Move Fast and Break Things
BY JONATHAN TAPLIN
Ever wonder why Silicon Valley seems omnipotent in every arena, not only in technology and business but also in government, public policy, academia, the media and more? We are in an unprecedented age, where a few powerful technology companies have bent the internet to serve their monopolistic and libertarian goals.
As tech executives accrue their fortunes, individual artists and content creators have been abandoned by platforms built upon the spoils of copyright infringement. Few realize how entwined big technology and Washington are or the impact this has for small businesses and individual workers. In the past, businesses built on addiction and erosion of customer privacy have been regulated, taxed and brought in line due to consumer demands and concerns from public health and government watchdogs. Today, Google, Facebook, Amazon, YouTube and the like have spun out of control right under our fingertips.
TOP 20 INSIGHTS
Tech companies have dangerously overtaken our economy. In 2006, the top five companies by market capitalization were ExxonMobil, General Electric, Microsoft, CitiGroup, BP and Royal Dutch Shell, worth an average of $288 billion each. In 2016, the top five companies were Apple, Google, Microsoft, Amazon and Facebook, worth on average $476 billion.
Early adopters of the internet harked its ability to bring a “long tail” of revenue to individual artists and content creators. Not so. Today in the music business, 80% of the revenues are derived from 1% of artists. Compare this to the 1980s, where 80% of music industry revenues came from 20% of the content.
Silicon Valley bigwigs like Peter Thiel, founder of PayPal and early Facebook investor, believe in themselves as brilliant savants whose sheer genius birthed the age of the internet. Thiel is an avowed libertarian and rejects the value of government aid or interference. The irony is that “the internet was conceived and paid for by the US government.”
Thiel’s beliefs venture into dark territory. He has espoused philosophies that oppose “egalitarian immigration,” “forced integration” and the value of women in the workplace. At one time, his writings focused on creating alternate states "free from taxes, regulation and copyright."
Thiel established foundational principles to identify a successful internet venture. These include obvious characteristics like a business that takes advantage of economies of scale or a strong brand. But of utmost importance is the value of a company that takes advantage of the internet's lack of government regulation.
Big technology companies use complicated practices to minimize taxes and short shrift the US government to the tune of $60 billion annually. “Bloomberg Businessweek” and a team of economics professors found that these companies use “transfer pricing” to attribute bulks of revenue to countries that are tax havens and shoulder expenses on entities in high-tax countries.
Many technology heads hold incredibly futuristic views. Thiel was deeply invested in a company called Halcyon Molecular, whose goal was to “create a world free from cancer and aging.” And Google's Chief Scientist, Ray Kurzweil, believes in achieving what he calls "singularity," when machines can create other machines more intelligent than themselves.
Google and others used ethically dubious practices to get where they are today. They never asked permission to "copy the entire World Wide Web onto their servers and index it." Also, they never obtained permission to capture images of private homes and workplaces to create Google Maps.
YouTube unfairly benefits from writers’ and producers’ work. They are the number one player in the music streaming business, with a 52% share of the market. However, they only pay “13% of the streaming music revenues” that musicians and artists earn.
Alexis Ohanian, Reddit co-founder and executive chairman, was confronted about how pirated music on his site had destroyed the livelihood of musicians such as “The Band.” He suggested that they go back out on tour to earn money, insensitive to the fact that one had terminal cancer, and the others were already dead.
We should be wary of the pernicious influence monopolistic companies have on American political life. Princeton researchers discovered that “the preferences of a small number of corporations and the very rich had a huge impact on policy decisions while the views of middle-income and poor Americans had almost none.”
Amazon employs age-old monopolistic tactics to persuade suppliers to agree to their terms. In negotiations with book distributor Hachette, Amazon drew firm battle lines to drive Hachette to irrelevance. Amazon used its “suggestions” tool to suggest non-Hachette books to readers or gave much longer estimated delivery times for Hachette books.
Researchers at the Massachusetts Institute of Technology have identified the results of monopolistic activity. They found that "even as the number of new ideas and potential for innovation is increasing, there seems to be a reduction in the ability of companies to scale. It has become increasingly advantageous to be an incumbent, and less advantageous to be a new entrant.
Through a lack of regulation, Amazon has slowly amassed unmatched reach and influence in the e-commerce space. For every dollar spent online, Amazon earns 51 cents.
Countless ties and overlap between Google and Washington, D.C. exist. Google spends upwards of $15 million a year on lobbying. A “revolving door” policy is endemic between the two entities. The US chief technology officer, the White House’s Chief Digital Officer and other senior government attorneys and heads all came from Google.
Google’s unique role as an information disseminator has had concerning results for the democratic process. When a bill that would have forced search engines to prohibit links to pirated sites was under review, Google displayed a black rectangle over their homepage logo with the words, “Tell Congress: Please don’t censor the web!”
Google stole not only the concept but also the actual data from companies like Yelp. Yelp Chief Executive Officer Jeremy Stoppelman testified before the Senate’s antitrust subcommittee that Google extracted their content, such as user reviews and business information, without permission. Then, Google demanded that Yelp allowed this to happen or face removal from web searches in consequence.
Lack of internet regulation has led to rampant fraud and wasted ad dollars. Researchers have concluded that “11% of display ads and almost a quarter of video ads were ‘viewed’ by software, not people.” A prominent study estimates this results in $6.3 billion in wasted ad dollars every year.
It’s no wonder misinformation cripples American media. In a comparison of The New York Times and Huffington Post, HuffPost generated more content per day (1,600 vs. 350 pieces) and more traffic per day (43.4 vs. 17.4 million page views) with far fewer employees through the use of unpaid bloggers and third-party sites.
Giant tech companies have not been a boon for the average American worker. Though tech companies comprise five out of the top six companies in the US by market capitalization and generate about 21% of the S&P 500, “they employ only 3% of the American workforce.”
A lack of government regulation and weak antitrust legislation has led to a Silicon Valley culture where a few powerful men seed their libertarian views in the world’s greatest technology companies. These men have used their money and influence to escape prosecution for the wreckage their business practices have caused. These casualties include the destruction of the music industry and the livelihoods of countless artists, the practice of dubious pressure tactics to force the hand of content providers and the facilitation of a news environment that prioritizes clicks over quality and truth. They fiercely oppose any threat to their business model, a model that thrives on advertising revenue at all costs. In doing so, they have endangered national security and the welfare of individuals globally.
LIBERTARIANISM AND TECH
A government agency, the Defense Advanced Research Projects Agency, funded and created the internet. The defense agency's main goal was to foster undefined advances in technology to compete with the Soviet Union. The agency employed a handful of scientists and engineers to develop the internet, many of whom "were fundamentally convinced that they could make the world a better place with their inventions." Eventually, this team fractured into two groups. The first was a set of "computer geeks" interested in the new technology for its own sake. The second was a group of men who identified as "counter-cultural humanists." They believed that the internet held great potential for humankind by making information and opportunity accessible to all.
“The Web was built to decentralize power and create open access, yet… ‘popular and successful services (search, social networking, email) have achieved near-monopoly status.”
Today, a handful of powerful companies control the internet. But it is important to remember that the internet was initially developed first for government purposes, and later, with the intention of greater democratization and equality. With the commercialization of the internet came a rise in the power of these new internet companies' heads.
Facebook founder, Mark Zuckerberg, and others may not have begun their careers with libertarian fervor. Still, men like Peter Thiel and Marc Andreessen have ensured that libertarian views are never absent from their strategies. These views have helped Amazon, Facebook and Google become monopolies. Wealthy libertarian business leaders like Thiel and Andreessen have financed, promoted and protected laws and regulations that render antitrust regulation powerless and shield monopolies from criticism.
Libertarians believe that the government is usually wrong, and the market is always right. They disavow regulation in business and laws related to copyright, casting business leaders in the roles of hero and job-creator and everyone else as the “moocher.” They despise “welfare queens” and the concept of government assistance for the poor. The irony is that research shows these tech companies only account for 3% of jobs in the US, yet account for 21% of the S&P 500. So they are not the job-creators they purport to be. And, as previously mentioned, the internet itself was created through government funding and assistance. As libertarianism has been entwined with big tech, we see more and more of the creation of a world in which people like individual artists, writers, filmmakers, entrepreneurs and blue-collar workers are cast aside. And, everyone's privacy and security have been compromised along the way. Here are just a few examples of how big tech, its ties to Washington and its commitment to fighting against regulation and antitrust laws have led and could lead to dangerous outcomes.
CLICKBAIT AS JOURNALISM
Major media hubs such as “Buzzfeed,” “Huffington Post” and “Bloomberg” increasingly rely on Facebook to traffic them readers. These outlets receive approximately a half to two-thirds of their readership from Facebook. But enlightened Twitter co-founder Evan Williams refers to many news stories that appear on social media as “junk food.” Stories that are rigorously researched, chock-full of truth and incredibly persuasive are given the same value as a “junk food” news story that captures one second of a reader’s attention. This explains why traditional sources of news are struggling.
Innovative models used by places like the “Huffington Post” utilize hundreds of writers, mostly unpaid, to ensure content is continuously being refreshed. Places like “The New York Times” produce fewer original content pieces due to employing the writers in a more traditional model and therefore receive fewer clicks and page views. One could argue that this pattern leads to lower advertising revenue for firms with a greater commitment to rigor in journalism.
The story is also complicated by the fact that Facebook functions as a monopoly. For many news outlets, winning on Facebook can often mean life or death for their firm. In 2015 Facebook began a new practice of hosting news stories directly on Facebook rather than carrying readers to linked sites. Despite the risks of handing over much of their readers' experience and information to Facebook, many outlets were on board. One writer posits that if news sites banded together, they could resist this overture. But the practice is likely too far gone.
Will Oremus writes in Slate, “And Facebook has made it clear that those who sign on early will see huge growth in their Facebook reach. If that proves true, others will scramble to follow, even as it becomes clear they’re seeing diminishing returns. Meanwhile, the holdouts would see their Facebook audiences wither and die, as Facebook’s algorithms gradually downgrade posts that link out to third-party websites.”
Zuckerberg has shown unique promise among tech leaders in questioning the state of affairs between tech companies, the government and its citizens and consumers. To start, Zuckerberg and his wife, Priscilla Chan, have pledged to give their wealth to charity. He continues to revisit and examine ethical issues identified in Facebook’s business model. Many hope that this topic of journalism reduced to its potential as clickbait will become a concern for him and other Facebook leaders.
VISIONS FOR THE FUTURE
Taplin writes that the internet is now controlled by "a group of men who believed that they had both the brilliance and the moral fortitude to operate outside the normal structures of law and taxes." But the belief in their "superhuman" nature goes further. Thiel poured millions into a venture called Halcyon Molecular, now defunct. Halcyon was dedicated to the pursuit of extending life, not just searching for cures for cancer but conducting research into a myriad of anti-aging efforts with the ultimate goal of immortality.
Google's Chief Scientist Kurzweil also holds extreme views about machines' possibility to become like humans. He predicts that the "singularity" is coming soon. By this, he means a time in which machines will become even smarter than humans. He posits that "personalities" could be transferred to "non-biological items," and thereby, immortality can be achieved. The singularity assumes that intelligent machines will have the ability to create machines even smarter than themselves. He believes this will continue until intelligence reaches beyond our planet.
Technology and ethics professor, Michael Patrick Lynch, writes in his book The Internet of Us: Knowing More and Understanding Less in the Age of Big Data about a dystopian future where smartphones are condensed into miniature size and inserted in our brains. The risks and concerns of such a product are apparent. Lynch hypothesizes scenarios where "we have stopped learning by observation and reason" and rely on whatever our smartphone chip directs us to do. Google's former CEO, Larry Page, is already working on such an offering.
Beliefs in the possibility and value of immortality, the desire for a machine that escalates in intelligence, and the pursuit of a device to replace the human brain are all concerning pathways. All those pathways reflect the values of the men whose larger-than-life view of themselves leads them to putting more faith in their technology than in their fellow humans.
A THREAT TO MORE THAN JUST CULTURE
Another major problem is tech’s refusal to monitor for certain types of illegal or pernicious activity. Organizations as wide-ranging as Russian hackers, ISIS and sex traffickers have co-opted the internet for their purposes.
Consider the fact that thirty years ago, extremist organizations would have to go to great effort to disseminate propaganda videos to more than a couple hundred people. “But today ISIS can make a video, post it for free on YouTube, and get two million views in a week – especially if it involves something horrific like a beheading.” YouTube has every ability to censor for videos that threaten our national security or magnify the work of foreign threats. But they have chosen not to, hiding behind the veil of free speech. And extreme and dangerous content is not just a minor threat. As of 2015, ISIS supporters have 46,000 accounts on Twitter, and those accounts post upwards of 90,000 tweets each day. In 2013, ISIS could claim that 35,000 videos on YouTube were theirs.
The current legal landscape puts the onus on individual users to find versions of their copyrighted content online. But considering the volume of the problem, this policy is not practical or feasible. “But today no individual can effectively police the millions of pirated files that mushroom online and reappear the instant they are taken down. Google alone received almost 560 million takedown notices in 2015.”
Claims that platforms don’t have the capabilities to monitor for this sort of activity are false. YouTube effectively censors pornography using sophisticated technology to spot it before it is even fully uploaded to the site. This same technology could easily be used to filter for ISIS videos or other illegal content. Unfortunately, it does not appear that big tech is going to be reigned in anytime soon. In 2016, a US official in charge of copyrights began analyzing the provisions that permit social media companies to display pirated and illegal content. She “requested comments” about whether these laws should be changed. Getting wind of the situation, Google created a “proxy organization” called Fight for the Future that “generated thousands of automated comments on the regulations.gov website opposing any changes to [the laws].” Also, that official was pushed out of her job at Google’s behest.
The libertarian worldviews of some of Silicon Valley’s most connected influencers have led to an environment where leaders act first and ask later. While this practice has no doubt led to technological innovations, it has come at the cost of a weakening of our journalism sector and the demise of the livelihoods of many musicians, artists and entrepreneurs. Furthermore, a lack of internet regulation has perpetuated extremist views, national division and even weakened our national security.