openpolitics.com

00:05

very excited to introduce Rana Rana Zay

00:08

is the global business columnist and

00:11

natural times and CNN’s global economic

00:13

analysts previously she’s been the

00:15

assistant managing editor in charge of

00:16

Business and Economics at time as well

00:18

as the magazine’s economic columnist and

00:20

spent 13 years at Newsweek as an

00:22

economic foreign affairs editor and

00:24

correspondent and in her new book don’t

00:26

be evil which i think is a great title

00:29

Rhonda Chronicles how far big tech has

00:31

fallen from its original vision of free

00:33

information and digital democracy

00:35

drawing on nearly 30 years of experience

00:36

reporting on the technologies sector

00:39

Ronna traces the evolution of companies

00:40

such as Google Facebook Apple Amazon

00:46

into behemoths that monetize people’s

00:49

data spread misinformation and hate

00:51

speech and threaten citizens privacy she

00:53

also shows how we can fight back by

00:55

creating a framework that both fosters

00:57

innovation and protects us from threats

00:59

posed by digital technology her book is

01:02

already garnering widespread praise with

01:04

the Guardian calling it a masterly

01:05

critique of the internet pioneers who

01:07

now dominate our world so without

01:08

further ado please help me in welcoming

01:10

Rana for a heart to politics and prose

01:16

thank you I am so honored to be here

01:19

it’s really a pleasure this is one of my

01:22

favorite bookstores probably my favorite

01:24

bookstore in Washington and so it’s just

01:27

a huge pleasure I thought I would start

01:30

by just talking a little bit about how I

01:32

got the idea to write this book it’s

01:33

actually my second book my first book

01:35

makers and takers was a look at the

01:38

financial sector and how it no longer

01:40

serves business so I like to kind of

01:42

take on these big industry-wide maybe

01:45

take down so we’ve the word but kind of

01:49

look at an ecosystem and economic

01:50

ecosystem see how it’s working or not

01:52

working I got the idea for this book

01:56

probably two months into my new job at

02:00

the Financial Times

02:01

I was hired in 2017 to be the chief

02:05

business commentary writer so my my job

02:08

was to sort of look at the top world’s

02:11

business stories economic stories and

02:13

try to make sense of them in commentary

02:14

and when I do that I tend to try and

02:17

follow the money in order to narrow the

02:18

funnel of where to put my focus and I

02:20

had come across a really really

02:22

interesting statistic that 80%

02:25

of the world’s wealth corporate wealth

02:27

was living in 10% of companies and these

02:30

were the companies that had the most

02:31

data personal data and intellectual

02:34

property and so the biggest of those

02:36

were the big tech platforms that my my

02:38

book kind of tries to make icons of

02:41

we’re using all the candy colors here

02:43

the fangs Facebook Amazon Apple Netflix

02:47

Google so that was a pretty stunning

02:50

statistic and it was interesting because

02:51

I was thinking about how wealth since

02:54

2008 had transferred from the financial

02:56

sector into the big tech sector and that

02:59

had happened really quietly without a

03:02

whole lot of commentary in the press now

03:05

at the same time I was starting to kind

03:06

of dig into this story something else

03:08

happened a much more personal episode I

03:11

came home one day and I there was a

03:14

credit card bill waiting for me and I

03:16

opened it up and I started looking

03:17

through and there were all these tiny

03:19

charges in the amount of dollar

03:21

ninety-nine three dollars five dollars

03:22

whatever and I noticed that they were

03:25

all from the app store and I thought oh

03:28

my gosh I must have been hacked and then

03:30

I thought who else has my password my

03:33

ten-year-old son Alex I see nods from

03:38

parents and others so I go downstairs

03:42

and I find Alex on the couch with his

03:44

phone which is his usual after-school

03:46

position and I say you know what what’s

03:50

up do you know anything about this and

03:51

he sort of stunned and oh yes oh that

03:55

yeah and turns out alex has gotten very

03:58

fond of a game called FIFA Mobile which

04:01

is an online soccer game and it’s one of

04:03

these games that’s dude that you can

04:04

download it for free but once you get

04:07

into the game and start playing you have

04:10

to buy stuff

04:11

in-app purchases it’s called our loot

04:13

boxes is another another name so if you

04:16

want to move up the rankings and do well

04:18

in the game

04:19

you have to buy virtual Ronaldo or some

04:22

new shoes for your player and nine

04:24

hundred dollars and one month later Alex

04:27

was at the top of the rankings but I was

04:32

horrified I was actually horrified and

04:34

fascinated in fact I mean as

04:36

mother I was horrified his phone was

04:39

immediately confiscated passwords were

04:41

changed limitations were put into place

04:44

by the way he now officially is allowed

04:47

only one hour a day on his phone he’s 13

04:51

years old the average for that age is 7

04:54

hours a day national average now he

04:57

sneaks in an extra I think he probably

04:58

gets about 90 minutes because I can’t

05:00

police him all the time on the way to

05:01

the on the way to school but it’s I mean

05:04

to me that is a stunning fact that the

05:06

average American 13 year old spent 7

05:09

hours day on their phone anyway so I was

05:12

horrified as a parent but I was

05:13

fascinated as a business writer because

05:15

I thought this is the most amazing

05:17

business model I have ever seen and I

05:20

have to learn everything about it and

05:22

right about that time someone had come

05:26

to see Mia a man named Tristan Harris

05:28

who’s one of the characters in my book

05:29

and Tristan is a really interesting guy

05:32

he was formerly the chief ethics officer

05:35

at Google and he was trying to bring

05:39

goodness and not evil to the company and

05:42

make sure that all the all the products

05:45

and services were functioning sort of a

05:47

human interest and then he realized he

05:48

was not having any luck doing that

05:49

within the company so he decided to go

05:52

outside and start something called the

05:54

Center for Humane technology and Tristan

05:57

had become really really worried about

05:59

the core business model that is it’s

06:02

particularly relevant for Google and

06:05

Facebook but is also a big part of

06:07

Amazon’s model and and it’s really the

06:08

model that another author Shoshanna

06:10

Zubov who recently wrote a wonderful

06:12

book on this topic would call

06:14

surveillance capitalism and so it’s the

06:16

idea of companies coming in and tracking

06:20

everything you are doing online and

06:22

increasingly offline you know if you

06:24

have your if you have an Android phone

06:25

it might know where you are in the

06:27

grocery store if you’re in a car with

06:29

smart technology your your location

06:32

coordinates can be tracked so all of

06:35

this is serving to build a picture of

06:37

you that is then used to be sold to

06:41

advertisers and then you can be targeted

06:44

with what’s called hyper targeted

06:46

advertising which is essentially why for

06:49

example

06:50

if I go online to look for a hotel in

06:53

California I might get a certain price

06:55

but someone else might get a different

06:57

price so this is a really important

06:59

thing we are looking at different

07:01

internets right there are subtle

07:04

differences but they’re there and this

07:06

data profile that is being built up is

07:08

splitting us as individual consumers but

07:12

I would argue that it’s also splitting

07:14

us as citizens and I’ll when I get to

07:16

the readings I’ll kind of flush that out

07:18

a bit more but Tristan

07:20

kind of turned me on to this business

07:23

model and he also helped me connect the

07:25

dots between this business model and

07:27

what had happened to my son because it

07:29

turns out that the technologies these

07:31

sorts of nudges that take you down a

07:34

game or that bring you to certain places

07:36

on Amazon or that give you a certain

07:39

kind of search result or purchasing

07:41

option on Google are part of an entire

07:45

field called capped ology which is kind

07:49

of an Orwellian word and these these

07:52

technologies actually come largely out

07:54

of something called the Stanford

07:55

persuasive technology lab so there is an

07:58

entire industry that is designed to

08:01

track your behavior and pull in things

08:03

like behavioral psychology casino gaming

08:06

techniques and then layer those on to

08:09

apps that will push you towards making

08:13

purchasing decisions or perhaps even

08:15

other kinds of decisions political

08:16

decisions that might be good for certain

08:19

actors and it’s interesting because when

08:22

I started to think about all this one of

08:24

the things I really wanted to do in this

08:26

book was to cry try and create a single

08:28

narrative arc to take folks through this

08:31

20 year evolution of this industry from

08:34

the mid-1990s which is really when the

08:36

consumer internet was born till now and

08:39

at the time I was writing and and still

08:41

probably today you could argue that

08:43

Facebook was the company that was

08:45

getting the most negative attention for

08:48

a lot of the economic and political

08:49

ramifications of its business model but

08:51

if you go back to the very beginning

08:53

Google is the most interesting way to

08:56

track this because Google really

08:59

invented the targeted advertising

09:01

business model they really invented

09:03

surveillance capitalism and one of the

09:05

things that is fascinating and and

09:06

sometimes I’m asked what’s the most

09:08

surprising thing that you found when

09:10

writing this book and really the most

09:11

surprising thing is it was all hiding in

09:14

plain sight so if you go back to the

09:17

original paper the Larry Page and Sergey

09:19

Brin who were the founders of Google did

09:21

in 1998 while at Stanford as graduate

09:25

students they actually lay out they lay

09:28

out what a giant search engine would

09:30

look like how it would function but then

09:31

how you might pay for it and if you go

09:34

down to page 33 there is a section in

09:36

the appendix called advertising and its

09:38

discontents and it essentially says that

09:42

if you monetize a search engine in this

this way with hyper targeted advertising

the interests of the users and the

interests of the advertisers be they

companies or who knows what public

entities are eventually going to come

into conflict and so they actually

recommend that there be some kind of

academic search engine an open search

engine in the public interest so this to

10:05

me first of all is fascinating that it

10:07

was just there all along and fascinating

10:11

that very few people have read that

10:13

entire paper even though even those that

10:16

write about it which in some ways kind

10:18

of goes to the point that in the last 20

10:20

years we all do a lot less reading not

10:22

folks here but but in general we do less

10:25

reading there was actually a fascinating

10:26

study that came out recently from common

10:28

sense media which is Jim’s dyers group

10:30

in California that tracks children’s

10:33

behaviors online teenagers only

10:36

one-third of them read for pleasure more

10:39

than once a month

10:41

long-form articles doesn’t matter if

10:43

you’re reading on an e-book or device

10:44

but long-form articles books only once a

10:47

month for pleasure so all our entire

10:50

world has been changed economically

10:52

these companies have huge monopoly power

10:54

politically we’re all kind of living

10:56

with the ramifications of this new world

10:58

of social media disinformation fake news

11:01

and cognitively our brains are changing

11:05

our behaviors are changing so connecting

11:07

all of those things was really what I

11:10

was trying to get at in this book and so

11:13

I’m gonna read two or three maybe short

11:16

excerpt

11:17

and then we can leave a lot of time for

11:19

questions so that people can kind of

11:20

dive into as much of this as they want

11:23

and I’ll start perhaps with my very

11:28

first meeting with the Googlers Larry

11:33

Page and Sergey Brin who I met not in

11:36

Silicon Valley but in Davos the Swiss

11:39

gathering spot of the global power elite

11:42

where they had taken over a small Chalet

11:44

to meet with a select group of media the

11:47

year was 2007 the company had just

11:50

purchased YouTube a few months back and

11:52

it seemed eager to convince skeptical

11:54

journalists that this acquisition wasn’t

11:56

yet another death blow to copyright paid

11:58

content creation and the viability of

12:00

the news publications for which we

12:02

worked

12:02

unlike the buttoned-up consulting types

12:05

or the suited executives from the old

12:07

guard multinational corporations that

12:09

roamed the promenades of davos their

12:11

tasseled loafers slipping on the icy

12:13

paths the Googlers with a cool bunch

12:15

they wore fashionable sneakers and their

12:17

chalet was sleek white and stark with

12:19

giant cubes masquerading as chairs in a

12:21

space that looked as though it had been

12:23

repurposed that morning by designers

12:25

flown in from the valley in fact it may

12:27

have been and if so Google would not

12:29

have been alone in such access I

12:30

remember attending a party once in Davos

12:32

hosted by Napster founder and former

12:34

Facebook president Sean Parker that

12:37

featured giant taxidermy bears and a

12:39

musical performance by John Legend back

12:42

in the Google Chalet Brin and page

12:44

projected a youthful earnestness as they

12:46

explained the company’s involvement in

12:48

or authoritarian China and insisted

12:50

they’d never be like Microsoft which was

12:52

considered the corporate bully and

12:53

monopolist at the time what about the

12:55

future of news we wanted to know after

12:57

admitting that page read only free news

12:59

online whereas Brin often bought the

13:01

sunday New York Times in print it’s nice

13:03

he said cheerfully

13:04

the duo affirmed exactly what we

13:07

journalists wanted to hear Google they

13:09

assured us would never threaten our

13:10

livelihoods

13:11

yes advertisers were indeed migrating

13:14

and mass from our publications to the

13:15

web where they could target consumers

13:17

with a level of precision that the print

13:19

world could barely imagine but not to

13:21

worry Google would generously retool our

13:22

business models so we too could thrive

13:24

in the new digital world I was much

13:27

younger than and not the admittedly

13:29

cynical business journalist that I have

13:30

since

13:31

and yet I listened skeptically

13:32

skeptically to that happy future of news

13:35

like lecture whether Google actually

13:37

intended to develop some brilliant new

13:40

revenue model or not what alarmed me was

13:42

that none of us were asking a far more

13:44

important question sitting towards the

13:46

back of the room somewhat conscious of

13:48

my relatively junior status I hesitated

13:50

waiting until the final moments of the

13:52

meeting before raising my hand excuse me

13:55

I said we’re talking about all this like

13:57

journalism is the only thing that

13:58

matters but isn’t this really about

13:59

democracy if newspapers and magazines

14:02

are all driven out of business by Google

14:04

or companies like it I asked how are

14:06

people gonna find out what’s going on

14:07

Larry Page looked at me with an odd

14:10

expression as if he were surprised that

14:11

someone should be asking such a naive

14:13

question oh yes we’ve got a lot of

14:16

people thinking about that

14:17

not to worry his tone seemed to say

14:19

Google had the engineers working on that

14:22

little democracy problem next question I

14:26

read that because I’m kind of amazed

14:30

there is still a real lack of

14:34

understanding I think in the valley

14:36

about some of the real negative

14:39

externalities of what have been let’s

14:41

face it amazing technologies I mean we

14:43

you know where would we be without

14:44

search in our smartphones we all

14:46

carrying around the power of a mainframe

14:47

in our pockets but as a journalist I

14:51

think there’s really been a an inability

14:54

of these companies to kind of own up to

14:56

you know some of the bad stuff that they

14:59

have wrought and I think that that still

15:00

considers oh sorry still continues to be

15:03

to be the case one of the other points

15:06

that I try and make in the book is that

15:09

the problems I’m talking about have

15:12

actually moved outside of just the big

15:14

four flat platform firms that that we’re

15:16

moving into a world in which

15:17

surveillance capitalism is going to be

15:19

part of the healthcare system and the

15:21

financial system and really every kind

15:24

of business is now using this as its

15:26

model so for example if you buy coffee

15:29

at Starbucks Starbucks knows a lot about

15:30

you Johnson & Johnson knows a lot about

15:33

you there there are firms watching you

15:35

all the time and so we’re really at a

15:37

pivot point I think where we have to ask

15:40

as a society what are the deeper

15:43

implications of this and our

15:44

okay with them and so I would like to

15:47

read another excerpt where I look at how

15:50

this model is is moving into the

15:52

insurance sector and what that means so

15:58

far data has been obtained via computers

16:01

and mobile devices but now with the rise

16:03

of personal digital assistants like

16:05

Amazon’s Alexa Google’s home mini and

16:07

Apple Siri now at 30 and now in a third

16:10

of American homes with triple digit

16:12

sales growth a year the human voice is

16:14

the new gold while reports of Alexa

16:16

Alexa and Siri listening in on

16:18

conversations and phone calls are

16:19

disputed there’s no question that they

16:21

can hear every word you say and from

16:23

there it’s a short step to them using

16:24

that knowledge to direct your purchasing

16:26

decisions it isn’t much of a longer step

16:28

to see the political implications

16:30

already some researchers worry that

16:32

digital assistants will become even more

16:33

powerful tools than social media for

16:36

election manipulation certainly none of

16:38

us will be unaffected consider consider

16:41

that homeowner oops sorry

16:43

I’m reading from a reading from the

16:44

wrong part I think apologies somehow

16:54

picked the wrong section here anyway I’m

16:57

going to talk you through this example

16:58

because it’s it’s something that is

17:01

already out there I had a conversation a

17:03

couple of years ago with an executive

17:04

from Zurich Financial which is a big

17:07

financial company they do insurance many

17:10

parts of the world they will now if

17:12

you’d like them to put sensors in your

17:14

home or in your car and if you have for

17:18

example as I do you live in a 1901

17:20

townhouse let’s say you’re upgrading

17:22

your pipes you get a check you get a you

17:24

know a positive mark and you may see

17:26

your insurance premium go down but let’s

17:30

say your kid is smoking a joint in their

17:32

bedroom and the sensor picks up on that

17:34

you then get a black mark here and your

17:36

premium may go up same again in your car

17:39

if you’re speeding your insurance

17:42

company will know and so on and so forth

17:43

now you can either like this or not

17:46

depending on where you sit in the

17:48

socio-economic spectrum but what’s very

17:50

very interesting is that entire business

17:53

model a pooled risk business model

17:55

that’s what insurance is it’s now been

17:57

completely dissed

17:58

so you can be targeted and split so this

18:02

is no longer about society pulling risk

18:04

a saree pooling risk this is about

18:06

individuals having to own the risk so if

18:09

you take that to its natural conclusion

18:12

you can imagine an elite up here that

18:17

has access to special pricing and all

18:19

kinds of great products but you can also

18:21

imagine an uninsurable group of people

18:25

at the bottom and then who is going to

18:28

pick up that risk now the public sector

18:30

may be maybe they’ll be a junk bond

18:33

market for insurance either way you have

18:36

a split in society that didn’t exist

18:39

before and that was always the business

18:42

model here you know you go back and read

18:44

some of the early work of someone like

18:46

Hal Varian for example who was the chief

18:48

economist at Google splitting pricing

18:51

down to the individual was always the

18:53

point of platform technology firms like

18:56

Google or Facebook or Amazon splitting

18:58

individuals out so they could be

18:59

targeted in different ways but that not

19:01

only splits pricing it splits Society

19:05

and so that’s kind of really the the

19:07

core issue I want to get out here

19:10

I think I’ll maybe read just just one

19:13

more excerpt and then we can do we have

19:15

we have time yeah and then we’ll open it

19:17

up for questions after that my first

19:22

book just to mention again was about the

19:25

financial industry and one of the things

19:26

that strikes me is that big tech

19:28

companies have in some way become the

19:30

new too big to fail entities not only

19:33

are they holding more wealth and power

19:35

than the largest banks but in some ways

19:36

they function like banks they have a

19:39

tremendous amount of money they use it

19:41

to buy up corporate debt if that debt

19:44

were to go bad that could actually be

19:46

the beginnings of another financial

19:47

crisis and so that’s kind of a part of

19:49

this story that really hasn’t gotten out

19:51

there so let me let me read just two or

19:54

three more pages for you on that topic

19:57

the late great management guru Peter

20:00

Drucker once said in every major

20:01

economic downturn in US history the

20:03

villains have been the heroes during the

20:05

preceding boom I can’t help but wonder

20:08

if that might be the case over the next

20:10

few years as the you know

20:11

it states and possibly the world heads

20:13

towards its next big slowdown downturns

20:16

historically come about once every

20:18

decade and it’s been more than that

20:19

since the 2008 financial crisis back

20:22

then banks were the too-big-to-fail

20:24

institutions responsible for our falling

20:26

stock portfolios home prices and

20:28

salaries technology companies by

20:30

contrast have led the market upswing

20:32

over the past decade but this time

20:34

around it’s the big tech firms that

20:36

could play the spoiler role you wouldn’t

20:39

think that it could be so when you look

20:40

at the biggest and richest tech firms

20:42

today take Apple for example warren

20:44

buffett says he wished he owned even

20:45

more Apple stock Goldman Sachs is

20:47

launching a new credit card with the

20:48

tech Titan which became the world’s

20:50

first trillion-dollar market cap company

20:52

in 2018 but hidden within these bullish

20:55

headlines are a number of disturbing

20:57

economic trends of which Apple is

20:59

already exemplar study this one company

21:02

and you begin to understand how big tech

21:04

companies the new too-big-to-fail

21:05

institutions could indeed sow the seeds

21:08

of the next financial crisis the first

21:11

thing to consider is the financial

21:12

engineering done by such firms like most

21:15

of the largest and most profitable

21:17

multinational companies Apple has loads

21:19

of cash about 300 billion as well as

21:22

plenty of debt close to 122 billion

21:24

that’s because like nearly every other

21:27

large rich company it has parked most of

21:30

its spare cash in offshore bond

21:32

portfolios over the last ten years at

21:34

the same time since the 2008 crisis is

21:37

that it is issued cheap debt at rates to

21:41

do sorry it is issued cheap rate sorry

21:44

cheap debt at low rates in order to do

21:48

record amounts of share buybacks and

21:50

dividends Apple’s responsible about a

21:53

quarter of the 407 billion in buybacks

21:55

and out since the Trump tax bill was

21:57

passed in December of 2017 but buybacks

22:00

have bolstered mainly the top 10% of the

22:03

US population that owns 84% of all stock

22:06

the fact that share buybacks have become

22:08

the biggest single use of corporate cash

22:10

for over a decade now has buoyed markets

22:13

but it’s also increased the wealth

22:15

divide which many common economists

22:17

believe is that not only the single

22:19

biggest factor in slower than historic

22:21

trend growth but is also driving

22:22

political populism which threatens the

22:25

good system itself that phenomenon has

22:28

been put on steroids by the rise of yet

22:30

another trend epitomized by Apple

22:33

intangibles such as intellectual

22:35

property and brands now make up a much

22:37

larger share of wealth in the global

22:39

economy the digital economy has a

22:41

tendency to create super stars since

22:43

software and internet services are so

22:45

scalable and they enjoy network effects

22:50

let’s see do but as these as software

22:56

and internet services become a bigger

22:58

part of the economy they reduce

23:00

investment across the economy as a whole

23:02

and that’s not only because banks are

23:03

reluctant to lend to businesses whose

23:06

intangible assets may simply disappear

23:08

if they go belly-up but because of the

23:10

winner-take-all effect that a handful of

23:12

companies including Apple Amazon and

23:14

Google enjoy so to sum this up in plain

23:17

English as this handful of companies has

23:20

gotten bigger and more powerful

23:21

investment in the overall decline

23:23

economy has declined the number of jobs

23:26

that they’re creating relative to their

23:28

market size is much lower than that in

23:30

the past so you have the superstar

23:32

economy that has become kind of a

23:33

winner-take-all game I think that we’re

23:37

going to probably see some kind of a

23:39

market correction in the next couple of

23:41

years it’s going to be very interesting

23:43

at that point to see whether tech leads

23:45

the markets down and whether you might

23:47

then see a kind of an Occupy Silicon

23:49

Valley sentiment as you did in 2008 with

23:53

Occupy Wall Street I think that that’s

23:54

really quite possible we can delve more

23:57

into that if you’d like but I think I

23:59

want to stop here and be respectful of

24:01

question time and there are parts that

24:04

you guys want to hear more about or

24:06

particular areas that I could read more

24:08

from you can let me know go ahead

24:15

because sure we don’t get to speak very

24:18

often you and I one is you’ve doubtless

24:23

read about Bloomberg’s decision recently

24:26

to forbade its reporters from covering

24:28

Michael Bloomberg yeah yet The

24:31

Washington Post has no problem

24:34

investigating Vsauce do you see is that

24:38

a problem for you have you thought about

24:40

that is that a and so have any

24:43

consistency that should bother at

24:45

financial journalists and the second

24:46

question is how important for any

24:51

solution to the problems you you raise

24:53

would an tights for the revival of

24:56

antitrust be s we see on the continent

24:59

where it’s more aggressive and among

25:01

some of the the Democratic candidates

25:04

for the president well so let me take

25:06

the antitrust question first that’s

25:08

actually important part of the book

25:10

there’s an entire chapter on antitrust

25:12

and I think we probably are gonna see

25:15

some shifts as folks may know since the

25:19

1980s onward antitrust in America has

25:23

basically been predicated on price so as

25:25

long as consumer prices were falling it

25:28

was perceived that companies could be as

25:30

big as they wanted that it wasn’t a

25:31

problem but one of the things I look at

25:34

in the book is this this shift to a

25:36

world in which transactions are being

25:39

done not in dollars but in data so

25:42

that’s a that’s a barter transaction

25:43

really and one of the things that’s so

25:45

interesting and this is actually a way

25:47

in another way in which Silicon Valley

25:49

is similar to Wall Street the

25:50

transaction is really opaque so you

25:53

don’t know essentially how much you’re

25:55

paying for the supposedly free service

25:58

that you’re receiving that is a very

26:02

difficult market to create fairness

26:04

within and it probably makes the Chicago

26:07

School notion of consumer prices going

26:10

down no problem I think probably

26:13

irrelevant and so there’s two ways in

26:15

which that’s being dealt with you have

26:17

the rise of this new Brandeis school of

26:19

thinking in which you know maybe this is

26:22

really about power maybe maybe we should

26:25

think about the big tech firms

26:26

we do the nineteenth-century railroads

26:28

we’re alright you know you had at one

26:30

point railroad Titans that would come in

26:33

and build tracks and then own the cars

26:35

and then own the things that were in the

26:37

cars and eventually that became a

26:39

zero-sum game and it’s you know it’s as

26:42

folks probably know we’re in a period in

26:44

which there’s as much concentration of

26:46

wealth and power as there was in the

26:47

Gilded Age so I could imagine very

26:50

easily a scenario in which you could

26:51

justify Amazon say being the platform

26:55

for e-commerce but not being able to

26:57

compete in the specific areas of fashion

27:01

or you know whatever else they’re

27:03

selling against other customers and in

27:05

fact that’s already the case in the

27:06

financial sector that big companies that

27:09

trade let’s say aluminum you know as

27:12

Goldman Sachs did this is what it ran

27:14

into a suit a few few years ago that it

27:16

was both owning all the aluminum and

27:18

trading it and that’s that’s

27:20

anti-competitive and so that became an

27:22

issue for the Fed so I think we probably

27:24

are going to see that kind of ruling as

27:26

for the post and journalism you know

27:29

it’s funny I have some friends that are

27:30

they’re quite influential to post and

27:34

they say that Bezos is pretty hands-off

27:37

I mean I can’t I can’t vouch for that

27:38

one thing I will say is that Amazon did

27:41

put this book on the top 20 nonfiction

27:43

what Stern’s a month so you know I don’t

27:46

know if that’s a ploy to make me think

27:48

that they’re they’re being really fair

27:49

but from probably Jeff Bezos I don’t

27:52

know I he probably not thinking that

27:53

much about this book or me but anyway

27:56

next question go ahead so it seems like

27:59

some of the major decisions that these

28:01

big tech companies are making are in

28:04

regard to fake news and how they’re

28:06

moderating fake news or the lack of it

28:08

so have you seen maybe an approach by

28:11

any current social media platform or any

28:13

proposed plans in place that you think

28:15

would be best for moderating fake news

28:17

that’s such a good question so just to

28:20

kind of pull back the the two points of

28:22

view on that are hey look you know the

28:26

platform tech companies are essentially

28:27

giant media and advertising firms right

28:30

I mean if you look at the business model

28:31

of a Google or a Facebook it’s

28:34

essentially just like the Financial

28:35

Times or CNN it’s just much more

28:37

effective and it can be targeted to the

28:39

individual

28:40

that means that these firms have taken

28:42

you know 85 90 percent of the app new

28:45

digital advertising pie in the last few

28:47

years now given that they function as

28:49

media companies should they not be

28:51

liable for disinformation in the way

28:55

that a media company would be so if I

28:57

print something incorrect at the FT

28:59

that’s you know the the paper and also

29:02

my hide on the line there I think that

29:05

we should actually think about rolling

29:08

back some of those loopholes that these

29:09

firms enjoy since the mid-1990s onwards

29:12

I think that they are going to have to

29:14

take some responsibility now the

29:16

question is do we want Mark Zuckerberg

29:18

being the minister of truth and that’s

29:20

that’s that’s a really tough question

29:23

what I would prefer is for the

29:26

government to actually you know for

29:28

democratically elected governments to

29:29

come up with rules about what is and

29:32

isn’t appropriate and to not have

29:34

individual companies making those

29:36

choices I think we’re in a period right

29:38

now where you know you’ve got Twitter

29:40

you’ve got Google to a certain extent

29:41

coming out saying okay we recognize we

29:43

need to do things differently that’s

29:44

putting pressure on Facebook but at the

29:46

end of the day we’re gonna have to have

29:47

I think an entirely new framework not

29:51

just in this area but also in taxation

29:53

in you know an antitrust which we’ve

29:56

already talked about this is the shift

29:58

that we’re going through is I think the

30:00

new Industrial Revolution it’s a 70 year

30:03

transition and it’s going to require a

30:04

lot of different frameworks relative to

30:07

what we already have so the answer is no

30:10

I don’t see any particular company that

30:12

has come up with the right framework yet

30:14

any other questions

30:16

oh yeah I’d like to go back to antitrust

30:18

for a minute the Washington Post put up

30:20

an article just this afternoon about how

30:23

Apple is changing its business model and

30:25

it’s different as you know it’s

30:27

differentiated itself in the market by

30:29

saying they care about privacy well now

30:32

they are moving from a a device company

30:38

to a services company according to the

30:40

article and they are used and they are

30:43

using privacy as a lever to provide

30:46

services that their that other smaller

30:51

companies like tile which is the example

30:54

the article has used to create a market

30:59

for itself right and so it says in the

31:03

article that the feds are considering

31:04

looking at antitrust measures against

31:06

Apple but I think it raises a bigger

31:09

question that you pointed to which is

31:13

that the models of antitrust don’t work

31:16

anymore so in terms of privacy lots of

31:22

people have talked about monetizing

31:24

privacy getting paid yeah data but how

31:27

do you think from an economic point of

31:30

view we as a society need to look at the

31:33

role of privacy and the role of

31:35

antitrust together to somehow change the

31:38

way we think about these companies

31:41

because in addition we’ve got

31:43

consolidation in the marketplace so yeah

31:45

no longer fair competition you can’t

31:48

become another Amazon right easily

31:51

because there are so many big so mate

31:53

because the players are big and there

31:55

are so few of them in each part of the

31:58

economy yeah a right so there’s a lot in

32:00

what you’ve just said for starters I

32:03

think you’re hitting on something really

32:04

important which I get at in my solutions

32:06

chapter that this is such a huge shift

32:09

and it’s touching so many different

32:11

areas and we’ve talked about privacy

32:13

we’ve talked about antitrust we haven’t

32:15

even gotten into national security you

32:17

know civil liberties I mean there there

32:19

are so many different areas and when you

32:21

one of the things I noticed when I sat

32:23

down to write the solution sections you

32:25

know when you do a think book you always

32:26

have to have the solutions section and

32:28

you know the publisher wants like that

32:29

Silver Bullet thing and you look at this

32:32

and you notice that when you pull a

32:33

lever here it effects something in this

32:35

other areas so I think that’s one reason

32:38

why we should have a national committee

32:41

to actually look at what are all the

32:43

questions it’s when I speak to folks

32:45

particularly in DC policymakers there’s

32:47

you know the antitrust camp here the

32:49

privacy camp here the security folks

32:50

there that conversation needs to be

32:52

happening in a 360 way and it is

32:54

happening much more so that way in

32:57

Europe I will say I just came off of two

32:59

weeks of book touring in Europe and the

33:02

conversation there I think is much more

33:04

developed and they seem to be to go to

33:06

your point about the ecosystem and how

33:08

share it one of the things that seems to

33:11

be folks seem to be headed towards is a

33:13

public digital Commons a kind of a

33:16

database let’s say alright if you decide

33:19

as you know the cat seems to be out of

33:21

the bag that we’re gonna allow

33:22

surveillance capitalism I mean there

33:24

there are certain folks like Shoshanna

33:26

would love to see the dial turned back

33:28

I’m not sure if that’s possible let’s

33:30

have a public database in which not just

33:33

one corporation or a handful of

33:35

corporations but multiple sized players

33:37

as well as the public sector as well as

33:40

individual citizens who’s you know after

33:43

all it’s our data being harvested

33:45

everybody gets access and then you can

33:47

figure out how you want to share the pie

33:49

and one interesting example recently is

33:51

the Google sidewalk project in Toronto

33:54

it sounds like you’re up on these issues

33:56

so you’re probably aware but Google had

33:59

taken over sort of twelve acres on the

34:01

Toronto Waterfront and put sensors

34:04

everywhere and the idea was to create a

34:06

smart city in which you’d be able to

34:08

manage traffic patterns and energy usage

34:10

and things like that but until recently

34:12

Google was going to own all that data

34:14

and have access to and finally the

34:16

Toronto government got a clue and said

34:18

well actually you know what let’s put

34:19

this in a public database so other

34:22

smaller or midsize local firms can come

34:25

in and be part of that economic

34:26

ecosystem but also as a public sector we

34:30

can decide well maybe we want to share

34:32

data for energy issues or for health

34:36

issues but maybe we don’t want to share

34:37

it for certain other kinds of things and

34:40

perhaps there would be some way in which

34:42

individuals could take back some of that

34:44

value so California is thinking about a

34:47

digital dividend payment from the big

34:49

tech companies there’s also been talk of

34:51

a digital sovereign wealth fund if you

34:53

think about kind of data as the new oil

34:56

whatever the value is judged to be it

34:59

would be putting the sovereign wealth

35:01

fund in the same way that Alaska or

35:02

Wyoming give back payments or use that

35:05

for the the public sector that could be

35:08

done with data too so I think something

35:10

like that is probably going to be the

35:12

best solution I’ll tell you I have many

35:14

examples in the book of ways in which

35:16

the bigger players have been able to

35:18

squash small and mid-sized firms and

35:20

that

35:21

a major issue and a lot of venture

35:23

capitalists that I speak to are actually

35:26

becoming concerned about that because

35:27

they say that there’s sort of black

35:29

zones of innovation where if Amazon is

35:33

there or Google is there you really

35:34

can’t start a business there’s just been

35:36

too much that’s been been written

35:38

ring-fenced question over here

35:40

yes while your book may be the the best

35:43

one on the subject they’ve certainly

35:44

been other books before talking about

35:46

individuals privacy and their their data

35:49

and everything about them why is it that

35:52

you think people are so unconcerned

35:56

about handing over all of their data to

35:58

these companies when they are perhaps

36:00

very concerned about handing it over to

36:02

the government why why do they feel

36:04

these guys are the good guys and the

36:06

government is necessarily the bad guys

36:08

yeah it’s such an interesting question

36:11

and that really varies from country to

36:13

country I find that that’s sort of an

36:15

interesting cultural dynamic that can

36:17

shift depending on what market you’re in

36:19

I have really been puzzled as to why

36:23

people are so first of all why everybody

36:25

just clicks the box and says no problem

36:27

I think part of that is is the opacity

36:29

of the market I mean if you kind of go

36:31

back to Adam Smith basic economics you

36:35

need three things to make a market

36:36

function property properly that would be

36:38

equal access to data transparency in the

36:41

transaction and a shared moral framework

36:44

and you could argue that none of those

36:46

things are in place so when we’re making

36:48

these transactions I think as that’s

36:51

that very fact becomes better explained

36:56

and people begin to kind of understand

36:58

that narrative like the insurance

36:59

example I just gave that all right

37:02

you’re getting something but you’re

37:03

giving up a lot I’m beginning to see

37:07

pushback already and I suspect in recent

37:10

weeks as some of the big players have

37:11

moved into healthcare you know into into

37:14

the commercial banking business I just

37:17

think that we are going to begin to see

37:18

more people being reluctant to give up

37:23

that much value for what they’re getting

37:25

you’re also interestingly seeing when

37:28

there are other options people will go

37:31

elsewhere so Jimmy Wales who started

37:33

Wikipedia just I think

37:34

the weeks ago came up with a new social

37:36

networking site he’s already got 300,000

37:38

users there and it’s an odd

37:41

they don’t do targeted advertising it’s

37:42

run on the wiki model where you can

37:44

donate if you want I think once the

37:47

antitrust piece is in place and you

37:49

actually have space for new competitors

37:52

to come in and to offer up different

37:54

kinds of services that perhaps are more

37:56

respectful of privacy that you you know

37:58

you could see a shift there but I’m

38:00

curious actually can I pull the audience

38:02

for a minute because I want to ask how

38:04

many people think that in the next five

38:07

years individuals are going to become

38:09

more worried about giving up information

38:12

that’s going to change their behavior

38:13

online so like two-thirds but not yeah

38:19

that’s interesting okay oh go ahead

38:23

sorry we’re sheep we’re cheap oh my god

38:26

that was a different book curious if you

38:30

see the administration’s

38:32

suggestion that it the California can’t

38:35

set its own rules for gas mileage and so

38:41

on and emissions as having a parallel in

38:44

this area you know I hadn’t thought

38:48

about that question before I always

38:50

think about California as really being

38:53

very leading what is eventually going to

38:55

become the national standard and I think

38:58

in data I feel like that is gonna happen

39:01

you know even the Europeans in fact are

39:04

saying that the California model is

39:06

probably the better model for data data

39:08

protection and privacy and sharing of

39:11

value so the Europeans have GDP are you

39:13

know which was kind of the first step in

39:15

the privacy direction but it doesn’t

39:17

take into account that economic

39:18

ecosystem so perversely you have the big

39:21

companies maybe being able to do better

39:23

with the GDP our model and smaller ones

39:26

getting cut out of the loop because they

39:27

don’t have the legal muscle to kind of

39:29

deal with all the rules so I do think

39:31

the California model is going to become

39:32

a de facto standard we also haven’t

39:34

talked about China which is of course

39:36

going its own way and I have it I have a

39:38

chapter in the book where I look at that

39:40

I look at the current trade war tech war

39:43

kind of through the lens of surveillance

39:44

capitalism and

39:46

that’s gonna be very interesting I think

39:48

one of the big probably the biggest mid

39:52

to long-term economic question for me is

39:54

are we going to see a transatlantic

39:56

alliance around digital trade and coming

39:59

up with some standards because China is

40:01

going its own direction it’s going to

40:02

develop its own ecosystem it has its own

40:04

big players the u.s. is in another

40:07

category but where is Europe gonna be is

40:09

it going to be a tri polar world is it

40:11

going to be a bipolar world in terms of

40:13

how all this works that that’s a major

40:15

ik you cannot make an actually foreign

40:16

policy question I think hey thanks for

40:21

coming and thinking um I’m wondering we

40:25

have like a Department of Agriculture we

40:27

have a Department of Energy will there

40:29

be a Department of Technology ever in

40:30

the US and which other countries already

40:33

have that kind of thing going yeah

40:35

England is talking about that actually I

40:37

think kind of an FDA of Technology is

40:40

probably a very good idea you know I see

40:44

going back to the example about my son

40:46

there there

40:46

the research is nascent and causality is

40:49

is difficult to prove but there there’s

40:51

you know a new body of research since

40:54

2011 2012 when smartphones really became

40:57

ubiquitous showing that levels of

40:59

anxiety and depression and younger

41:01

people arising you know they’re there

41:04

they’re issues of self harm sometimes

41:07

when people you know use these

41:08

technologies addictively so I think that

41:11

that’s that’s a big issue to me it’s

41:12

very similar to cigarettes you know

41:14

those were regulated there was a

41:16

different narrative and then behaviors

41:17

changed and I think I think that that’s

41:20

one area to consider policy wise there

41:25

may be time for one or two more

41:26

questions

41:27

okay sorry over here and then over here

41:29

hi

41:30

I’m kind of curious what you think about

41:33

the fact that most of these

41:36

conversations around technology or even

41:38

democracy tends to focus on institutions

41:41

and systems and structures which is

41:44

great because they are so powerful and

41:47

ubiquitous my background is in teaching

41:51

critical thinking and in conflict

41:54

management and I what I worry

41:58

that so little attention is being paid

42:01

to the intelligence and maturity of the

42:05

citizenry I’m from India after 70 years

42:10

of democracy we’ve lost it I think it’s

42:15

simplistic to blame the right-wing

42:18

leaders and the government I believe we

42:22

as a people have not developed the

42:24

maturity to be effective intelligent

42:30

citizens we don’t have the values we are

42:34

still feudal we are still extremely

42:37

hierarchical we don’t have the

42:40

democratic values in India and we didn’t

42:43

cultivated over 70 years I see a

42:46

parallel to being susceptible to the

42:52

seductions of Technology whether it be

42:56

free news or the click baiting or

43:00

anything that the big companies seduce

43:04

us with that even as we need as you said

43:08

they an FDA kind of for technology we

43:13

seem to be observing ourselves of the

43:17

responsibility of being you know of

43:20

waking up and no se pians I hear I hear

43:24

what you’re saying and it’s interesting

43:25

two things come to mind first of all as

43:28

I say I just got back from Europe the

43:29

debate is much more nuanced there and

43:33

and further along and I think that’s in

43:36

part because there was not quite as much

43:39

pendulum shift in the last 40 or 50

43:41

years from the public sector to the

43:43

private sector as there was here I think

43:46

I’m not quite sure if I agree entirely

43:49

with your point about institutions I

43:50

think in some ways part of the problem

43:53

one of the reasons why we have

43:54

concentration levels that are same as

43:57

they were in the 19th century is that

44:00

you know we have a generation of

44:03

business leaders that grew up in the 80s

44:04

thinking that the government was only

44:06

good for cutting taxes and there’s hyper

44:09

individualism that’s that’s

44:12

the entire economic model and in some

44:14

ways I think that you know Facebook is

44:16

maybe the apex of the neoliberal

44:19

economic model if you think about the

44:22

problems of globalization were that cap

44:25

but you know it was supposed to be

44:27

globalization was supposed to be about

44:28

capital goods and people crossing

44:30

borders well it turned out the capital

44:31

could cross a lot faster than either

44:33

goods or people if you take that into

44:36

the world of data that’s even more true

44:38

and so I think that you have a group of

44:41

companies now that have really

44:44

turbocharged a lot of the problems that

44:46

have given us the politics that we have

44:49

now and and a company like Facebook I

44:51

mean I think it every time Zuckerberg is

44:52

on the hill it’s like there’s this

44:54

attitude that they are supranational you

44:56

know and kind of flying 35,000 feet

44:59

above national concerns and I think that

45:02

that’s part of a larger shift and

45:04

probably going to be a big part of the

45:05

2020 debate right are we gonna now have

45:08

a pendulum shift back away from private

45:12

power to some public power some

45:14

different sharing of that which is a

45:16

values question which I think gets at

45:18

some of what you’re talking about

45:20

long-winded answer anyway I think we

45:22

have time for maybe one more question

45:23

yeah – quick question okay one is some

45:27

of the tech companies especially the

45:29

platform companies have you know why

45:32

should we not consider looking at them

45:35

as utility companies yeah I mean we’ve

45:39

had phone companies and as far as I know

45:41

they don’t data mine our conversations

45:43

and maybe mistaken a bit right I mean

45:46

right that’s they could easily right

45:49

right yes it’s different different

45:50

business model yeah yeah so so that was

45:52

one the other thing is you mentioned

45:54

that eventually we need tech policy

45:56

around this and the issue at least my

45:59

issue is that the people who make these

46:01

decisions the the policy makers they

46:05

just most to them don’t have the

46:07

technical background right to properly

46:10

assess the different choices and make

46:12

those decisions I mean I think one of

46:15

them Zuckerberg or someone testified the

46:17

questioning was just awful I mean they

46:20

just ignore our tech support was

46:22

terrible

46:23

yeah exactly so I know anyway whatever

46:27

thoughts you have no that’s a great and

46:29

that’s like maybe a great place to sort

46:31

of wrap up I think the utility model is

46:34

completely viable and it’s interesting

46:36

one of the bits of pushback that you’ll

46:38

sometimes get from folks in the valley

46:40

about that is well if we’re if we’re

46:42

split in this way or if the the capacity

46:46

to innovate is sort of you know

46:47

compressed as the profit margins would

46:49

be compressed in a utility model that’ll

46:52

be bad for innovation not really I mean

46:54

there’s the statistics show for starters

46:56

that companies innovate more when

46:58

they’re smaller they tend to innovate

47:00

more when they’re private and breakups

47:03

in the past you can argue have actually

47:05

created more innovation so a lot of

47:07

academics would say that even the the

47:10

the the antitrust just the threat of

47:13

antitrust action against Microsoft was

47:15

one of the reasons that Google was

47:16

allowed to to blossom as it did you can

47:19

go back to the breakup of the bells and

47:22

say maybe that created space for the

47:25

cellphone industry to to move ahead so I

47:28

think there’s a lot of examples that a

47:31

more decentralized model is actually a

47:34

good thing and I think that that is

47:36

actually going to be a really important

47:37

thing because right now there’s this I

47:40

think very perverse debate in the u.s.

47:42

that is bringing together parts of the

47:45

far right and parts the far left that

47:47

all right we need these companies to

47:48

stay big because they’re the national

47:50

champions and the the becoming war with

47:52

China that is a complete bunk that is

47:56

not shown out first of all I mean these

47:58

companies would love to be in China if

47:59

they could get into China you know I

48:02

think decentralized is the advantage in

48:06

all respects in the US economically so

48:09

yeah I’m have no problems with a utility

48:12

model anyway I think my time is up but

48:15

I’d be happy to sign books and answer

48:17

any other questions here at the table

48:18

and thanks so much for your attention

48:19

[Applause]

48:34

you