Non-Rival Data as Rival Products: An Encapsulation-Forging Approach for Data Synthesis

TL;DR

The paper presents the Encapsulation-Forging framework, a novel method to generate rival synthetic data that maintains utility for specific models while protecting proprietary information, enabling secure data sharing.

Contribution

It introduces a new approach to create asymmetric utility synthetic data, balancing data sharing benefits with competitive protection.

Findings

EnFo achieves high utility with significantly smaller datasets.

The synthetic data provides robust privacy and misuse resistance.

EnFo enables strategic collaboration without compromising competitive advantage.

Abstract

The non-rival nature of data creates a dilemma for firms: sharing data unlocks value but risks eroding competitive advantage. Existing data synthesis methods often exacerbate this problem by creating data with symmetric utility, allowing any party to extract its value. This paper introduces the Encapsulation-Forging (EnFo) framework, a novel approach to generate rival synthetic data with asymmetric utility. EnFo operates in two stages: it first encapsulates predictive knowledge from the original data into a designated ``key'' model, and then forges a synthetic dataset by optimizing the data to intentionally overfit this key model. This process transforms non-rival data into a rival product, ensuring its value is accessible only to the intended model, thereby preventing unauthorized use and preserving the data owner's competitive edge. Our framework demonstrates remarkable sample efficiency, matching the original data's performance with a fraction of its size, while providing robust privacy protection and resistance to misuse. EnFo offers a practical solution for firms to collaborate strategically without compromising their core analytical advantage.