Monopoly power on the feudal Internet

Maciej Ceglowski, a writer and software entrepreneur in San Francisco, spoke at a conference in Berlin last May about monopoly power on the Internet: –

There are five Internet companies—Apple, Google, Microsoft, Amazon and Facebook.  Together they have a market capitalization just under 3 trillion dollars.

Bruce Schneier has called this arrangement the feudal Internet.  Part of this concentration is due to network effects, but a lot of it is driven by the problem of security.  If you want to work online with any measure of convenience and safety, you must choose a feudal lord who is big enough to protect you.

Maciej Ceglowski

These five companies compete and coexist in complex ways.

Apple and Google have a duopoly in smartphone operating systems.  Android has 82% of the handset market, iOS has 18%.

Google and Facebook are on their way to a duopoly in online advertising.  Over half of the revenue in that lucrative ($70B+) industry goes to them, and the two companies between them are capturing all of the growth (16% a year).

Apple and Microsoft have a duopoly in desktop operating systems.  The balance is something like nine to one in favor of Windows, not counting the three or four people who use Linux on the desktop, all of whom are probably at this conference.

Three companies, Amazon, Microsoft and Google, dominate cloud computing. AWS has 57% adoption, Azure has 34%. Google has 15%.

Outside of China and Russia, Facebook and LinkedIn are the only social networks at scale.  LinkedIn has been able to survive by selling itself to Microsoft.

And outside of Russia and China, Google is the world’s search engine.

That is the state of the feudal Internet, leaving aside the court jester, Twitter, who plays an important but ancillary role as a kind of worldwide chat room.  [1]

There is a difference between the giant Silicon Valley companies and Goldman Sachs, Citicorp and the big Wall Street banks.   The Silicon Valley companies have created value.  The Wall Street banks, by and large, have destroyed wealth.

I depend on Google; I found Ceglowski’s talk through Google Search.   I use Apple products; I’m typing this post on my i-Mac.  I don’t use Facebook or Windows, but many of my friends do.  I try to avoid ordering books through Amazon, because I disapprove of the way Jeff Bezos treats Amazon employees and small book publishers, but I use subscribe to Amazon Prime.

I don’t deny the achievements of the founders of these companies, nor begrudge them wealth and honor.  But I do not think that they or their successors have the right to rule over me, and that’s what their monopoly power gives them.

Ceglowski pointed out that the business model for Amazon, Facebook, Google and Microsoft is surveillance.  They gather and correlate behavioral data on their customers, and use it to target advertising.  Worse, behavioral data also is used to evaluate job applicants, loan applicants and even criminal defendants.

He correctly noted the lack of security of personal data stored by the big companies.   I think he underestimated the degree to which these companies work with the NSA, CIA and other U.S. intelligence agencies, and overestimated the degree to which these agencies are constrained by U.S. law.

But he was dead right to point out to his European audience that the powers of U.S. technology companies and intelligence agencies affect not only Americans, but Europeans and everyone else in the world outside Russia and China.

He went on in his talk to point out how little the Silicon Valley elite have done to help the growing number of poor people and the shrinking middle class, including those in their immediate neighborhoods.

Instead, he said, Silicon Valley billionaires are busy financing research on personal immortality and space colonization.

If we’re going to worry about existential risk, I would rather we start by addressing the two existential risks that are indisputably real—nuclear war and global climate change—and working our way up from there.

But real problems are messy. Tech culture prefers to solve harder, more abstract problems that haven’t been sullied by contact with reality.  So they worry about how to give Mars an earth-like climate, rather than how to give Earth an earth-like climate.  They debate how to make a morally benevolent God-like AI, rather than figuring out how to put ethical guard rails around the more pedestrian AI they are introducing into every area of people’s lives.

It is true that Bill Gates is a major philanthropist and that he Mark Zuckerberg are educational reformers, both of them concerned with real problems.   The problem is that they see Microsoft and Facebook as a model for how society should be run, and they most definitely will not be interested in any social reform that diminishes their wealth or power.

I think power without accountability is always dangerous, even when used with good intentions, and I don’t see that those two have any standing to impose their vision of society on the rest of us.

The election of Donald Trump has made Silicon Valley executives, along with a lot of other people, aware of the dangers of concentrated powers in the wrong hands.   But they aren’t doing anything about it, nor is Silicon Valley’s high-tech work force, with its lack of tradition of union solidarity.

In the absence of US action, Ceglowski looked to the European Union to curb the power of the Silicon Valley monopolists.

Here are some specific regulations I would like to see the EU impose:

  • A strict 30 day time limit on storing behavioral data.
  • The right to opt out of data collection while continuing to use services.
  • A ban on the sale or transfer of behavioral data, including to third-party ad networks.
  • A requirement that advertising be targeted strictly to content, not users.

With these rules in place, we would still have Google and Facebook, and they would still make a little bit of money.  But we would gain some breathing room.  These reforms would knock the legs out from underground political ad campaigns like we saw in Brexit, and in voter suppression efforts in the US election.  They would give publishers relief in an advertising market that is currently siphoning all their earnings to Facebook and Google.  And they would remove some of the incentive for consumer surveillance.

The other thing I hope to see in Europe is a unionized workforce at every major tech company. Unionized workers could demand features like ephemeral group messaging at Facebook, a travel mode for social media, a truly secure Android phone, or the re-imposition of the wall between Gmail and DoubleClick data.  They could demand human oversight over machine learning algorithms.  They could demand non-cooperation with Trump.

And I will say selfishly, if you can unionize here, it will help us unionize over there. [2]

I don’t think this would be easy, but it is doable.   I don’t think neoliberal European governments have it in them to stand up to American corporate or government pressure, but this is an issue on which socialists, who believe in economic democracy, and nationalists, who believe in national sovereignty, could join forces.

It would be an example of how globalization could be used to level up global standards rather than leveling down.


Notes From An Emergency by Maciej Ceglowski on his Idle Words web log.   The whole thing is well worth reading.

[1] Links in original.  [2]  Links added.

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