On 15 January 2018 opinion writer Deborah Hill Cone penned a piece entitled “Why tech giants need a kick in the software”
Not a lot of it is very original and echoes many of the arguments in Jonathan Taplin’s “Move Fast and Break Things.” I have already critiqued some of Taplin’s propositions in my earlier post Misunderstanding the Internet . Over the Christmas break I revisited Mr. Taplin’s book. It is certainly not a work of scholarship, rather it is a perjorative filled polemic that in essence calls for regulation of Internet platforms to preserve certain business and economic models that are challenged by the new paradigm. Mr. Taplin comes from a background of involvement primarily in the music industry and the realities of the digital paradigm have hit that industry very hard. But, as was the case with the film industry, music took an inordinate amount of time to adapt to the new paradigm and develop new business models. It seems that is now happening with iTunes and Spotify and the movie industry seems to have recognised other models of online distribution such as Netflix, Hulu and other on-demand streaming services.
For Mr. Taplin these new business models are not enough. His argument is that artists should have an expectation that they should draw the same level of income that they enjoyed in the pre-digital age. And that ignores the fact that the whole paradigm has changed.
But Mr. Taplin directs most of his argument against the Internet giants – Facebook, Google, Amazon and the like and singles out their creators and financiers as members of a libertarian conspiracy dedicated to eliminating competition – although to conflate monopolism with libertarianism has its own problems.
Much of Mr. Taplin’s argument uses labels and generalisations which do not stand up to scrutiny. For example he frequently cites one of the philosophical foundations for the direction travelled by the Internet Giants as Ayn Rand whom he describes as a libertarian. In fact Ms. Rand’s philosophy was that of objectivism rather than libertarianism. Indeed, libertarianism has its own subsets. In using the term does Mr. Taplin refer to Thomas Jefferson’s flavour of libertarianism or that advocated by John Stuart Mill in his classic “On Liberty”? It is difficult to say.
Another problem for Mr Taplin is his brief discussion on the right to be forgotten He says (at page 98) “In Europe, Google continues to challenge the “right to be forgotten” – customers’ ability to eliminate false articles written about them from Google’s search engine.” (The emphasis is mine).
The Google Spain Case which gave rise the the right to be forgotten discussion was not a case about a false article or false information. In fact the article that Sr Costeja-Gonzales wished to deindex was true. It was an advertisement regarding his financial that was published in La Vanguardia newspaper in Barcelona some years before. The reason why deindexing was sought was because the article was no longer relevant to Sr Consteja-Gonzales improved fortunes. To characterise the desire by Google to resist attempts to remove false information misunderstands the nuances of the right to be forgotten.
One thing is clear. Mr. Taplin wants regulation and the nature of the regulation that he seeks is considerable and of such a nature that it might stifle much of the stimulus to creativity that the Internet allows. I have already discussed some of these concepts in other posts but in summary there must be an understanding not of the content that is delivered via Internet platforms but rather of the underlying properties or affordances of digital technologies.
One of these is the fact that digital technologies cannot operate without copying. From the moment a user switches on a computer or a digital device to the moment that device is shut down, copying takes place. Quite simply, the device won’t work without copying. This is a challenge to concepts of intellectual property that developed after the first information technology – the printing press. The press allowed for mechanised copying and challenged the earlier manual copying processes that characterised the scribal paradigm of information communication.
Now we have a digital system that challenges the assumptions that content “owners” have had about control of their product. And the digital horse has bolted and a new paradigm is in place that has altered behaviours, attitudes, expectations and values surrounding information. And can regulation hold back the flood? One need only look at the file sharing provisions of the Copyright Act 1994 in New Zealand. These provisions were put in place, as the name suggests, to combat file sharing. They are now out of date and were little used when introduced. Technology has overtaken them. The provisions were used sporadically by the music industry and, despite extensive lobbying, not at all by the movie industry.
Two other affordances that underlie digital technologies are linked. The first is that of permissionless innovation which is interlinked with the second – continuing disruptive change. Indeed it could be argued that permissionless innovation is what drives continuing disruptive change.
Permissionless innovation is the quality that allows entrepreneurs, developers and programmers to develop protocols using standards that are available and that have been provided by Internet developers to “bolt‑on” a new utility to the Internet.
Thus we see the rise of Tim Berners-Lee’s World Wide Web which, in the minds of many, represents the Internet as a whole. Permissionless innovation enabled Shawn Fanning to develop Napster; Larry Page and Sergey Brin to develop Google; Mark Zuckerberg to develop Facebook and Jack Dorsey, Evan Williams, Biz Stone and Noah Glass to develop Twitter along with dozens of other utilities and business models that proliferate the Internet. There is no need to seek permission to develop these utilities. Using the theory “if you build it, they will come” new means of communicating information are made available on the Internet. Some succeed but many fail. No regulatory criteria need to be met other than that the particular utility complies with basic Internet standards.
What permissionless innovation does allow is a constantly developing system of communication tools that change in sophistication and the various levels of utility that they enable. It is also important to recognize that permissionless innovation underlies changing means of content delivery.
So are these the aspects of the Internet and its associated platforms that are to be regulated? If the Internet Giants are to be reined in the affordances of the Internet that give them sustenance must be denied them. But in doing that, it may well be that the advantages of the Internet may be lost. So the answer I would give to Mr Taplin is to be careful what you wish for.
This rather long introduction leads me to a consideration of Ms. Hill Cone’s slightly less detailed analysis that nevertheless seizes upon Mr Taplin’s themes. Her list of “things to loathe” follow along with some of my own observations
1.) These companies (Apple, Alphabet, Facebook, Amazon) have simply been allowed to get unhealthily large and dominant with barely any checks or balances. The tech firms are more powerful than the telco AT&T ever was, yet regulators do nothing (AT&T was split up). In this country the Commerce Commission spent millions fighting to stop one firm, NZME (publisher of the New Zealand Herald) from merging with another Fairfax (Now called Stuff), a sideshow, while they appear stubbornly uninterested in tackling the real media dominance battle: how Facebook broke the media. I know we’re just little old New Zealand, but we still have sovereignty over our nation, surely? [Commerce Commission chairman] Mark Berry? Can’t you do something? The EU at least managed to fine Google a couple of lazy bill.
Taplin deals with this argument in an extensive analysis of the way in which antitrust law in the United States has become somewhat toothless. He attributes this to the teachings of Robert Bork and the Chicago School of law and economics.
Ms Hill Cones critique suggests that there is something wrong with large corporate conglomerates and that simply because something has become too big it must be bad and therefore should be regulated rather than identifying a particular mischief and then deciding whether regulation is necessary – and I emphasise the word necessary.
2.) Some of these tech companies have got richer and richer exploiting the creative content of writers and artists who create things of real value and who can no longer earn a living from doing so.
This is straight out of the Taplin playbook which I have discussed above. I don’t think its has been suggested that artists are not earning. They are – perhaps not to the level that they used to and perhaps not from sales of remuneration from Spotify tracks. But what Taplin points out – and this is how paradigmatic change drives behavioural change – is that artists are moving back to live performance to earn an income. Gone are the days when the artist could rely on recorded performances. So Ms Hill Cone’s critique may be partially correct as it applies to the earlier expectation of making an income.
3.) Mark Zuckerberg’s mea culpa, announced in the last few days that Facebook is going to focus on what he called “meaningful interaction”, is like a drug dealer offering a cut-down dose of its drug, hoping addicts won’t give up the drug completely. Even Zuckerberg’s former mentor, investor Robert McNamee said in the Guardian that all Zuckerberg is doing is deflecting criticism and leaving users “in peril.”
The perjorative analogy of the drug dealer ignores the fact that no one is required to sign up to Facebook. It is, after all, a choice. And in some respects, Zuckerberg’s announcement is an example of continuing disruptive change that affects Internet Giants as much as it does a startup.
4.) These companies have created technology and thrown it out there, without any sense of responsibility for its potential impact. It’s time for them to be held accountable. Last week Jana Partners, a Wall Street investment firm, wrote to Apple pushing it to look at its products’ health effects, especially on children. Even Facebook founder Sean Parker has recently admitted “God knows what [technology) is doing to our children’s brains.”
The target here is that of permissionless innovation. Upon what basis is it necessary to regulate permissionless innovation. Or does Ms Hill Cone wish to wrap up the Internet with regulatory red tape. Aa far as the effects of social media are concern, I think what worries may digital immigrants and indeed digital deniers is that all social media does is to enable communication – which is what people do. It is an alternative to face to face, telephone, snail mail, email, smoke signals etc. We need to accept that new technologies drive behavioural change.
5.) While it’s funny when the bong-sucking entrepreneur Erlich Bachman says in the HBO comedy Silicon Valley: “We’re walking in there with three foot c**ks covered in Elvis dust!” in reality, many of these firms have a repugnant, arrogant and ignorant culture. In the upcoming Vanity Fair story “Oh. My god, this is so f***ed up: inside Silicon Valley’s secretive orgiastic dark side” insiders talked about the creepy tech parties in which young women are exploited and harassed by tech guys who are still making up for getting bullied at school. (Just as bad, they use the revolting term “cuddle puddles”) The romantic image of scrappy, visionary nerds inventing the future in a garage has evolved into a culture of entitled frat boys behaving badly. “Too much swagger and not enough self-awareness,” as one investor said.
I somehow don’t think that the bad behaviours described here is limited to tech companies. I am sure that in her days as a business journalist (and a very good one too) Ms Hill Cone saw examples of the behaviours she condemns in any number of enterprises.
6.) These giant companies suck millions in profits out of our country but do little to participate as good corporate citizens. If they even have an office here at all, it is tiny. And don’t get started on how much tax they pay. A few years ago Google’s New Zealand operation consisted of three people who would fly back and forth from Sydney to manage sales over here. Apparently, Apple has opened a Wellington office and lured “several employees” from Weta Digital. But there is little transparency about how or where these companies do business or how to hold them accountable. There is no local number to call, there is no local door to knock on. And don’t hold your breath that our children might get good jobs working for any of these corporations.
This criticism goes to the tax problem and probably has underneath it a much larger debate about the purposes and morality of the tax system. The classic statement, since modified, is stated in the case of Inland Revenue Commissioners v Duke of Westminster  AC 1 where it was stated:
“Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax.”
There can be no doubt that the tax laws will be changed to close the loophole that exists whereby the relationship between the income derived by Google and Apple from their NZ activites will be subject to NZ tax. But Ms Hill Cone goes further and suggests that these companies should have a physical presence – a local door to knock on. This is the digital paradigm. It is no longer necessary to have a suite of offices in a CBD building paying rent.
7.) Mark Zuckerberg preaches that Facebook’s mission is to connect people. But Johann Hari’s new book Lost Connections: Uncovering the real causes of depression and the unexpected solutions, out this week, provides convincing evidence that in the digital age people are more lonely than ever. Hari argues the very companies which are trying to “fix” loneliness – Facebook, for example – are the ones which have made people feel more disconnected and depressed in the first place.
The book cited by Ms Cone is by a journalist writing about depression. Apparently the diagnosis for hsi depression was supposedly from a chemical imbalance in his brain whereas he discovered after investigating some of the social science evidence that depression and anxiety are caused by key problems with the way that we live. He uncovered nine causes of depression and anxiety and offers seven solutions to the problems. Much of the book is about the author and the problems that he had with the treatment he received. His book is as much a critique of the pharmaceutical industry as much as anything. It is described in the Guardian as a flawed study. Certainly it cannot be said that Hari’s argument is directed towards the suggestion that social media platforms are causative of depression.
8.) Is all this technology really making the world a better place? At this week’s CES (Consumer Electronics Show) in Las Vegas some of the innovations were positive but a lot of them were really, quite dumb. Do you really need a robot that will fold your laundry or a suitcase that will follow you? Or a virtual reality headset that will make you feel like you are flying on a dinosaur (Okay, maybe that one would be fun.)
Point taken. A lot of inventions are not going to make the world a better place. On the other hand many do. Think Thomas Alva Edison and then think about the Edsel motor vehicle. Ms Hill Cone accepts that some of the innovations were positive and the positive ones will probably survive the “Dragon’s Den” of funding rounds and the market.
These eight points were advanced by Ms Hill Cone as reasons why tech companies should get their comeuppance as she puts it. It is difficult to decide whether the article is merely a rant or a restatement of some deeper concerns about Tech Giants. If it should be the latter there should be more thorough analysis. But unless it is absolutely necessary and identifies and addresses a particular mischief in my view regulation is not the answer.
But Ms Hill-Cone is not alone. Later in January a significant beneficiary of Silicon Valley, Marc Benioff compares the crisis of trust facing tech giants to the financial crisis of a decade ago. He suggest that Google, Facebook and other dominant forms pose a threat and he made these comments at the World Economic Forum in Davos. He suggested that what is needed is more regulation and his call was backed by Sir Martin Sorrell who suggested that Apple, Facebook, Amazon, Google, Microsoft, and China’s Alibaba and Tencent had become too big. Sir Martin compared Amazon founder Jeff Bezos to a modern John D. Rockefeller.
One of the suggestions by Sir Martin was that Google and Facebook were media companies, echoing concerns that had been expressed by Rupert Murdoch. The argument is that as the Internet Giants get bigger, it is not a fair fight. And then, of course, there were the criticisms that the Internet Giants had become so big that they were unaware of the nefarious use of their services by those who would spread fake news.
George Soros added his voice to the calls for regulation in two pieces here and here. At the Davos forum he suggested that Facebook and Google have become “obstacles to innovation” and are a “menace” to society whose “days are numbered”. As mining companies exploited the physical environment, so social media companies exploited the social environment.
“This is particularly nefarious because social media companies influence how people think and behave without them even being aware of it. This has far-reaching adverse consequences on the functioning of democracy, particularly on the integrity of elections.”
In addition to skewing democracy, social media companies “deceive their users by manipulating their attention and directing it towards their own commercial purposes” and “deliberately engineer addiction to the services they provide”. The latter, he said, “can be very harmful, particularly for adolescents”.
He considers that the Internet Giants are unlikely to change without regulation. He compared social media companies to casinos, accusing them of deceiving users “by manipulating their attention” and “deliberately engineering addiction” to their services, arguing that they should be broken up. The basis for following a model that was applied in the break up of AT & T Soros suggested that the fact that the Internet Giants are near-monopoly distributors makes them public utilities and should subject them to more stringent regulation, aimed at preserving competition, innovation and fair and open access.
Soros pointed to steps that had been taken in Europe where he described regulators as more farsighted than those in the US when it comes to social policies, referring to the work done by EU Competition Commissioner Margrethe Vestager, who hit Google with a 2.4 billion euro fine ($3 billion) in 2017 after the search giant was found in violation of antitrust rules.
Even more recently, in light of the indictments proferred by Spevial Prosecutor Mueller against a number of Russians who attempted to interfere with the US election of 2016 and who used social media to do so, a call has gone up to regulate social media so that this does not happen again. Of course that is a knee jerk reaction that seems to forget the rights of freedom of expression enshrined in both international convention and domestic legislation and the First Amendment to the US Constitution which protects freedom of speech and where political speech is given the highest level of protection in subsequent cases. But nevertheless, the call goes out to regulate.
Facebook has responded to these concerns by reducing the news feeds that may be provided and more recently in New Zealand Google has restructured its tax arrangements. Both of these steps represent a response by the Internet Giants to public concern – perhaps an indication of a willingness to self-regulate
The urge to regulate is a strong one especially on the part of those who favour the status quo. There can be little doubt that ultimately what is sought is control of the digital environment. The content deliverers like Facebook and Google will be first, but thereafter the architecture – the delivery system that is the Internet that must be free and open – will increasingly come under a form of regulatory control that will have little to do with operational efficiency.
Of course, content is a low-hanging fruit. Marshall McLuhan recognised that when he called the “content” of a medium is like the juicy piece of meat carried by the burglar to distract the watchdog of the mind.” I doubt very much that content is the real target. Nicholas Sarkozy called for regulation of the Internet in 2012 so that urge to regulate is not new by any means.
At the risk of being labelled a technological determinist, I suggest that trying to impose regulatory structures that preserve the status quo inhibits innovation and creativity as much if not more than the suggestion that such an outcome will happen if we leave the Internet Giants alone. Rather I suggest that we should recognise that the changes that are being wrought are paradigmatic. There will be a transformation of the way in which we use communication systems after the current disruption that is being experienced. That means that what comes out the other end may not be immediately recognisable to those of us whose values and predispositions were formed during the analog or pre-digital paradigm.
On the other hand those who reject technological determinism still recognise the inevitability of change. Mark Kurlansky in his excellent book “Paper: Paging through history” argues that technologies have arisen to meet societal needs. It is futile to denounce the technology itself. Rather you have to change the operation of society for which the technology was created. For every new technology there are detractors, those who see the new invention destroying everything that is good in the old.
To suggest that regulation will preserve the present – if indeed it is worth preserving – is rear view mirror thinking at its worst. Rather we should be looking at the opportunities and advantages that the new paradigm presents. And this isn’t going to be done by wishing for a world that used to be, because that is what regulation will do – it will freeze the inevitable development of the new paradigm.
 In fact a misquote that has fallen into common usage from the movie Field of Dreams (Director and Screenplay by Phil Alden Robinson 1989). The correct quote is “If you build it he will come” (my emphasis) http://www.imdb.com/title/tt0097351/quotes (last accessed 3 February 2015).
 See for example Andrew Keen The Internet is Not the Answer (Atlantic Books, London 2015)