Why the Castles of Silicon Valley are Built out of Sand

Ambrogio_Lorenzetti Temperance with an hour glass Allegory of Good Government

If you get just old enough, one of the lessons living through history throws you is that dreams take a long time to die. Depending on how you date it, communism took anywhere from 74 to 143 years to pass into the dustbin of history, though some might say it is still kicking. The Ptolemaic model of the universe lasted from 100 AD into the 1600’s. Perhaps even more dreams than not simply refuse to die, they hang on like ghost, or ghouls, zombies or vampires, or whatever freakish version of the undead suits your fancy. Naming them would take up more room than I can post, and would no doubt start one too many arguments, all of our lists being different. Here, I just want to make an argument for the inclusion of one dream on our list of zombies knowing full well the dream I’ll declare dead will have its defenders.

The fact of the matter is, I am not even sure what to call the dream I’ll be talking about. Perhaps, digitopia is best. It was the dream that emerged sometime in the 1980’s and went mainstream in the heady 1990’s that this new thing we were creating called the “Internet” and the economic model it permitted was bound to lead to a better world of more sharing, more openness, more equity, if we just let its logic play itself out over a long enough period of time. Almost all the big-wigs in Silicon Valley, the Larry Pages and Mark Zuckerbergs, and Jeff Bezos(s), and Peter Diamandis(s) still believe this dream, and walk around like 21st century versions of Mary Magdalene claiming they can still see what more skeptical souls believe has passed.

By far, the best Doubting Thomas of digitopia we have out there is Jaron Lanier. In part his power in declaring the dream dead comes from the fact that he was there when the dream was born and was once a true believer. Like Kevin Bacon in Hollywood, take any intellectual heavy hitter of digital culture, say Marvin Minsky, and you’ll find Lanier having some connection. Lanier is no Luddite, so when he says there is something wrong with how we have deployed the technology he in part helped develop, it’s right and good to take the man seriously.

The argument Lanier makes in his most recent book Who Owns the Future? against the economic model we have built around digital technology in a nutshell is this: what we have created is a machine that destroys middle class jobs and concentrates information, wealth and power. Say what? Hasn’t the Internet and mobile technology democratized knowledge? Don’t average people have more power than ever before? The answer to both questions is no and the reason why is that the Internet has been swallowed by its own logic of “sharing”.

We need to remember that the Internet really got ramped up when it started to be used by scientists to exchange information between each other. It was built on the idea of openness and transparency not to mention a set of shared values. When the Internet leapt out into public consciousness no one had any idea of how to turn this sharing capacity and transparency into the basis for an economy. It took the aftermath of dot com bubble and bust for companies to come up with a model of how to monetize the Internet, and almost all of the major tech companies that dominate the Internet, at least in America- and there are only a handful- Google, FaceBook and Amazon, now follow some variant of this model.

The model is to aggregate all the sharing that the Internet seems to naturally produce and offer it, along with other “compliments” for “free” in exchange for one thing: the ability to monitor, measure and manipulate through advertising whoever uses their services. Like silicon itself, it is a model that is ultimately built out of sand.

When you use a free service like Instagram there are three ways its ultimately paid for. The first we all know about, the “data trail” we leave when using the site is sold to third party advertisers, which generates income for the parent company, in this case FaceBook. The second and third ways the service is paid for I’ll get to in a moment, but the first way itself opens up all sorts of observations and questions that need to be answered.

We had thought the information (and ownership) landscape of the Internet was going to be “flat”. Instead, its proven to be extremely “spiky”. What we forgot in thinking it would turn out flat was that someone would have to gather and make useful the mountains of data we were about to create. The big Internet and Telecom companies are these aggregators who are able to make this data actionable by being in possession of the most powerful computers on the planet that allow them to not only route and store, but mine for value in this data. Lanier has a great name for the biggest of these companies- he calls them Siren Servers.

One might think whatever particular Siren Servers are at the head of the pack is a matter of which is the most innovative. Not really. Rather, the largest Siren Servers have become so rich they simply swallow any innovative company that comes along. FaceBook gobbled up Instagram because it offered a novel and increasingly popular way to share photos.

The second way a free service like Instagram is paid for, and this is one of the primary concerns of Lanier in his book, is that it essentially cannibalizes to the point of destruction the industry that used to provide the service, which in the “old economy” meant it also supported lots of middle class jobs.

Lanier states the problem bluntly:

 Here’s a current example of the challenge we face. At the height of its power, the photography company Kodak employed more than 140,000 people and was worth $28 billion. They even invented the first digital camera. But today Kodak is bankrupt, and the new face of digital photography is Instagram. When Instagram was sold to FaceBook for a billion dollars in 2012, it employed only thirteen people.  (p.2)

Calling Thomas Piketty….

As Bill Davidow argued recently in The Atlantic the size of this virtual economy where people share and get free stuff in exchange for their private data is now so big that it is giving us a distorted picture of GDP. We can no longer be sure how fast our economy is growing. He writes:

 There are no accurate numbers for the aggregate value of those services but a proxy for them would be the money advertisers spend to invade our privacy and capture our attention. Sales of digital ads are projected to be $114 billion in 2014,about twice what Americans spend on pets.

The forecasted GDP growth in 2014 is 2.8 percent and the annual historical growth rate of middle quintile incomes has averaged around 0.4 percent for the past 40 years. So if the government counted our virtual salaries based on the sale of our privacy and attention, it would have a big effect on the numbers.

Fans of Joseph Schumpeter might see all this churn as as capitalism’s natural creative destruction, and be unfazed by the government’s inability to measure this “off the books” economy because what the government cannot see it cannot tax.

The problem is, unlike other times in our history, technological change doesn’t seem to be creating many new middle class jobs as fast as it destroys old ones. Lanier was particularly sensitive to this development because he always had his feet in two worlds- the world of digital technology and the world of music. Not the Katy Perry world of superstar music, but the kinds of people who made a living selling local albums, playing small gigs, and even more importantly, providing the services that made this mid-level musical world possible. Lanier had seen how the digital technology he loved and helped create had essentially destroyed the middle class world of musicians he also loved and had grown up in. His message for us all was that the Siren Servers are coming for you.

The continued advance of Moore’s Law, which, according to Charlie Stross, will play out for at least another decade or so, means not so much that we’ll achieve AGI, but that machines are just smart enough to automate some of the functions we had previously thought only human beings were capable of doing. I’ll give an example of my own. For decades now the GED test, which people pursue to obtain a high school equivalency diploma, has had an essay section. Thousands of people were necessary to score these essays by hand, the majority of whom were likely paid to do so. With the new, computerized GED test this essay scoring has now been completely automated, human readers made superfluous.

This brings me to the third way this new digital capabilities are paid for. They cannibalize work human beings have already done to profit a company who presents and sells their services as a form of artificial intelligence. As Lanier writes of Google Translate:

It’s magic that you can upload a phrase in Spanish into the cloud services of a company like Google or Microsoft, and a workable, if imperfect, translation to English is returned. It’s as if there’s a polyglot artificial intelligence residing up there in that great cloud of server farms.

But that is not how cloud services work. Instead, a multitude of examples of translations made by real human translators are gathered over the Internet. These are correlated with the example you send for translation. It will almost always turn out that multiple previous translations by real human translators had to contend with similar passages, so a collage of those previous translations will yield a usable result.

A giant act of statistics is made virtually free because of Moore’s Law, but at core the act of translation is based on real work of people.

Alas, the human translators are anonymous and off the books. (19-20)

The question all of us should be asking ourselves is not “could a machine be me?” with all of our complexity and skills, but “could a machine do my job?” the answer to which, in 9 cases out of 10, is almost certainly- “yes!”

Okay, so that’s the problem, what is Lanier’s solution? His solution is not that we pull a Ned Ludd and break the machines or even try to slow down Moore’s Law. Instead, what he wants us to do is to start treating our personal data like property. If someone wants to know my buying habits they have to pay a fee to me the owner of this information. If some company uses my behavior to refine their algorithm I need to be paid for this service, even if I was unaware I had helped in such a way. Lastly, anything I create and put on the Internet is my property. People are free to use it as they chose, but they need to pay me for it. In Lanier’s vision each of us would be the recipients of a constant stream of micropayments from Siren Servers who are using our data and our creations.

Such a model is very interesting to me, especially in light of other fights over data ownership, namely the rights of indigenous people against bio-piracy, something I was turned on to by Paolo Bacigalupi’s bio-punk novel The Windup Girl, and what promises to be an increasing fight between pharmaceutical/biotech firms and individuals over the use of what is becoming mountains of genetic data. Nevertheless, I have my doubts as to Lanier’s alternative system and will lay them out in what follows.

For one, such a system seems likely to exacerbate rather than relieve the problem of rising inequality. Assuming most of the data people will receive micropayments for will be banal and commercial in nature, people who are already big spenders are likely to get a much larger cut of the micropayments pie. If I could afford such things it’s no doubt worth a lot for some extra piece of information to tip the scales between me buying a Lexus or a Beemer, not so much if it’s a question of TIDE vs Whisk.

This issue would be solved if Lanier had adopted the model of a shared public pool of funds where micropayments would go rather than routing them to the actual individual involved, but he couldn’t do this out of commitment to the idea that personal data is a form of property. Don’t let his dreadlocks fool you, Lanier is at bottom a conservative thinker. Such a fee might balance out the glaring problem that Siren Servers effectively pay zero taxes

But by far the biggest hole in Lanier’s micropayment system is that it ignores the international dimension of the Internet. Silicon Valley companies may be barreling down on their model, as can be seen in Amazon’s recent foray into the smartphone market, which attempts to route everything through itself, but the model has crashed globally. Three events signal the crash, Google was essentially booted out of China, the Snowden revelations threw a pale of suspicion over the model in an already privacy sensitive Europe, and the EU itself handed the model a major loss with the “right to be forgotten” case in Spain.

Lanier’s system, which accepts mass surveillance as a fact, probably wouldn’t fly in a privacy conscious Europe, and how in the world would we force Chinese and other digital pirates to provide payments of any scale? And China and other authoritarian countries have their own plans for their Siren Servers, namely, their use as tools of the state.

The fact of the matter is their is probably no truly global solution to continued automation and algorithmization, or to mass surveillance. Yet, the much feared “splinter-net”, the shattering of the global Internet, may be better for freedom than many believe. This is because the Internet, and the Siren Servers that run it, once freed from its spectral existence in the global ether, becomes the responsibility of real territorially bound people to govern. Each country will ultimately have to decide for itself both how the Internet is governed and define its response to the coming wave of automation. There’s bound to be diversity because countries are diverse, some might even leap over Lanier’s conservativism and invent radically new, and more equitable ways of running an economy, an outcome many of the original digitopians who set this train a rollin might actually be proud of.

 

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3 comments on “Why the Castles of Silicon Valley are Built out of Sand

  1. Nick Land says:

    Thought-provoking piece — but I think you meant to refer to Joseph (not “Charles”) Schumpeter.

  2. […] there’s the question of the structure of the whole thing. Like Jaron Lanier, Rudder is struck by the degree to which the seemingly democratized architecture of the Internet […]

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