Variant Partners Two Approaches to Achieving Efficient Interoperability on the Internet

Coin World reported:
The core premise of realizing a more interoperable internet is that an application should be able to access the data of users from another application.
By Alana Levin, Variant Fund investment partner
Recently, I have noticed that there seem to be two trends accelerating on the internet:
Existing applications are becoming increasingly isolated and self-contained.
New startups are striving to make the internet more open and interoperable.
I summarize the relationship between these two trends as follows: established companies are trying to consolidate and strengthen their profitability and moats, while new startups see this profitability as an opportunity.
The core premise of realizing a more interoperable internet is that an application should be able to access the data of users from another application. Imagine this: SeatGeek prioritizes ticket sales to you based on your past betting records on DraftKings; Resy recommends restaurants to you based on the types of food you recently ordered on Amazon Fresh; Fila provides unique discount codes to those who watched Emma Navarro’s exciting matches in the US Open and are interested in purchasing equipment from sponsors.
I have noticed that there are two types of startups pursuing this opportunity for an interoperable internet.
The first type aligns with the current state of the internet, as it accepts the fact that the majority of existing user data is stored in closed applications, with underlying technology called web proofs, which are encrypted signature data from web servers proving that users have taken certain actions online. Web proofs allow users to choose how their data is used. In the examples mentioned above, users can choose to prove to SeatGeek that they are active DraftKings users; consumers can choose to let Resy access detailed information about their recent Amazon Fresh orders, but they are not required to do so.
The second type of approach attempts to use persistent and enforced open-source data to rebuild the core categories of internet applications. One key difference from the first type of approach is that no one can control the data, so there is no need for third-party developers to ask users to prove that they have performed certain actions (i.e., provide web proofs). Developers can verify user actions themselves. Farcaster is one of the major companies in this field. It is an emerging social network where everything, from users’ social graphs to posts and likes, is stored in a distributed hub. It has become a thriving developer center, and we are starting to see some cool applications attracted to its network.
I am interested in both approaches. With embedded encrypted wallets gaining more adoption, we can start imagining how new economic flows will emerge.
Regarding the former: we can see microeconomics and emerging information markets riding this wave of powerful access. So far, one challenge for users selling data is that individual pieces of data are not actually valuable. Micropayments may be a way for consumers to monetize their data. But the opposite may also happen. I can envision a world where consumers are willing to pay for exclusive access to certain features (e.g., priority ticketing rights), and the authorization process for this exclusive access cannot be without web proofs.
Regarding the latter: advertising supports a large portion of economic flows on the internet today. What if we could better match consumers with the products they want and ensure that the money spent by advertisers truly translates into money spent by consumers? I wrote in a previous article:
Companies could send coupons directly to the wallets of target customers (as each account is associated with a wallet).
Coupon distribution could be based on consumer posts (or posts they follow) mentioning similar products.
Companies can operate with confidence, knowing that data will always remain open and accessible (i.e., no worries about APIs being deprecated or priced out), allowing them to invest in improving the effectiveness of distribution channels.
Budgets are only spent when consumers take purchasing actions (i.e., coupons are used).
An open data graph is the core to achieving this vision.
Overall, both approaches seem promising and lead towards a similar ultimate goal: a more interoperable internet. The decisions made about data access methods, available data types, whether to meet user needs or bring users to the future, seem to be different approaches without any downsides. More internet experiments are always beneficial!