As a follow up to my blog on the internet of things, I see the entire space as potentially falling into the dilemma of concentrated benefit and diffuse harm. Many small businesses, small service providers and entrepreneurs think they have equal access to “big data.” While in fact, the large companies are exploiting the information to concentrate power even more.
One area that has come to light recently is high frequency trading (HFT). If you are involved in the financial field or follow any of the popular shows on investing, you might have heard the term and have little idea what it means. Supporters of the concept say that it provides liquidity to the markets. In providing that liquidity, though, HFTs extract pennies on each trade, but pennies add up to millions of dollars based on volume. What a computer program is able to do is outlawed if you and me were using the same information. It is a classic case of laws and regulations not being able to keep up with technology.
If this post has piqued your interest, you might want to read “Flash Boys” by Michael Lewis. He outlines the history of HFT and highlights an alternate exchange, IEX, that was developed in an attempt to level the playing field.