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Evil is Baked into Big Tech’s Business Plan. Now What?

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Via Naked Capitalism

Yves here. A supposedly staid organization like INET is broadcasting that rule by our new tech overlords is less than benign. Quite a change in their image in a fairly short time.

By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

Google co-founders Larry Page and Sergey Brin famously launched their search engine with the mantra: “Don’t Be Evil.” Yet soon enough, their ambitions would lead them to talk publicly about doing good while stealthily refining business models based on exploiting, deceiving, and spying on their fellow humans.

Maybe they harbored an adolescent notion of being good. As if nice intentions were enough – like their early aim to steer clear of ad-based business models — without the responsibility, wisdom, and judgment that guide them to reality. Or maybe they had soaked up too much of the Ayn Rand-ethos of the ‘80s. In any case, Page and Brin tossed their youthful idealism overboard to make superyacht-loads of money grabbing your personal data to sell to the highest advertising bidder. Together with other once-idealistic Silicon Valley entrepreneurs, they created gigantic, Gilded Age-style companies that can bully or buy off anyone who stands in their way, sucking up public resources and shredding the democratic fabric as they go. Page and Brin, who recently stepped down from Google, are now the sixth and seventh richest people in the world.

Amid a rising public outcry against Big Tech’s alarming surveillance practices, monopolistic business practices, and growing threats to democracy, America needs guidance on how to reign in these behemoths. Enter the clear-eyed Financial Times columnist Rana Foroohar, who investigates how we ended up in this mess and proposes some practical ways to get back on track. In the following conversation, she discusses her penetrating new book, Don’t be Evil: How Big Tech Betrayed Its Founding Principles — and All of Us, with the Institute for New Economic Thinking.

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Lynn Parramore: As global business correspondent, you write on a wide array of topics for the Financial Times. Why a book-length dive on this particular subject at this moment?

Rana Foroohar: Two things. First, I was trolling for some focus in terms of where to throw my reporting energy, and I came across an amazing McKinsey Global Institute stat showing that 80 percent of corporate value was being held by just 10 percent of firms – those with the most IP [networking software] and data. Most were big tech companies, like the FAANGs [Facebook, Apple, Amazon, Netflix, and Google].

At the same time, I came home one day and opened a credit card bill and started scrolling down it and noticed all these tiny charges in increments of $1.99, 3 bucks, etc. I noticed they were all from the App store. At first, I thought I’d been hacked, but it turns out that my 10-year-old son had become addicted to an online soccer game and racked up all these charges in “in app” purchases. I was horrified as a mother, but fascinated as a journalist, and felt I needed to learn all about this insidious business model.

LP: You mention that Silicon Valley was heavily influenced by 60s counterculture and that many people involved in its rise started out wanting world a better place for everyone. How did the tune go from “We are the World” to “Dirty Deeds Done Dirt Cheap”?

RF: I think that over the decades, the “connect the world” ethos morphed from something beautiful into something that was really just about supra-national companies offshoring capital, data, and profits to wherever they could. Many of the people running the platform tech firms today are very young; they came of age in the 80s when you had a neoliberal ethos, a greed is good culture, and a sense that the only thing that the government can do is cut taxes. They don’t think about the largest public/private ecosystem, or citizens – only consumers. That’s a larger shift in the economy and society of course, but Big Tech represents it’s apex – if capital can fly 35,000 feet over the problems of the nation state, data has been able go even further and faster.

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LP: We’re used to throwing around the word ‘big’ in association with certain industries: Big Ag, Big Pharma, etc. But the bigness of Big Tech feels like something new. You mention, for example, that the market capitalizations of the FAANG companies is bigger than the economy of France. What does this bigness mean to the rest of the economy?

RF: Platform companies enjoy a super-star effect to the nth degree. Their model has been to move fast, break things, ring fence as much data as possible and then use that position to establish monopoly power. That was always the aim, and the possibility with such firms – you can go back to economists like Hal Varian and look at their early writings and see that data economists understood that potential. So, that’s one reason that I don’t buy it when tech titans come to Capitol Hill to testify and say “oh, we had no idea.” Of course you did. That was the plan – to become the operating system for people’s lives, in every aspect of their lives.

LP: The issues surrounding Big Tech are incredibly complex. What is something you learned while writing this book that you might not have been aware of or fully understood before?

RF: Per my point above, one thing that really amazed me was reading the first academic paper on search that Larry Page and Sergei Brin did while they were grad students at Stanford. It has a section in the appendix that admits that if you try to monetize a search engine via targeted advertising, as Google today does, you’ll likely end up in a position where the interests of the users and the advertisers aren’t in alignment. Which is, of course, exactly where we are today. In the beginning, the pair considered targeted advertising “evil,” but as they got closer to IPO (and folks like former chair and CEO Eric Schmidt came into the picture) they loosened those principles.

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LP: How might we realign the interests of tech firms and interests of customers and citizens? Where do you stand on breaking these companies up v. regulating them more effectively?

RF: I would like to see 4 things – first, public data banks in which democratically elected governments can decide which companies and which parts of the public sector get access to consider data and under what terms (rather like what Toronto is doing with the Google Sidewalk project). Data being considered a resource of value, like labor, with an appropriate portion of the corporate value extracted from it going back to the individual (this might be done via a sovereign wealth fund for data, or a digital dividend program – both are being considered in California). I think network and commerce should be separated, a la the 19th century railroad model or bank holding company model – a firm like Amazon, for example, shouldn’t be able to own the entire ecommerce network, and compete against its own clients in commerce (particularly with no algorithmic transparency). And finally, we need a digital bill of rights that enshrines basic civil liberties in the digital space, and an FDA of technology to study the cognitive effects and regulate digital tech properly.

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