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.

The case against the Internet

Double click to enlarge. Source: Visual Capitalist.

Andrew Keen’s book, The Internet Is Not The Answer (2015), which I recently finished reading, is a good antidote to cyber-utopians such as Kevin Kelly.

Keen says the Internet is shaping society in ways we the people don’t understand.  Some of them are good, some of them are bad, but all are out of control.

Like Kelly, he writes about technology as if it were an autonomous force, shaped by its own internal dynamic rather than by human decisions.  Unlike Kelly, he thinks this is a bad thing, not a good thing.

He does not, of course, deny that the Internet has made life easier in many ways, especially for writers.   But that is not the whole story.  He claims that—

• The Internet is a job-destroyer.
• The Internet enables business monopoly
• The Internet enables surveillance and invasion of privacy.
• The Internet enables anonymous harassment and bullying.
• The Internet enables intellectual property theft

Keen quotes Marshall McLuhan’s maxim, “We shape our tools, then our tools shape us.”

What he doesn’t quite understand is that the “we” who shape the tools is not the same as the “us” who are shaped by them.

Or to use Marxist lingo, what matters is who owns the means of production.

Technology serves the needs and desires of those who own it.  Technological advances generally serve the needs and desires of those who fund it.

Advances in technology that benefit the elite often serve the general good as well, but there is no economic or social law that guarantees this.   This is as true of the Internet as it is of everything else.

Let me look at his claims one by one—

Mike Lofgren and the Deep State

This Bill Moyers broadcast is from 2014

Mike Lofgren is a Washington insider.  He was a Republican congressional staff member for 28 years, including 16 years as a senior analyst on the House and Senate budget committees.

He has written a book, THE DEEP STATE: The Fall of the Constitution and the Rise of a Shadow Government, about governmental and private institutions that operate above the law, and independently of the will of the citizens, and how they interlock in ways that mutually reinforce their power.

The Deep State includes the bankers who were prosecuted for financial fraud because they were “too big to fail” and CIA torturers who were not prosecuted or dismissed because that would demoralize the agency.

It is the force that makes the government engage in bank bailouts, warrant-less surveillance and undeclared wars.  It is the force that has made the American public accept endless war and economic stagnation as normal.  It is the explanation of why partisan gridlock and financial sequesters never affect the availability of money to subsidize foreign military forces.

Lofgren’s Deep State includes President Eisenhower’s “military industrial complex”, the FBI, CIA and NSA and their supposed overseers in Congress and the federal courts, Wall Street and its supposed overseers in the Treasury and Justice departments, and Silicon Valley.

They work together, and have revolving doors through which people can move from one to another—for example, General David Petreaus, after his retirement from the military, to a seven-figure job at KKR, a Wall Street private equity form.

None of this is the result of a conscious conspiracy, Lofgren wrote.  It is a natural evolution of power without accountability, and the “group-think” of people who never have their assumptions questioned.

Silicon Valley’s agenda for the Democrats

The kinds of Democrats who go to college, get an entrepreneurial career or move to a big city — those who embrace a relatively unpredictable life — want an entirely different role for the federal government: they want the state to invest in modernization, with more high-skilled immigration, expansive free trade agreements, and performance-based charter schools.

Source: The Ferenstein Wire.

Startup founders and college-educated liberals fundamentally reject an atomistic conception of Society: government should be involved in personal decisions, such as finishing school or eating healthy, because they believe that personal decisions ripple out and significantly affect most people in Society.

Source: The Ferenstein Wire

Economically, the technology industry exacerbates inequality between the rich and middle-class, but eradicates poverty by making essential goods freely accessible.  Ultimately, this will trend toward a two-class society of extremely wealthy workaholics who create technologies that allow the rest of society to enjoy leisurely prosperity.  The cost for this prosperity will be inequality of influence

Source: The Ferenstein Wire.

Click to enlarge.

A San Francisco journalist named Gary Ferenstein says the Democratic Party is no longer the party of factory workers and organized labor.  It is the party of college-educated professionals and high-tech companies, he says, and this is a good thing.

He has published a manifesto on behalf of the Silicon Valley Democrats—which include Barack Obama and Hillary Clinton—and against “protectocrats” such as Bernie Sanders and Elizabeth Warren.

While not all Silicon Valley entrepreneurs and professionals think alike, any more than labor union members, white people or any other large category of people do, I think that Ferenstein does speak for many people from that background, and that his ideas are worth discussing.

His basic idea is that the government should give free rein to creative entrepreneurs, while trying to change individual behavior so as to make people more productive.  The high-tech start-up corporation is his model for all the institutions of society.

Unlike the typical neo-liberal, he does not advocate allowing people to fend for themselves.  Government should assure everyone an adequate education, adequate medical care and everything else they need to be economically productive.

Click to enlarge.

He believes that the key to better education and better public health services is internal competition.  He therefore favors Obamacare over a universal single-payer system, and charter schools over universal public education.

This is a form of radicalism that has appeared time and again in modern history—a radicalism that would revolutionize the way people live, yet leave the structure of political and economic power unchanged.

Ferenstein asserts that change is always good, there are no fundamental conflicts in society and education is the solution to all problems.  Nobody struggling to survive in today’s harsh economy would believe any such thing, but I’m sure that there is a constituency that does.

He deserves credit for making that constituency’s assumptions explicit, and showing how they influence the Democratic Party leadership.

What follows is more of Ferenstein’s Silicon Valley manifesto, my comments and links to the full text of his writings.

The environmental scene – August 13, 2015

The Point of No Return: Climate Change Nightmares Are Already Here by Eric Holthaus for Rolling Stone.

The reality of global warming: We’re all frogs in a pot of slowly boiling water by Roz Pidcock for Reuters.

Risk, Climate Change and Black Swans by John Atcheson for Common Dreams.

California’s Drought Is So Bad That Thousands Are Living Without Running Water by Julia Lurie for Mother Jones.

How the Midwest’s Corn Farms Are Cooking the Planet by Tom Philpott for Rolling Stone.

Dupont and the Chemistry of Deception by Sharon Lerner for The Intercept.

The Earthquake That Will Devastate the Pacific Northwest by Kathryn Schulz for The New Yorker.  (Hat tip to Hal Bauer)  Not a human-made problem, but that doesn’t mean it can be ignored.

I spent a weekend at Google talking with nerds about charity.  I came away worried by Dylan Matthews for Vox.   The irrelevance of some of Silicon Valley’s best minds.

Seeds That Defied Romans, Pirates and Nazis by Robert Krulwich for National Geographic.  The resiliency of life.

 

The passing scene: January 7, 2015

60 Words and a War Without End: The Untold Story of the Most Dangerous Sentence in U.S. History by Gregory D. Johnson for BuzzFeed.

The Authorization for the Use of Military Force was intended to give President George W. Bush the authority to hunt down the terrorists who plotted the 9/11 attacks.  But President Bush and President Obama after him have used it as justification for any kind of covert or military action anywhere in the world that they deem necessary for national security.  This article tells how AUMF was enacted, and the debate over its meaning.

Nonviolent Conflicts in 2014 You May Have Missed Because They Were Not Violent by Erica Chenoweth for Political Violence @ A Glance.

Violent methods of struggle have more credibility than non-violent methods.  When mass defiance fails, it is seen as a reason to shift to violent struggle.  When violent struggle fails, it is seen as a reason to double down on violence.

FBI says search warrants not needed to use “stingrays” in public places by David Kravets for ars technica.

The FBI has erected fake cell phone towers which it uses to intercept and listen in on cell phone conversations.

Bernie Sanders Brutal Letter on Obama’s Trade Pact Foreshadows 2016 Democratic Clash by Zach Carter for Huffington Post.

Why the Tech Elite Is Getting Behind Universal Basic Income by Nathan Schneider for Vice News.

 

The passing scene: Links & comments 9/16/14

Ukraine Offers Amnesty to Rebels by Mike Shedlock on Mish’s Global Trend Analysis (via Naked Capitalism).

President Petro Poroshenko of Ukraine made a peace offer to separatist rebels in Donetsk and Luhansk, consisting of amnesty to helps, help in rebuilding, free local elections Nov. 9, limited self-rule for at least three years and the right to use Russian in official documents.

To me, an outsider ignorant of internal Ukrainian politics, this looks like a reasonable offer.   But it is opposed by Prime Minister Arseny Yatseniuk, who came to power with the backing of neo-conservatives in the U.S. State Department.

Steve Jobs Was a Low-Tech Parent by Nick Bilton for The New York Times.  (Via Mike the Mad Biologist)

Most CEOs of Silicon Valley companies set strict limits on how much time their children can spend in front of computer screens or use social media.  Instead they encourage their children to read printed books and engage in face-to-face conversation.   Consumers of their products should follow their example.

Foreign Powers Buy Influence at Think Tanks by Eric Lipton, Brooke Williams and Nicholas Confessore for The New York Times. (Via Avedon’s Sideshow)

Non-profit research organizations such as the Brookings Institution, the Center for Strategic and International Studies and the Atlantic Council are supposed to provide expert and objective advice.  But how objective can they be if they take money from foreign governments?

John Crawford Shooting: Open Carry for Whites, Open Season on Blacks by Albert L. Butler for The Root.

Doubts cast on witness’s account of black man killed by police in Walmart by Jon Swaine for The Guardian.

Police in Ohio shot and killed a black man in a Walmart store in Ohio because they thought the toy gun he was holding was real.  But Ohio is an “open carry” state.  If he had been carrying a real gun, it would have been perfectly legal under state law.

Life in the wired society

Oral-B, a Procter & Gamble company, this year launched its SmartSeries Bluetooth toothbrush — an essential appliance for what the firm calls “the well-connected bathroom”.

It connects to your smartphone, where its app tracks brushing tasks: Have you flossed? cleaned the tongue? rinsed? And highlights areas of the mouth visualized on the phone screen that deserve more attention.

More importantly, as the toothbrush’s website proudly announces, it also “records brushing activity as data that you can chart on your own and share with dental professionals.”

What happens to that data — whether it goes to these dental professionals, or your insurance company, stays with you or is appended to your data already owned by Facebook and Google — is a controversial question.

via Evgeny Morozov: How much for your data?.

The principle of financialization is that if anything can be done, it not only can, but should be done for money, and that the only standard of value is monetary.  Technology in the service of financialization applies this to your personal life.  Any information about you that is worth knowing is worth selling for money.

Now if personal data is a financial asset and nothing else, the individual person should have the exclusive right to sell it, just as the individual person should have the exclusive right to sell his or her own blood.   But is this how we want to live?

The digitization of everyday life, and the rapaciousness of financialization, risk turning everything — genome to bedroom — into a productive asset. 

As Esther Dyson, a board member of 23andme, the leader in personalized genomics, said the company is “like the ATM that gives you access to the wealth locked within your genes”.

This is the future that Silicon Valley expects us to embrace: given enough sensors and net connections, our entire life becomes a giant ATM.  Those refusing this would have only themselves to blame. 

Opting out from the “sharing economy” would come to be seen as economic sabotage and wasteful squandering of precious resources that could accelerate growth.

Eventually, the refusal to “share” becomes tinged with as much guilt as the refusal to save or work or pay debts, with a veneer of morality covering up — once again — exploitation.

It’s only natural that the less fortunate, under the burden of austerity, are turning their kitchens into restaurants, their cars into taxis, and their personal data into financial assets. What else can they do?

For Silicon Valley, this is a triumph of entrepreneurship — a spontaneous technological development, unrelated to the financial crisis.  But it is only as entrepreneurial as those who are driven — by the need to pay rent — into prostitution or selling their body parts.

via Evgeny Morozov: How much for your data?.

 Hat tip for the link to Daniel Brandt.

Top Silicon Valley CEOs accused of wage theft

I’d guess that if I interviewed a typical Silicon Valley CEO, he’d say he opposed labor unions because wages should be set by the law of supply and demand.  This is conjecture, because I don’t know the views of individual CEOs, but I’d bet it was true.

I’d also bet that many of them buy into the view of certain economists that growing inequality in wages is due to the fact that the most talented workers command more of a premium over average workers than they did in an earlier era.

Be that as it may, Silicon Valley’s top companies – Apple Computer, Google, Abobe, Pixar, Intuit and Intel – are the targets of a class action lawsuit, and Hewlett-Packard in a separate suit, alleging that their CEOs conspired to limit the salaries of their most talented employees.

They allegedly agreed among themselves to refrain from recruiting each others’ employees, to share wage information and to punish companies that wouldn’t co-operate. All this is illegal, of course

The passing scene: Notes & links 11/26/13

Silicon Chasm: the class divide on America’s cutting edge by Charlotte Allen for The Weekly Standard.

Pundits such as Richard Florida say that if a community caters to the “creative class,” there will be business innovations that expand the economy and benefit the whole community.   Charlotte Allen’s tour of Silicon Valley indicates that things don’t necessarily work out that way.

When Product Features Disappear: Apple, Amazon and Tesla and the Troubled Future of 21st Century Consumers by Steve Blank.

One of the great innovations of the 21st century is software-based products which you don’t need to maintain yourself, and which suppliers automatically upgrade without you having to go to the store.  But Steve Bank points out that the downside is that (1) the product you bought today may not be the product you have later, (2) manufacturers can, and do, downgrade your product as well as upgrade it, and (3) you have no legal protection.

“Blood Avocados”: the Dark Side of Your Guacamole by Jan-Albert Hootsen for the Vocativ news site.

Alcohol prohibition in the United States in the 1920s fueled a big increase in organized crime.  But when Prohibition ended, the crime syndicates didn’t go away.  The gangsters found new forms of enterprise.  Drug prohibition in the United States has fueled a big increase in organized crime in Mexico, Colombia and other countries.  But drug legalization won’t make those crime syndicates go away.  Jan-Albert Hootsen wrote about how one Mexican drug syndicate is taking over the avocado industry.

Coal Politics: Big Win in a Small Town by Lou Dubose for the Washington Spectator.

The investment theory of the 2012 elections

Thomas Ferguson is a political scientist whose writings changed the way I think about politics.  His “investment theory of political parties” is that candidates for office are like entrepreneurs, wealthy corporate interests are like venture capitalists who provide capital, and the voters are like customers being sold the product.

Ferguson says the public gets to decide who wins, but the “investors” get to decide who runs.  That’s why elected officials normally pay more attention to the people who finance them than the people who vote for them, and why politicians so often do the opposite of what they promise and what their constituents want.

Ferguson and two other scholars, Paul Jorgensen and Jie Chen, recently did a study of the 2012 election campaign which bears this out.  What was noteworthy, they wrote, is that the strong support Obama got from Silicon Valley companies.  Romney got more support from big business as a whole, but Obama got as much or more from the telecommunications, software, web manufacturing, electronics, computer and defense industries.

All these industries, as they point out, are deeply involved with the National Security Agency, as suppliers of technology, as sub-contractors and as aiders and abettors of surveillance.  The overseas businesses of Apple, Facebook, Google, Microsoft, Skype, YouTube and other companies have been gravely damaged by Edward Snowden’s disclosures of how they work with the NSA to spy on foreign governments, businesses and citizens.  No wonder Obama regards Snowden as Public Enemy No. 1.

The corporate cash behind the surveillance state

The high technology and Silicon Valley companies that supported President Obama’s 2012 re-election campaign are also deeply involved with the National Security Agency and other surveillance programs.

Thomas Ferguson, Paul Jorgensen and Jie Chen, after analyzing campaign finance reports from 2012, concluded that although Mitt Romney received more contributions from big business overall, Barack Obama received equal or stronger support than Romney from the telecommunications, software, web manufacturing, electronics, computer and defense industries.

They pointed out in an article for AlterNet that these industries supply the technology that makes possible the NSA’s total surveillance programs, and provide many suppliers and subcontractors that operate the system.  And, as Glenn Greenwald and Edward Snowden disclosed, Google, Apple, Microsoft, Verizon and Facebook worked directly with the NSA to spy on the American and foreign public at large.

At the time President Obama took office, many of his supporters expected a radical change in course on national security policy. This did not happen.  For sure, limitations on some of the worst excesses were put in place, but there was no broad reversal.  The secret programs of surveillance expanded and … other policies … on indefinite detention, treatment of whistleblowers, and executive prerogatives relative to Congress stayed in place or broke even more radically with tradition.

Our analysis of political money in the 2012 election shines a powerful new light on the sources of this policy continuity.  We do not believe that it would be impossible to strike a reasonable balance between the demands of security and freedom that accords with traditional Fourth Amendment principles and checks abuses of government surveillance rapidly and effectively.  But a system dominated by firms that want to sell all your data working with a government that seems to want to collect nearly all of it through them is unlikely to produce that.

I thought that Silicon Valley entrepreneurs supported President Obama out of social liberalism or because they thought he was more modern in his thinking than John McCain or Mitt Romney.  Maybe they do.  But there is also this three-way relationship—the NSA funds high tech industry, high tech industry funds President Obama’s campaign, and President Obama supports the NSA.

Click on Who Buys the Spies for the complete article by Ferguson, Jorgenson and Chen on AlterNet.