Big Data: A Revolution That Will Transform How We Live, Work, and Think

by Viktor Mayer-Schonberger

  Table of Contents

  Title Page

  Table of Contents

  Copyright

  Dedication

  NOW

  MORE

  MESSY

  CORRELATION

  DATAFICATION

  VALUE

  IMPLICATIONS

  RISKS

  CONTROL

  NEXT

  Notes

  Bibliography

  Acknowledgments

  Index

  About the Authors

  Copyright © 2013 by Viktor Mayer-Schönberger and Kenneth Cukier

  All rights reserved

  For information about permission to reproduce selections from this book, write to Permissions, Houghton Mifflin Harcourt Publishing Company, 215 Park Avenue South, New York, New York 10003.

  www.hmhbooks.com

  Library of Congress Cataloging-in-Publication Data is available.

  ISBN 978-0-544-00269-2

  eISBN 978-0-544-00293-7

  v1.0313

  To B and v

  V.M.S.

  To my parents

  K.N.C.

  1

  NOW

  IN 2009 A NEW FLU virus was discovered. Combining elements of the viruses that cause bird flu and swine flu, this new strain, dubbed H1N1, spread quickly. Within weeks, public health agencies around the world feared a terrible pandemic was under way. Some commentators warned of an outbreak on the scale of the 1918 Spanish flu that had infected half a billion people and killed tens of millions. Worse, no vaccine against the new virus was readily available. The only hope public health authorities had was to slow its spread. But to do that, they needed to know where it already was.

  In the United States, the Centers for Disease Control and Prevention (CDC) requested that doctors inform them of new flu cases. Yet the picture of the pandemic that emerged was always a week or two out of date. People might feel sick for days but wait before consulting a doctor. Relaying the information back to the central organizations took time, and the CDC only tabulated the numbers once a week. With a rapidly spreading disease, a two-week lag is an eternity. This delay completely blinded public health agencies at the most crucial moments.

  As it happened, a few weeks before the H1N1 virus made headlines, engineers at the Internet giant Google published a remarkable paper in the scientific journal Nature. It created a splash among health officials and computer scientists but was otherwise overlooked. The authors explained how Google could “predict” the spread of the winter flu in the United States, not just nationally, but down to specific regions and even states. The company could achieve this by looking at what people were searching for on the Internet. Since Google receives more than three billion search queries every day and saves them all, it had plenty of data to work with.

  Google took the 50 million most common search terms that Americans type and compared the list with CDC data on the spread of seasonal flu between 2003 and 2008. The idea was to identify areas infected by the flu virus by what people searched for on the Internet. Others had tried to do this with Internet search terms, but no one else had as much data, processing power, and statistical know-how as Google.

  While the Googlers guessed that the searches might be aimed at getting flu information—typing phrases like “medicine for cough and fever”—that wasn’t the point: they didn’t know, and they designed a system that didn’t care. All their system did was look for correlations between the frequency of certain search queries and the spread of the flu over time and space. In total, they processed a staggering 450 million different mathematical models in order to test the search terms, comparing their predictions against actual flu cases from the CDC in 2007 and 2008. And they struck gold: their software found a combination of 45 search terms that, when used together in a mathematical model, had a strong correlation between their prediction and the official figures nationwide. Like the CDC, they could tell where the flu had spread, but unlike the CDC they could tell it in near real time, not a week or two after the fact.

  Thus when the H1N1 crisis struck in 2009, Google’s system proved to be a more useful and timely indicator than government statistics with their natural reporting lags. Public health officials were armed with valuable information.

  Strikingly, Google’s method does not involve distributing mouth swabs or contacting physicians’ offices. Instead, it is built on “big data”—the ability of society to harness information in novel ways to produce useful insights or goods and services of significant value. With it, by the time the next pandemic comes around, the world will have a better tool at its disposal to predict and thus prevent its spread.

  Public health is only one area where big data is making a big difference. Entire business sectors are being reshaped by big data as well. Buying airplane tickets is a good example.

  In 2003 Oren Etzioni needed to fly from Seattle to Los Angeles for his younger brother’s wedding. Months before the big day, he went online and bought a plane ticket, believing that the earlier you book, the less you pay. On the flight, curiosity got the better of him and he asked the fellow in the next seat how much his ticket had cost and when he had bought it. The man turned out to have paid considerably less than Etzioni, even though he had purchased the ticket much more recently. Infuriated, Etzioni asked another passenger and then another. Most had paid less.

  For most of us, the sense of economic betrayal would have dissipated by the time we closed our tray tables and put our seats in the full, upright, and locked position. But Etzioni is one of America’s foremost computer scientists. He sees the world as a series of big-data problems—ones that he can solve. And he has been mastering them since he graduated from Harvard in 1986 as its first undergrad to major in computer science.

  From his perch at the University of Washington, he started a slew of big-data companies before the term “big data” became known. He helped build one of the Web’s first search engines, MetaCrawler, which was launched in 1994 and snapped up by InfoSpace, then a major online property. He co-founded Netbot, the first major comparison-shopping website, which he sold to Excite. His startup for extracting meaning from text documents, called ClearForest, was later acquired by Reuters.

  Back on terra firma, Etzioni was determined to figure out a way for people to know if a ticket price they see online is a good deal or not. An airplane seat is a commodity: each one is basically indistinguishable from others on the same flight. Yet the prices vary wildly, based on a myriad of factors that are mostly known only by the airlines themselves.

  Etzioni concluded that he didn’t need to decrypt the rhyme or reason for the price differences. Instead, he simply had to predict whether the price being shown was likely to increase or decrease in the future. That is possible, if not easy, to do. All it requires is analyzing all the ticket sales for a given route and examining the prices paid relative to the number of days before the departure.

  If the average price of a ticket tended to decrease, it would make sense to wait and buy the ticket later. If the average price usually increased, the system would recommend buying the ticket right away at the price shown. In other words, what was needed was a souped-up version of the informal survey Etzioni conducted at 30,000 feet. To be sure, it was yet another massive computer science problem. But again, it was one he could solve. So he set to work.

  Using a sample of 12,000 price observations that was obtained by “scraping” information from a travel website over a 41-day period, Etzioni created a predictive model that ha
nded its simulated passengers a tidy savings. The model had no understanding of why, only what. That is, it didn’t know any of the variables that go into airline pricing decisions, such as number of seats that remained unsold, seasonality, or whether some sort of magical Saturday-night-stay might reduce the fare. It based its prediction on what it did know: probabilities gleaned from the data about other flights. “To buy or not to buy, that is the question,” Etzioni mused. Fittingly, he named the research project Hamlet.

  The little project evolved into a venture capital–backed startup called Farecast. By predicting whether the price of an airline ticket was likely to go up or down, and by how much, Farecast empowered consumers to choose when to click the “buy” button. It armed them with information to which they had never had access before. Upholding the virtue of transparency against itself, Farecast even scored the degree of confidence it had in its own predictions and presented that information to users too.

  To work, the system needed lots of data. To improve its performance, Etzioni got his hands on one of the industry’s flight reservation databases. With that information, the system could make predictions based on every seat on every flight for most routes in American commercial aviation over the course of a year. Farecast was now crunching nearly 200 billion flight-price records to make its predictions. In so doing, it was saving consumers a bundle.

  With his sandy brown hair, toothy grin, and cherubic good looks, Etzioni hardly seemed like the sort of person who would deny the airline industry millions of dollars of potential revenue. In fact, he set his sights on doing even more than that. By 2008 he was planning to apply the method to other goods like hotel rooms, concert tickets, and used cars: anything with little product differentiation, a high degree of price variation, and tons of data. But before he could hatch his plans, Microsoft came knocking on his door, snapped up Farecast for around $110 million, and integrated it into the Bing search engine. By 2012 the system was making the correct call 75 percent of the time and saving travelers, on average, $50 per ticket.

  Farecast is the epitome of a big-data company and an example of where the world is headed. Etzioni couldn’t have built the company five or ten years earlier. “It would have been impossible,” he says. The amount of computing power and storage he needed was too expensive. But although changes in technology have been a critical factor making it possible, something more important changed too, something subtle. There was a shift in mindset about how data could be used.

  Data was no longer regarded as static or stale, whose usefulness was finished once the purpose for which it was collected was achieved, such as after the plane landed (or in Google’s case, once a search query had been processed). Rather, data became a raw material of business, a vital economic input, used to create a new form of economic value. In fact, with the right mindset, data can be cleverly reused to become a fountain of innovation and new services. The data can reveal secrets to those with the humility, the willingness, and the tools to listen.

  Letting the data speak

  The fruits of the information society are easy to see, with a cellphone in every pocket, a computer in every backpack, and big information technology systems in back offices everywhere. But less noticeable is the information itself. Half a century after computers entered mainstream society, the data has begun to accumulate to the point where something new and special is taking place. Not only is the world awash with more information than ever before, but that information is growing faster. The change of scale has led to a change of state. The quantitative change has led to a qualitative one. The sciences like astronomy and genomics, which first experienced the explosion in the 2000s, coined the term “big data.” The concept is now migrating to all areas of human endeavor.

  There is no rigorous definition of big data. Initially the idea was that the volume of information had grown so large that the quantity being examined no longer fit into the memory that computers use for processing, so engineers needed to revamp the tools they used for analyzing it all. That is the origin of new processing technologies like Google’s MapReduce and its open-source equivalent, Hadoop, which came out of Yahoo. These let one manage far larger quantities of data than before, and the data—importantly—need not be placed in tidy rows or classic database tables. Other data-crunching technologies that dispense with the rigid hierarchies and homogeneity of yore are also on the horizon. At the same time, because Internet companies could collect vast troves of data and had a burning financial incentive to make sense of them, they became the leading users of the latest processing technologies, superseding offline companies that had, in some cases, decades more experience.

  One way to think about the issue today—and the way we do in the book—is this: big data refers to things one can do at a large scale that cannot be done at a smaller one, to extract new insights or create new forms of value, in ways that change markets, organizations, the relationship between citizens and governments, and more.

  But this is just the start. The era of big data challenges the way we live and interact with the world. Most strikingly, society will need to shed some of its obsession for causality in exchange for simple correlations: not knowing why but only what. This overturns centuries of established practices and challenges our most basic understanding of how to make decisions and comprehend reality.

  Big data marks the beginning of a major transformation. Like so many new technologies, big data will surely become a victim of Silicon Valley’s notorious hype cycle: after being feted on the cover of magazines and at industry conferences, the trend will be dismissed and many of the data-smitten startups will flounder. But both the infatuation and the damnation profoundly misunderstand the importance of what is taking place. Just as the telescope enabled us to comprehend the universe and the microscope allowed us to understand germs, the new techniques for collecting and analyzing huge bodies of data will help us make sense of our world in ways we are just starting to appreciate. In this book we are not so much big data’s evangelists, but merely its messengers. And, again, the real revolution is not in the machines that calculate data but in data itself and how we use it.

  To appreciate the degree to which an information revolution is already under way, consider trends from across the spectrum of society. Our digital universe is constantly expanding. Take astronomy. When the Sloan Digital Sky Survey began in 2000, its telescope in New Mexico collected more data in its first few weeks than had been amassed in the entire history of astronomy. By 2010 the survey’s archive teemed with a whopping 140 terabytes of information. But a successor, the Large Synoptic Survey Telescope in Chile, due to come on stream in 2016, will acquire that quantity of data every five days.

  Such astronomical quantities are found closer to home as well. When scientists first decoded the human genome in 2003, it took them a decade of intensive work to sequence the three billion base pairs. Now, a decade later, a single facility can sequence that much DNA in a day. In finance, about seven billion shares change hands every day on U.S. equity markets, of which around two-thirds is traded by computer algorithms based on mathematical models that crunch mountains of data to predict gains while trying to reduce risk.

  Internet companies have been particularly swamped. Google processes more than 24 petabytes of data per day, a volume that is thousands of times the quantity of all printed material in the U.S. Library of Congress. Facebook, a company that didn’t exist a decade ago, gets more than 10 million new photos uploaded every hour. Facebook members click a “like” button or leave a comment nearly three billion times per day, creating a digital trail that the company can mine to learn about users’ preferences. Meanwhile, the 800 million monthly users of Google’s YouTube service upload over an hour of video every second. The number of messages on Twitter grows at around 200 percent a year and by 2012 had exceeded 400 million tweets a day.

  From the sciences to healthcare, from banking to the Internet, the sectors may be diverse yet together they tell a similar story: the amount of data
in the world is growing fast, outstripping not just our machines but our imaginations.

  Many people have tried to put an actual figure on the quantity of information that surrounds us and to calculate how fast it grows. They’ve had varying degrees of success because they’ve measured different things. One of the more comprehensive studies was done by Martin Hilbert of the University of Southern California’s Annenberg School for Communication and Journalism. He has striven to put a figure on everything that has been produced, stored, and communicated. That would include not only books, paintings, emails, photographs, music, and video (analog and digital), but video games, phone calls, even car navigation systems and letters sent through the mail. He also included broadcast media like television and radio, based on audience reach.

  By Hilbert’s reckoning, more than 300 exabytes of stored data existed in 2007. To understand what this means in slightly more human terms, think of it like this. A full-length feature film in digital form can be compressed into a one gigabyte file. An exabyte is one billion gigabytes. In short, it’s a lot. Interestingly, in 2007 only about 7 percent of the data was analog (paper, books, photographic prints, and so on). The rest was digital. But not long ago the picture looked very different. Though the ideas of the “information revolution” and “digital age” have been around since the 1960s, they have only just become a reality by some measures. As recently as the year 2000, only a quarter of the stored information in the world was digital. The other three-quarters were on paper, film, vinyl LP records, magnetic cassette tapes, and the like.

  The mass of digital information then was not much—a humbling thought for those who have been surfing the Web and buying books online for a long time. (In fact, in 1986 around 40 percent of the world’s general-purpose computing power took the form of pocket calculators, which represented more processing power than all personal computers at the time.) But because digital data expands so quickly—doubling a little more than every three years, according to Hilbert—the situation quickly inverted itself. Analog information, in contrast, hardly grows at all. So in 2013 the amount of stored information in the world is estimated to be around 1,200 exabytes, of which less than 2 percent is non-digital.