Finance & Development – IMF
In this December 2025 article, Viktor Mayer-Schönberger examines the growing concentration of data in the digital economy and its implications for innovation. He argues that data has become a key driver of economic value, especially in the age of artificial intelligence. However, access to data is highly uneven, favoring large technology firms. As a result, the article proposes that broader data sharing is necessary to sustain competition and economic dynamism.
The feedback effect and market concentration
A central concept in the article is the “feedback effect.” Companies that collect more data can improve their products, attract more users, and generate even more data. This self-reinforcing cycle strengthens the position of dominant firms.
Large technology companies benefit the most from this dynamic. As shown, a small group of firms controls a significant share of global internet traffic and AI computing capacity. Consequently, competitors face substantial barriers to entry, particularly due to limited access to data and processing power.
At the same time, AI intensifies these dynamics. Training advanced models requires massive datasets and infrastructure, which only a few companies can afford. This further widens the gap between data-rich and data-poor firms.
Limits of traditional policy responses
The article evaluates common policy approaches to addressing market concentration. Antitrust measures, such as breaking up large firms, target outcomes rather than underlying causes. Even if dominant firms are split, similar concentration dynamics may reemerge.
Other approaches, such as granting individuals greater control over their data, face practical limitations. Although people value privacy, most do not actively manage their data rights. This creates a collective action problem, where individual incentives are too weak to produce meaningful change.
Policies that assign ownership rights over data also present challenges. Complex licensing processes can increase transaction costs and restrict data access. As a result, these approaches may unintentionally reduce innovation, particularly for smaller firms.
Data access as a policy solution
Mayer-Schönberger argues that data access mandates offer a more effective solution. These policies require organizations to share certain types of data, particularly nonpersonal data, under regulated conditions. By reducing barriers to access, they enable more firms to use data for innovation.
This approach shifts the focus from data collection to data utilization. Instead of rewarding firms for accumulating data, it encourages value creation through its application. As highlighted on the article, shared data environments allow multiple actors to generate insights and develop new products.
Examples from existing policy frameworks support this idea. Systems such as GPS and the EU’s Galileo provide open access to data, enabling widespread innovation. Similarly, historical cases—such as the sharing of transistor patents in the United States—demonstrate how access can drive technological progress.
Innovation, competition, and economic dynamism
The article concludes that without broader data access, innovation may slow. As dominant firms consolidate their position, they may have fewer incentives to innovate, focusing instead on maintaining market share. This reduces overall economic dynamism.
Data-sharing policies can counteract this trend by fostering competition and encouraging new ideas. By enabling more actors to experiment with data, these policies support a more dynamic and inclusive digital economy. However, their effectiveness depends on careful design to balance innovation, competition, and privacy concerns.
Reference
Mayer-Schönberger, V. (2025, December). Why data should be shared. Finance & Development, International Monetary Fund.