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

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.

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.

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.

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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45 comments

  1. Vastydeep

    Google didn’t start their search engine with the mantra “Don’t be evil.” To choose “Don’t be evil” as a mantra you have to have reached the point where you recognize that “be evil” clearly IS an option. The problem is that Gresham’s Law also applies to evil — even if they chose not to be evil, they or some successor would eventually come along and make the other choice. And once you make the choice there’s no turning back.

    Reply
  2. Carolinian

    HBO’s just ended Silicon Valley spent six seasons satirizing this odd mix of northern California hippie culture and big business rapacity. The above seems to suggest that evil was there from the beginning and that Don’t Be Evil was always a snow job. But it’s probably a lot more complicated than that. Just as in the show, the founders of these companies likely never imagined how big they would become and it was the eventual power itself that corrupted them. This is what Ayn Rand didn’t get or wouldn’t admit–power corrupts.

    Still, on the evil scale the tech companies aren’t even close to some older seats of American power. They aren’t going around killing people. And the libertarian ethos still survives on the web, at least so far. After all we are sitting here reading contrary views every day.

    Reply
    1. lordkoos

      They themselves may not be going around killing people, but I bet their data has been used by the US government to kill people, and I think in the future that use of data will only increase.

      Reply
  3. The Rev Kev

    Got hung up about something at the beginning of this article where she says:

    “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.”

    I can’t help but wonder if this is 80 percent of corporate “value” or whether it should be 80 percent of corporate “price”. Not the same thing when you get down to it. We have seen examples of corporations that have stratospheric valuations for stupid things like juice-squeezers. To steal an idea from J.M. Greer, value in terms of what outputs for what inputs?

    Reply
    1. lyman alpha blob

      Yes, and this bit too –

      Data being considered a resource of value..

      Just posted a comment in the Mariana Mazzucato piece that’s still in moderation about this notion of value. I don’t really see value as anything other than an opinion. So this data is considered a resource of value by whom? And are they correct that it is actually valuable? I would say no, at least not nearly as valuable as companies like FB and Google have convinced the rubes it is. To me, the fact the these tech companies have come to dominate in market cap, or price, indicates that neoclassical economists are wrong, markets do not come to some equilibrium, and the sky high prices of the these companies and the wealth of their squillionaire founders is a result of them grossly overcharging for the services they provide before anyone caught on that it was all a scam. Google itself has done research that shows more than 50% of internet ads, all of which someone is presumably paying for, are never seen by any human being ever. The link is from 5 years ago but if they were raking it in then on ads that nobody watched, I really doubt they’ve changed their business model. So much for the notiuon that they are “microtargeting” potential customers for advertisers.

      Reply
      1. The Rev Kev

        That bit about 50% of ads never being seen struck a memory chord. Several decades ago a businessman complained that half of his advertising budget was sheer waste. But he simply did not know which half. Your comment suggested which half that might be nowadays.
        Here is a simple mental exercise. Imagine a world in which advertising is illegal. Sure you could have directories to list businesses but no TV, internet or radio adds. No advertising street signs, no corporate sponsorships unless done anonymously. No tracking because what would be the point? I could live in a world like that.

        Reply
      2. eg

        Neoclassical economists are most certainly wrong about a lot of things, perhaps most notoriously where equilibria are concerned; not least in their failure to recognize that they are indeed plural.

        Reply
  4. Oh

    There’s no point in dissing Google and other evil companies that spy on you as long as one uses evil youtube, facebook or twitter or shop from amazon. We have to get away from providing them more currency.

    Reply
    1. anon y'mouse

      i also flush my toilet (20 times a day, just because i can! or really because i urinate a lot) and bring home food items in single use plastic packaging in my large gas-powered vehicle all alone

      so there is no use for me to complain about such things as the state of the system that forces me to participate in all of this. i can urinate in a bucket and throw it outside, and not go to the store nor buy food there.

      right? right?

      there are presently existing systems that charge you more if you want to use actual, physical means to use their services. utility companies and banks have set up systems where if you don’t want to sign in online and do everything “virtually”, you will end up paying the price. oh, and don’t try to apply for ANY job without the ability to use computers, necessitating email addresses and often online profiles for communication.

      one could say that information and remaining informed is also a “need”, in order to participate in any way in our modern society. or i could just wait for the newspaper to come and give me a canned and incomplete overview directed against my interests.

      but i can just bail on all of that and live like Ted Kaczynski. give the finger to The Man, fight the power!

      Reply
    2. Dan

      Haha, Youtube is owned by Google.
      I think Google is more spread out and more menacing than others. You can not use Facebook or not shop at Amazon if you wish.
      But Google monopolizes search engines, half of the mobile phones(can you not use a phone?), along with apps used everywhere-such as G maps and GPS,G store.
      And yes, Youtube.
      As this is not enough they continue to gulp large other future tech sectors.

      Reply
      1. lordkoos

        I recently began using the Qwant.com search engine, which not only doesn’t track you, it also does not filter search results, which tend to keep people in an information echo chamber. Duckduckgo is another alternative.

        Reply
  5. Michael Fiorillo

    Early work on their search engine was funded by DARPA.

    Like the Internet itself, developed in response to irrational fear of the Soviet Union, much of it engineered for political reasons, it was Born In Sin.

    Reply
    1. Synoia

      “Like the Internet itself, developed in response to irrational fear of the Soviet Union”

      That’s not what I remember of the early internet in the ’70s. I remember a presentation and I wondered how we’d get from here (analog, 7200 bps) to packet switching (56kbps analog).

      Digital trunks were possible, only with copper, and frequent repeaters.

      Fiber optic was the stuff of dreams.

      Reply
      1. jsn

        At the start, way back when “things still worked”, I think there’s an important distinction to be drawn between those engaged in communications technology and those funding it.

        DARPA was funding a lot and the justification before Congress was competition with the Soviets in multiple spheres, military or tangent there to, like space.

        The people actually doing the work were part of a broader, happier and more hopeful world, one in which The Club of Rome could finance research for “The Limits of Growth”, Nixon could create the EPA and what would become Exxon would fund and openly distribute research on the greenhouse effect.

        The neoliberal turn allowed evil to simply take over all these well intentioned efforts and use them to make money before all else, turning a life impulse into a deathwish.

        Reply
  6. inode_buddha

    Evil is not the exclusive domain of tech companies. I would argue that *any* large company is most likely evil. Reason being, those that make the decisions become ever more removed from direct consequences, collecting only the profits while socializing the losses. Hiding behind limited liability in the same way government hides behind bureaucracy.

    Reply
  7. Susan the Other

    When Marshall McLuhan said ‘the medium is the message’ he meant it really didn’t matter what crap was on TV because everybody was mesmerized regardless. Electronic games took advantage of this fact. The internet should have a better motto than don’t be evil. Maybe “don’t sell vacuous, pointless and repetitious crap.” The internet needs a board of standards. If it is producing good informative stuff, then yes that deserves a reward. Where’s the Church Lady when we really need her?

    Reply
  8. Suz the lurker

    Thanks for posting this. I started the book few days ago but am not into the meat of it yet. The author gives some background, going back to the dot.com days, and explores implications beyond the Silicon Valley tech companies. So far, a good read, although I haven’t read what her prescriptions are.

    Reply
  9. California Bob

    re: “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.”

    Apple sends an email to the owner of the account whenever a charge is made; were they just ignored or deleted without opening? Who gets hardcopies of CC transactions anymore (well, my 85-YO mother likes paper and checks)?

    I’m not defending ‘Big Tech,’ but if you’re going to use it you HAVE to stay on top of the action.

    Reply
  10. Olivier

    I know I’m being pedantic, so sue me, but can we please stop using “reign in” when we mean “rein in”? It’s epidemic on NC. Really.

    Reply
    1. Yves Smith Post author

      This is in the cross post, and I can’t change the copy I am republishing.

      Lynn Parramore has PhD and was even an assistant prof in a Humanities discipline, so I guarantee this is the result of terrible copy editing at INET.

      Reply
  11. Summer

    RE: “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)….”

    First thing’s first. I’d like to see one main thing. Make nothing dependent upon turning your information over to them in the first place.
    You’re only proposing letting a bought and paid for Congress turn over more information to unelected, unaccountable elites. And they will remain unaccountable until something is done about the money in politics.
    This is all trash without bringing down the gauntlet on campaign finance reform.

    Reply
  12. Mael Colium

    Wait …..what? I’m reading an article on information technology by someone who has given their own credit card details to her 10 years old child. Excuse me while I reflect on this pertinent information for a few moments.

    Is it just me?

    Reply
    1. Temporarily Sane

      You’re seriously trying to make an issue of the fact that she uses information technology? Point out where her arguments are wrong or go home. Trying to stir up an ad hominem fuelled two minutes of hate so you don’t have to think about the implications of a small group of extremely powerful (and power hungry) corporations having such enormous influence, including over how people think and communicate, is pretty sad.

      Reply
      1. inode_buddha

        I think you miss the point that this person gave their cc details to a 10 year old and then thinks to speak on security issues. The issue is that they gave their cc details to a 10 year old, not that they use technology.

        Reply
        1. Savita

          Fair enough, and we don’t know, but it could just as easily be that the journalist has a google play store account with her credit card details saved. She shares this account with her son-because its easier, or he set it up for them, or so she can keep an eye on his app use. It may never have occurred to her, not being tech literate, that he may need to access her card details.
          I hope there is plenty of detail on the countless times Schmidt or Brin/Page were invited for private meetings with Obama. Something like 30+ times.

          Reply
          1. polecat

            ‘plenty of details’ ..

            Well, the long-term forecast as I see it, is for much CLOUDyness .. without the absolute chance of a cleansing rein …

            Reply
  13. Grebo

    A small correction: IP in this context clearly means Intellectual Property not Internet Protocol. Having lots of networking software isn’t going to add much to a corporation’s value these days.

    Reply
    1. Savita

      Very helpful thankyou! Some moments of cognitive dissonance as I read the IP reference, without lingering long enough to work it out. I wonder if theres a style or etiquette for this situation (terms of art in a contextual piece)

      Reply
    2. lordkoos

      Speaking of intellectual property, I just finished a highly entertaining sci-fi book “Autonomous” by Annalee Newitz, in which a post-climate change future is portrayed, dominated by big pharma, bio-tech, and robotics. In this world, indentured servitude and slavery are legal and commonplace with both humans and robots. The heroine is a scientist who reverse-engineers drugs so that poor people can afford them, while pharmaceutical companies in cahoots with the government send robot assassins to track down and eliminate those who violate patent laws.

      https://us.macmillan.com/books/9780765392077

      Reply
    3. cnchal

      The algorithms that are used on the data generated by user interaction with a platform are not published nor open for inspection by the public, so calling that intellectual property is a category error.

      It is a trade secret.

      Reply
  14. smoker

    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)

    NO.

    Just make snatching personal data for Corporate Value, illegal, period, it figures California would be suggesting this, California Government and Legislators bear a large part of the responsibility for the nightmare technocracy we’re living in now.

    Reply
  15. eg

    I see endemic policy failure to recognize network effects and the privatization of natural monopolies.

    The solution is either more rigorous regulation and enforcement of monopolies or outright nationalization.

    Reply

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