TECH & SOCIETY / ETHICS:
MONOPOLIES, BIG DATA AND SURVEILLANCE CAPITALISM: THE FUTURE OF SOCIETY AND DEMOCRACY
Section B/Topic 6 – Charu Arya, Ervis Bida, Joe Colombo, Christian DeFelice, Jessica Flaherty, Kyle Rusignuolo, Rajat Sinha, Tom Williams
The unprecedented rise of the big four — Google, Facebook, Amazon and Apple — many argue, has brought into place a concentration of power unknown in human history. The amassing of power seems to follow two vectors: the first the rapid rise of monopoly power and second, the absolute control over data.
PART 1 – The Problem: MONOPOLY
- We have become a nation of monopolies; a large and growing part of our economy is “owned” by a handful of companies that face little competition
- Three companies control about 80% of mobile telecoms, three have 95% of credit cards, four have 70% of airline flights within the U.S. Google handles 60% of searches.
- Creative destruction is the process of companies growing their profits by delivering better products at lower prices than their competitors, but that is not happening today. Creative destruction also means that companies go out of business and workers lose their jobs for a new competitor to hire them eventually.
- Doug Kass predicted in 2019 that Amazon stock prices will be at $3,000 within a few years, and $5,000 by 2025
- We are currently living in a niche market where the world is moving to fewer competitors and larger businesses.
Roger McNamee — Investor / Venture Capitalist — watch video interview and associated article.
https://www.wired.com/story/this-big-facebook-critic-fears-techs-business-model/ (Links to an external site.)
- Roger McAmee, an investor and early Facebook backer, has since soured on the company, along with other early 2000’s Silicon Valley technology that has since exploded.
- He argues these companies (Google, Facebook, Paypal) behaved unlike any organization before them.
- They created disruption and harm by trying to gather as much personal information from their users in order to boost their own profits.
- McAmee believes society has accepted the practice of companies tracking users, claiming domain on their personal information, and then analyzing said info through machine learning and AI to steer people towards advertisements and predict their searches.
- McAmee does not blame the CEO’s, including Mark Zuckerberg, for continuing these practices.
- He places the blame firmly on the business models which have made these companies so profitable, where it relies on storing and utilizing customer data.
FB co-founder says “It’s time to breakup fb” NYT May 2019
- The author condemns Mark Zuckerberg for sacrificing user security & civility on Facebook, Instagram, and WhatsApp for clicks
- Facebook’s news feed algorithm:
- Changed their corporate culture
- Had influence on elections
- Empowered nationalist leaders
- The author finds Mark Zuckerberg’s power unprecedented and un-American
- The author calls to break up Facebook
- Monopolies prevent the competition that spurs innovation and leads to economic growth.
- The Sherman Antitrust Act of 1890 outlawed monopolies. More legislation followed in the 20th century, creating legal and regulatory structures to promote competition and hold the biggest companies accountable.
- In the past 20 years, more than 75% of American industries, from airlines to pharmaceuticals, have experienced increased concentration, and the average size of public companies has tripled.
- Results: less entrepreneurship, stalled productivity growth, & higher prices/less options for customers
- Social media is seeing similar unchecked behavior
- Facebook faces no market-based accountability
- Mark Zuckerberg’s drive to “dominate” the social media landscape was what drive Facebook to acquire Instagram in 2012 and WhatsApp in 2014
- Facebook’s Monopoly Statistics
- Worth half a trillion dollars
- Commands more than 80% of the world’s social networking revenue.
- EPS have increased by 40% since the previous year
- Roughly 70% of American adults use social media, most of whom use Facebook products
- ⅔ use Facebook
- ⅓ use Instagram
- ⅕ use WhatsApp
- Fewer than ⅓ use competing sites such as LinkedIn, Pinterest or Snapchat
PART 2 – The Problem: BIG DATA AND SURVEILLANCE CAPITALISM
Surveillance Capitalism by Shoshana Zuboff (McMillan 2018)
Review of SURVEILLANCE CAPITALISM
https://www.theguardian.com/books/2019/feb/02/age-of-surveillance-capitalism-shoshana-zuboff-review (Links to an external site.)
- Companies, such as Google & Facebook, have come into a “behavioral surplus” of user personal information based on how their services are being utilized.
- Allows these companies to take a user’s personal information and wants and trade them for profit in new markets which predict needs.
- Same companies are spending billions to prevent legislation blocking them from profiting off their user base’s personal information.
- Author Shoshana Zuboff coined this practice as “Surveillance Capitalism”.
- A majority of people are willing to sacrifice their private information to these companies in return for perceived benefits, in what is known as “Decision Rights”.
- Perceived benefits such as:
- Ease of use.
- Navigation features.
- Access to information and other people
- Zuboff argues that the implications to allowing private data to be shared can be dangerous for societal norms in the future. Belief that surveillance capitalism will look to model human behavior and erase both free will and free markets.
A Zuboff documentary on Surveillance Capitalism
According to Zuboff, our personal and private experiences have been hijacked by Silicon Valley and used as the raw material and reveals how Silicon Valley deceives us.
We voluntarily provide personal information to technology companies
- Facebook knows all our hobbies preferences and friends
- Google knows where we are at all times thanks to its navigation app
Residual (wasteful data) from all the way back to 2001 contains rich user data that these companies use to improve their service, but also used to train their models (patterns of user behavior) to predict consumer behavior in the present and future.
- Sell this behavior data to business customers who can in turn use it to target those customers with promotion and targeted ads.
- Maximize the consumer value
We have no idea what today’s algorithms can predict about us or what behavioral data they used to do it
- Buying a single shampoo can predict our behavior. Walmart case of how Walmart knew a woman was pregnant before she did.
Big tech knows us better then we know ourselves
- they can predict things like our personality our
- emotions our
- sexual orientation our political orientation
Our data can be sold to totalitarian regimes like China who uses to oppress political dissidents and minorities
Big tech operates in stealth. The systems have been engineered to be indecipherable to be undetectable to Create ignorance in a vast group of all of us that they call users.
- Facebook experimented with subliminal cues planted in its Facebook pages That would actually influence offline real-world Behavior and emotions to see if they could make people feel happier or sadder.
- Pokémon go is used as a surveillance system (initially incubated at google) that uses Google Earth which in turn used to be a CIA program called Keyhole.
- Hidden microphone in Nest security systems
Functionality of the devices and services we buy/use is held hostage to your agreeing to the privacy contract.
- For example the way to pay with privacy with privacy for all the free services we get from Google
Google’s free mobile operating system Android means Google holds the key to almost 90% of the world’s smartphones in the world.
Need more whistleblowers to prevent illegal data usage such as the Cambridge Analytica scandal.
21st century citizens should not have to make a choice of either essentially, going analog or
living in a world where our self-determination and our Privacy are destroyed for the sake of this market logic.
A similar argument from Evgeny Morozov on the issue of Democracy and Democratization
- t the 2019 Univention Summit, writer Evgeny Morozov gave a speech on the dangers of power in the hands of “Big Tech” companies.
- Facebook launched an app and would actually give users $20 a month (mainly ages 13-25) to allow Facebook to gather and study user data.
- This continued until Apple recognized the act, and removed Facebook’s app from the iOS marketplace.
- Morozov believes the above situation with Facebook represents the three problems facing the digital economy today:
- American and Chinese tech companies promise security & privacy, when in fact these same companies track user data in order to determine what products to launch.
- Periods of growth/competition push tech companies to gather more data and new ways to extract this data. There are no current social rules to dissuade this behavior, so these spying techniques are just accepted.
- Apple has immense power to decide which companies are allowed to continue their activities on their platform and which companies should be relegated away.
- Danger of all three problems above is that the digital economy right now is not properly regulated.
- The strongest companies have the best chance to flourish and continue while others are left to fade away or are pushed out by the larger groups.
- Immediate positives but long-term negatives with the current agreements we have with tech giants.
- Increased Efficiency
- Cheaper or Absence of Prices
- Data is Harvested and Sold
- Prices are Subsidized by Venture Capitalists
- Uber is an example of a tech company subsidizing prices in the short-term in order to achieve long-term dominance.
- In 2017, Uber lost $4.5 billion, but their size and capital backing allows them to continue to operate while smaller firms would die off.
- Long-term, Uber can outwait competition until they are the remaining company. At that point, they can operate at much more profitable levels in a monopoly.
- Society has accepted these dangerous business practices.
- While the cheap prices are nice now, if regulations are not put in place, or if social norms do not adjust, the prices will rise and the burden will be placed on society.
- Morozov believes data should be off limits from corporate control, and regulated instead.
- Build a model to give companies, like Facebook and Google, the right to pay for this data rather than harvesting it like they are now.
Big tech has amassed power in similar paths with two significant steps: the first, establish a monopoly, and the second, obtain complete control over the collected data. Monopolies have overtaken the United States, and it has been proposed that we are moving towards a market in which monopolies are more significant and competition is fewer. Monopolies like Facebook and Google have been harvesting consumer data to create more advertising revenue at the consumer’s expense. McAmee believes that this business model, which allows for companies to gain unprecedented power through consumer data, is the one to blame. Tech giants, including Google and Facebook, track user data and develop targeted advertisements. Monopolies have been proven to decrease entrepreneurship, decrease productivity growth, reduce options, and increase prices. Facebook is one such monopolistic company, whose significant influence in the social media industry with its platforms, Facebook, Instagram, and WhatsApp, has influenced elections, empowered nationalist leaders without being checked or regulated and has spread misinformation and sacrificed user security. Although Facebook had to pay punitive damages of over $5 billion to settle a U.S. investigation into years of privacy violations, their practices continue to perpetuate the behavior of harvesting user data for their monetization purposes.
In contrast, many people are willing to exchange their private user information for perceived benefits, including better user interfaces, navigation features, and access to other people and information. This exchange has significant implications, including the potential for the erasure of both free will and free markets. For example, on Google, people are willing to forego the risk of having the site violate their privacy rights to get more personalized searches that are more applicable to their interests. In the end, some consumers may not care for their rights to privacy being violated, just so long as they can have their needs fulfilled by these Big Tech companies. Furthermore, because of the data they can gather on large groups of customers, big tech knows consumers better than themselves, and there is little information on what these monopolistic companies do with consumers’ data. The digital economy is facing three critical issues, outlined by Morozov, which are markers for an unregulated digital economy in which only the most substantial and most prominent companies are most likely to flourish. One solution presented by Morozov is to regulate consumer data outside of corporate control and have corporations like Google and Facebook pay for the data they use.
Surveillance capitalism poses a significant threat to both free will and free society. The aforementioned current benefits may not be enough to justify the long-term implications. Indeed, the state of the digital economy cannot continue to go unchecked. There needs to be greater transparency and accountability surrounding data and privacy in the current tech environment. Ultimately, it is up to consumers to determine what they are willing to sacrifice in terms of data privacy in exchange for access to more personalized features and platforms and more customized and relevant user experiences. We can conclude that there is still much to be done on the digital regulation front and how it will undoubtedly shape the future of the technological landscape and how these large corporations manage user data. It’s been discussed whether or not organizations such as the ones mentioned above should have to report data as an asset on a company’s balance sheet. While data can be a significant business asset to an organization offering tangible results in revenue that is hopefully not exploited, there can be severe limitations and consequences to an organization, and it can become a significant liability if not managed properly.
- Facebook co-founder, Chris Hughes, believes that the current state of the Social Networking company has sacrificed user privacy and safety for clicks. As they acquire other apps, their monopoly grows stronger within the social platform industry. Through this power, Facebook can influence elections and empower nationalist leaders with very little checks and balances. Do you believe that Facebook’s power has gone unchecked and what regulations should be put in place to combat their rising monopoly?
- What are the three problems Morozov believes are facing the digital economy today? Morozov also feels data should be limited from corporate control, and companies should have to pay to acquire this data. Do you agree with Morozov’s stance, and why? If not, do you feel there is a better way to handle how user data is distributed.
- Most of us acknowledge a privacy issue with tech and data – how private data is shared and utilized (i.e. targeted ads)? And yet Zuboff points to a much larger problem characterized by what she calls “behavioral futures”emerging as a commodity. What are behavioral futures and how does it help us go beyond privacy?