A hope for tomorrow's light in current economic moat for users data
Author started with a localist and anti-monopolist point of view and against the monopoly of Big tech companies such as Facebook, Google, etc. With current innovations author points out that *aaS application stack will be majorly disrupted. For example services like Firebase, GCP, etc will be the most affected. And his optimism for this approach comes from the massive databases which in today’s scenario are known to us as Blockchains.
Author started with a question of why user table matters, so here’s a short explanation from the article:
Every web application (from MVP to services such as messenger) have a table called users, which perform most of the operations such as login and signup for the application to log you in the service. Apart from basic details such as username, email and encrypted password they also contain lots of proprietary data such as location history, etc .And author claims that adding rows (more users) to this table is how you win at software.
Author pointed out some of the things which these giants can do with you data:
- App specific functions (Mood Prediction, etc.)
- Support ticketing
- Account Recovery
- Marketing and Remarketing
- And much more.. such as using it in their research
Now the main part of this discussion: the network effects as these tables give you access to it. It gives you some lock-in. In layman terms, the more the users a platform has, the more value it has to any one user with which:
- It’s easier to get new customers
- Makes harder for any user to leave(as they will leave on the value they currently have on you platform)
And the whole attention economy is built around these users tables,the size of these tables are a direct measure of the tech platform which I must say is true in every conceivable way.
As a solution to cap the size of the platform, the author suggested we need to limit the size of its users table. One such method is to break up the giant platforms(e.g Google Ecosystem) into separate entities and don’t let entities share data among themselves with help of legislation and government.
So, how will it affect if we were to separate those users tables and how it will limit monopolies of giant tech companies. When tables are separated we will have siloed tables connected by access controlled APIs and depending upon the relation between any two nodes, they’ll have different kinds of access to each other’s data through this ad-hoc, decentralised system. But these APIs have many implications with them:
- We can access user data only which a company has published.
- They can revoke access at any time
- We can’t raise complaint against the company as our company depends on their data
- And if those companies gets bought then God knows which they’ll do with the APIs
- And most important that we won’t be able to write to those tables.
Bottom line, the company hosting the APIs and data has much more leverage over all users than us and it gives all users data exposure to various of their businesses. And this combination of leverage and risk exposure is what cripple’s numerous startups and entrepreneurs at an early stage upto the point that author compares it to dark matter which I think is not an over exaggeration of the current situation.
As a solution to above dire situation author drilled down a possible solution:
“In place of a decentralized network of user data silos connected by APIs, there’s a single decentralized user data store accessible via an open protocol and a decentralized network of storage nodes. So the identity-hosting blockchain represents decentralization at the datastore implementation layer, and recentralization at the datastore access layer.”
What the author meant is to have a decentralised open protocol to save user tables which anyone can access, giving them equal opportunity and leverage. As for the tech giant of now author gave an insight that they can create the off-chain data stores and add their proprietary data there but at the end of the day within a decade or so due to size of users table on-chain it will be easier for companies to use on-chain data much more easily then the current off-chain solutions and if the didn’t do it most of the companies will lose their leverage. This will effectively achieve all the benefits of current technology as well as cease the current economic moat around users tables.
Below is the game plan listed by the author:
- All of the big incumbents will want to keep their users’ tables proprietary in the beginning, because that’s their moat and it gives them the network effects and lock-in that markets and investors reward them for.
- At some point, though, the blockchain users table (plus the ecosystem built on it) will grow to the size where incumbents can’t compete on their own.
- Eventually, there will be a blockchain users table that’s bigger than the next two or three proprietary users tables combined. When that happens, the mega platforms will either ditch their proprietary tables and reconfigure their businesses around the chain, or they’ll enter a doom loop.
As a last discussion point, the author discussed how it will greatly benefit small companies to bootstrap innovative ideas and for big companies they will have to provide something unique on chain to keep their users on their platform rather than using their economic moat. For problems such as SPAM , the on-chain credentials providers can be incentivised to remove them and possibilities are infinite.
To summarize Author says that Moving identity on-chain and removing possibility of user-table centric network effects completely escapes the API architecture which is access control based and will greatly enhance interoperability on the Internet. And every market and political dynamic which is around users table size, leverage and risk will be out of the picture.
For all the points which the author has listed is the current scenario ,how today’s internet works is all true and happening .As of writing this there are many technologies which are trying to improve upon this and make the Internet a better and secure place. For the article author has chosen the example of BitClout and it is a great platform which gives users leverage too for using the platform by creating their tokens and circulating them to help users with their work.
It would be a great addition to this article if it talked about platforms and protocols such as IDX and Ceramic network which are redefining not only the users table but also how you will store the informational data. Currently most of the data stored related to information is in databases which are behind the firewalls of big tech companies. To alleviate that leverage ceramic network allows to store data on-chain and any kind of data. As for IDX it is supported by web3 foundation and creates a digital identity which is interoperable since it is on web3 standards. Not only this with technologies such as IPFS the decentralised storage is much more easier than ever and new startups are emerging at a faster pace than ever. I am also optimistic about the end of leverage based on users table to be out of the window in our recent future.