Q. With reference to the data-network-activities loop or the DNA loop, consider the following statements;
1.Under this, the stock of user data are utilized as input to offer a range of services to increase user activity.
2.The loop makes big tech firms with an established platform to have an advantage when they venture into financial services.
Which of the statements given above is/are correct?

[A] 1 only

[B] .2 only

[C] .Both 1 and 2

[D] .Neither 1 nor 2

Answer: C
Notes:
Statement 1 is correct:

The business model of big techs rests on enabling direct interactions among a large number of users.

An essential by-product of their business is the stock of user data. The data are then utilized as input to offer a range of services that exploit natural network effects, generating further user activity. Increased user activity then completes the circle, as it generates yet more data. This has been called as “data-network-activities” loop – or the “DNA” loop.

Statement 2 is correct: The DNA loop is self-reinforcing. More data generates stronger network effects, which elicit more activity, leading to yet more data. This means that big tech firms with an established platform have an advantage when they venture into financial services.

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