dividend” that will provide a framework for everyday citizens to garner value or monetary compensation for their data they could trade with various organizations.

On November 1, 2023, Brazil took this vision a step further by introducing the world’s first “General Data Empowerment Act” bill to its congress that could be an add-on amendment of its LGPD, Brazil’s landmark data-privacy act, one of the most stringent in the world alongside similar laws in California and the EU. If enacted, as some pundits predict in 2024, new legislation will introduce data ownership rights and provide a framework for monetizing this data for everyday citizens to benefit from.

Brazil’s fintech innovation — led by its central bank (Banco Central do Brasil) — is paving the way for a new paradigm shift where people have autonomy over their data instead of corporate giants controlling it. This levels the playing field for data to be a new currency of preference traded over new rails, making it more divisible, transportable, trusted, and resistant to counterfeiting and fraud. With arguments about IP infringements by large language models (LLMs) concerning actors’ likenesses, artists’ imagery, and the general use of personal data, advancing new regulations to account for 21st-century constructs and the highly automated use of our collective data is critical.

A recent S&P Global Market Intelligence report based on Brazil Central Bank president Roberto Campos Neto‘s recent remarks “connected the dots” to a phased innovation roadmap that began with the introduction of Pix, Brazil’s instant-payment system that boomed faster than anything before it, to a new CBDC (central bank digital currency) to help monetize our data.

A gathering storm: Big finance vs. Big Tech

During the last few years, there has been more friction between traditional banks competing directly with tech innovators. From crypto exchanges attempting to disrupt the monetary system to new payment rails, digital wallets, and even new neobanks or challenger banks that have transformed day-to-day financial services.

During the summer of 2022, the crypto bubble burst after a staggering amount of human and financial capital had poured into web3 businesses and technologies. One tech futures’ pundit, NYU professor Scott Galloway, declared the sector dead in a post titled “Trustless” after “Luna went from a market cap of $34 billion to worthless in a matter of days” and crypto lending platform Celsius announced it was pausing all withdrawals and transfers between accounts. This is the same Celsius that promoted advertised savings rates of 18.63% versus traditional banks.

The largest bank in Latin America today, born out of Brazil, is the Warren Buffet–backed Nubank, with over 90 million customers and an extremely profitable business model. It is the fastest-growing bank in Brazil despite being one of the largest. Nubank has perfected the process of digital acquisition and referral mechanisms to dominate the digital banking landscape. At the same time, Brazil has the fastest-growing payment network in the world with Pix. More than 70% of Brazil’s population has started using this mobile-based payment system in just two years since its introduction.

We see extensive central bank investment in CBDCs, particularly for cross-border trade mechanisms regarding smart contracts.

Yet, unless traditional banking institutions continue to evolve and innovate, they could become obsolete, especially in a world that’s been moving to one where banking is an embedded function. Our bank accounts are becoming a value store on smartphones for most of the world’s consumers. Smart, progressive banks such as those in Brazil have been reinventing themselves — and instead of bankers, they’re hiring more data scientists, AI specialists, and behavioral psychologists.

Emerging markets are rising to lead the way

Unless the U.S. and other mature markets, such as Europe, speed their pace of innovation and legislative reform, they will fall behind in this new data economy boom. The writing is on the wall. In the “Blueprint for an AI Bill of Rights,” the Biden administration frames the use of technology, data, and automated systems “as among the great challenges posed to democracy today” due to AI’s bias and discrimination and the “unchecked social media data collection that threaten people’s opportunities, undermine their privacy, or pervasively track their activity — often without their knowledge or consent.”

The word is getting out, including at the heart of technocapitalism in the U.S. On November 3, 2023, during an event in Silicon Valley, Gustavo Franco, a Brazilian economist and former governor of Brazil’s Central Bank, explained that data ownership rights face a challenge similar to money back in the 1980s. Franco proposed a structure of supervision and regulation around data rights that is analogous to the 1988 Bank of International Settlements Basel Accords, which manages system risk around bank operations.

During the same conference, Campos Neto discussed the latest innovations in the market, which will combine Pix, open finance (banking and financial product integration), internationalization of currency, and Drex (Brazil’s emerging CBDC) for a “new dimension of financial intermediation” by adding AI so people can consume financial products in a safe, efficient way.”

The time is nigh for the U.S. and other mature markets to get in the game before falling behind in a brave new world of data ownership rights. Without express consent, it won’t allow data brokers, Big Tech companies, or organizations to scrape, package, and sell our data.

Importantly, the next megacycle in which AI is powered by personal data that we collectively control will quickly create a much bigger pie for everyone to profit from and thrive together. That’s how we accelerate into the next big thing that lies ahead and a world where data given with consent ensures trust and participation in our institutions.