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April 21, 2017

Editor's Choice: Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy

By: Dylan Schleicher @ 2:45 PM – Filed under: Big Ideas & New Perspectives, Innovation & Creativity

Movefastbreakthings

Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy by Jonathan Taplin, Little, Brown and Company, 320 pages, Hardcover, April 2017, ISBN 9780316275774

I suppose I should warn you upfront that the book Jonathan Taplin intended to write was of the culture wars. It doesn't concern those raging in national politics, but the ones occurring economically between content creators and technology companies. As he began his exploration of what has happened in that struggle over the past two decades, he found artists were just on the front lines a broader economic war. His finished product, Move Fast and Break Things, reflects the understanding that it’s not confined to the media, information, and entertainment industry. It just so happened that theirs was the first industry to be digitized. But it did start there, so let’s take a look at some of those numbers:

 

Since 2000, US recorded music revenues have fallen from $19.8 billion to $7.2 billion per year. … US newspaper advertising revenue has fallen from $65.8 billion in 2000 to $23.6 billion in 2014. … During that same period (2003 to 2015), Google revenue went from $1.5 billion to $74.5 billion.

 

In 2016, Google took in “$60 billion in U.S. ad spend—a figure 166 percent larger than [the] No. 2 ranking … Walt Disney Company.” Google’s parent company, Alphabet, employs around 61,000 people worldwide. Disney World, alone, employs 62,000 people. And, of course, it owns ABC, ESPN, the Disney Channel, employing people in a capitalist ecosystem of the arts, content creation, and the content revenue that supports it, that is being eroded by five tech giants that prey on them without paying them.

 

Even though tech firms represent around 21 percent of the S&P 500 (the five hundred largest American firms), they employ only 3 percent of the American workforce.

 

That may explain why nearly all their wealth accrues toward the top, and seven of the ten wealthiest people on the Forbes 400 are tech moguls. The increase in the concentration of power and income inequality is spread throughout the economy, of course, but it is especially pronounced, even celebrated, in tech circles. Paul Graham, CEO of Y Combinator, a Silicon Valley venture capital firm, has written that he is not only an expert on how to increase wealth inequality, he “has spent the past decade working hard to do it.” Paypal founder turned venture capitalist Peter Thiel, “godfather of … the Paypal Mafia,” has not only stated he no longer believes freedom is compatible with democracy, but is increasingly promoting the idea of “seasteading”—the creation of artificial islands outside any nation’s legal jurisdiction on which their businesses would be untaxed and unregulated, and they could build city-states based on the Libertarian principles and philosophies of Ayn Rand and Milton Friedman. This same community is also investing heavily in extending life and finding a “cure for death.” The inequality caused by those experiments would not be only economic—it could become biological, creating an upper class of the bioengineered and enhanced, something Yuval Noah Harari’s recent book, Homo Deus, explains in greater detail. All of this is not inevitable, but a result of their influence with those that make and enforce our laws:

 

Contrary to what techno-determinists want us to believe, inequality is not the inevitable by-product of technology and globalization or even the lopsided distribution of genius. It is a direct result of the fact that since the rise of the Internet, policy makers have acted as if the rules that apply to the rest of the economy do not apply to Internet monopolies. Taxes, antitrust regulation, intellectual property law—all are ignored in regulation the Internet industries.

 

Not only that have they been drastically altering our economy without interference, all while trumpeting the values of disruption, these very platforms were used to undermine our democracy by spreading fake news. And it could be worse. If they decided to, they could actively alter elections themselves.

 

In 2014, a study led by Robert Epstein, a psychologist at the American Institute for Behavioral Research and Technology, analyzed the extent to which political candidates’ Google rankings could influence voters. Epstein noted, “We estimate, based on win margins in national elections around the world that Google could determine the outcome of 25 percent of all national elections.”

 

And we all now essentially work for these companies, as well, generating user-generated content they can appropriate and data they can scrape and sell. We do it all for free because they’ve sold us on the idea that they’re benevolent, that they will make our lives easier and more seamless, and connect us all to each other in meaningful ways that lead to better community—even though, as Holly B. Shakya and Nicholas A. Christakis point out in the Harvard Business Review, A New, More Rigorous Study Confirms: The More You Use Facebook, the Worse You Feel.

 

Overall, our results showed that, while real-world social networks were positively associated with overall well-being, the use of Facebook was negatively associated with overall well-being. These results were particularly strong for mental health; most measures of Facebook use in one year predicted a decrease in mental health in a later year. We found consistently that both liking others’ content and clicking links significantly predicted a subsequent reduction in self-reported physical health, mental health, and life satisfaction.

 

Given that a “Facebook user spends almost an hour on the site every day, according to data provided by the company last year,” that means many of us are essentially putting in a lot of time in at a job that’s making us miserable. (But at least we’re not getting paid for it, right?)

It is all allowed in the pursuit of efficiency and innovation—this even as studies show we’re increasingly less productive at work and that economic growth overall is grinding to a halt.

Jonathan Taplin has run the Annenberg Innovation Lab at USC since 2010, and was the founder of Intertainer, “the first streaming-video-on-demand company … which deployed high-quality video over the Internet ten years before YouTube went online.” Explaining how we got here, he traces the roots back to its counterculture origins and tells the story of “The Libertarian Counterinsurgency” that overthrew that ethos, the rise of tech monopolies (monopsony in Amazon’s case) and the digital destruction that has followed. 

What Taplin is searching for is a new “moral framework for the digital economy,” and he approached that question by looking at the industries that were hit first by the disruption so celebrated in the Silicon Valley story and mindset—the arts and entertainment, industries he worked in as a tour manager for Bob Dylan and The Band and film producer for the likes of Martin Scorsese and Gus Van Sant. That prior life makes the book all the more entertaining, as well as informative, because you get to read about people like Levon Helm and the recording of “The Night They Drove Down Old Dixie Down.” He tells the story of Bob Dylan going electric at the Newport Folk Festival, which he witnessed as a roadie working for legendary entrepreneur and music talent manager Albert Grossman. Being witness to that era, he belies the notion that “the music business has always screwed musicians.” The second chapter, in fact, tells Levon’s story in greater detail, which sees him making $100,000 a year in royalties off his music to almost nothing in the digital economy—even as more and more people discovered and listened to it on pirate sites, YouTube, and low-paying streaming sites.

In other words, “The Long Tail” promised to creators of content in Chris Anderson’s book of that name never arrived. “The democratic distribution of the spoils of the digital age,” Taplin tells us, “is a myth, a fact evidenced by the current music business, in which 80 percent of the revenue is generated by 1 percent of the content.” In fact:

 

In 2015, vinyl record sales generated more income for music creators than the billions of music streams on YouTube and its ad-supported competitors.

 

This is a decidedly opinionated, perhaps even partisan book. But it’s not about political party; it’s about the underlying philosophy of the internet, and whether it can be returned from the Libertarian bent it is currently on to its counter-cultural, decentralized, and democratic roots. It’s about resistance to the techno-determinism that dominates the narrative of business and our collective future.

That includes changing laws, and defining them more clearly—for instance, the Library of Congress issuing guidelines to “determine the precise definition of fair use” of content, the FTC to follow the EU’s example and give users control over how their data is mined and shared.

 

Given that Google stores your complete search history, your location history, your purchase data, your demographic profile, your calendar, and your contacts, it would seem only logical that the FTC should consider a default option that asks if you want to opt in to data sharing.

 

And that doesn’t touch on other indecencies or outright fraud rampant on their platforms. Much of the solution may come down to good, old-fashioned monopoly busting of the Roosevelt variety, not only of the five dominant tech firms, but of the broadband providers that connect us to them. That lack of competition in that industry means there is not much incentive to providing better service, which may account for the fact that, as of December 2015, the percentage of high-speed fiber-optic connections in total broadband subscriptions in the US was at just 11 percent, not only behind Japan and South Korea, which are both at over 70 percent adoption, but being Latvia (60 percent) and the Slovak Republic (27 percent). This is vital to our economic competitiveness and future, something that can be seen on the local level in the change that occurred after Chatanooga’s Electric Power Board (EPB) built out it’s own, municipally owned fiber optic network. Not only did they beat Comcast’s lawsuits to build it, they are now beating them in the marketplace:

 

Now the EPB is gaining market share for its $70 monthly plan, which gives consumers one-gig broadband speed plus TV service. Comcast is losing market share with its old-fashioned cable broadband business.

 

And they have built a small, independent tech sector there that has revitalized a city decimated by the loss of its industrial economy. It’s an example of how a digital renaissance can help solve the issues digital destruction has wrought if we can build it more deliberately, democratically, and decentralized. And that is important, because the challenges we face are more about our values than about our technology, and the latter can't be allowed to outstrip the former. 

 

 

Silicon Valley celebrates the demise of the old guard gatekeepers, and have become a new generation of gatekeepers in the process, one that can monitor everything we do like the all-seeing eye of Mordor, scooping up our data and information. We assume they’re benevolent plutocrats, but they’re plutocrats all the same. And like the natural extraction industries, they are interested in extracting resources at the cheapest price possible and selling them at the highest price possible—it’s just that the resource they’re extracting is our personal information and data.

 

Google and Facebook are in the extraction industry—their business model is to extract as much personal data from as many people in the world at he lowest possible price and to resell that data to as many companies as possible at the highest possible price—data is the new oil.

 

In doing so they have, in the words if the Internet Archive’s Brewster Kahle, “inadvertently built the word’s largest surveillance network with the web.” 

What we have to ask is, is it really enriching our lives, or is it enriching a relatively few monopolies and individuals? Are their celebrated “disruptions” contributing to the economy, or cannibalizing it? And what can we do about it? 


About Dylan Schleicher


Dylan Schleicher has been a part of the 800-CEO-READ claque since 2003. Even though he's stayed on at the company, he has not stayed put. After beginning in shipping & receiving, he joined customer service and accounting before moving into his current, highly elliptical orbit of duties overseeing the ChangeThis and In the Books websites, the company's annual review of books and in-house design. He lives with his wife and two children in the Washington Heights neighborhood on Milwaukee's West Side.