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Don't Be Evil. Rana Foroohar on Big Tech.

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– People think of Silicon Valley as being very democratic, very left of center, and that's true to a certain extent But I actually think of many of the big tech titans as being much more libertarian than liberal

I think actually one of the reasons that some of the largest companies have been very, very tone-deaf as regulators have really started to look at some of their behaviors, anti-competitive, the political issues, the addiction issues, is that they perceive themselves, and their companies as being supranational, above the concerns of nation states So, if you think about the issues of globalization and how much easier it is for capital to move across borders, well, digitized capital is easier still – I'm here today with Rana Foroohar from the Financial Times to talk about her new book, "Don't Be Evil" Thanks for joining us – Thanks for having me

– First of all, I can't imagine that anybody could ever say don't be evil with a straight face (Rana laughs) There's good and evil inside of everything, and they're not separable, and I guess these people are finding out about that – Absolutely, you've just described the arc of my book You know, it's really, in some ways, a 20-year look, not only at the rise of platform technology, Google, Facebook, Amazon, Apple, but the way in which Silicon Valley itself went from utopia to dystopia And there's a lot of deep analysis in this book, there's a lot of reporting, but there's also a lot of personal stories in there, and I'm hoping that that's what going to really resonate with people because, as you once told me, Rob, I think that nothing really makes sense until you have a felt experience of it and big tech is something that all of us, I think, have a felt experience of

– And to put it simply, there's also good – Yeah – And one of the things that concerns me most right now is, as you talk about, the pendulum goes from superhero to dystopia, you could throw the baby out with the bathwater and there are a lot of things that, properly balanced, could be of continuing benefit to society We gotta be careful about that – Well, absolutely, and, I mean, the thing is, this transformation that we're going through, this digital transformation, is, this is the industrial revolution of our time, right? And this is a 50, 60, 70 year transformation

We are maybe at the end of phase one of it You know, we have seen the advent and now are deep into the consumer internet, but we're about to have a whole new depth of experience as all the technologies that I'm talking about in my book move into the industrial space, move into the internet of things, move all around us into everything we're doing And so, both the good and the bad are going to be amplified And one of the things that I really wanted to do, a lot of people have written books about different aspects of this story, sometimes the economics, sometimes the political, sometimes the cognitive behavioral, but all those things are connected And so often in these big transformative stories, we think about things in a silo

Really, you need to connect all of those dots if we are going to get to the right place as a society with how to think about these technologies and how to manage them in the public interest You hear an argument echoed a lot in the valley and now being taken to Washington, DC by the CEOs of these companies Bigger is better, you need scale in order to play in this field

But actually, if you think about what Silicon Valley was at its birth, it was a collection of very entrepreneurial, very nimble companies As it's gotten bigger and more mature and frankly more financialized, you've had monopoly power really rise And I have multiple stories in my book of small entrepreneurs coming in to the spaces that these companies occupy and just getting crushed As a matter of fact, I spoke to a three-time entrepreneur and he told me a very, very interesting story about his experience with one of the largest tech companies Tried to sell a data analysis firm to this company and they'd asked him to put the code open source so they could have a look at it

Meanwhile, all along, they were doing their own internal version and he has lots of emails, lots of proof that they essentially took his ideas and then used it and said, "I'm so sorry we're not going to buy your firm" And there's nothing you can do when you're a small company like that You don't have the muscle to fight legally, there's just scale that you can't compete with But he went to his source at this giant tech firm and said, you know, "Come on, I know what you guys are up to" and he said, you know, "Listen, John, you have to understand, we're dealing with six times as much information as the largest financial institutions per second, but we are making one one hundred-thousandth the amount of profit on it

If we have to pay for anything, we don't have a business model" And in some ways, I think that that encapsulates the ways in which these companies can come in and take over an entire category And that's a lot of what the regulators are going to poking at in the next few months and years – Well, there are a lot of dimensions For instance, Silicon Valley models itself as these little startup people and there is a certain contingent, but you also have a tremendous injection from the Intelligence Community and the Defense Department

So this isn't all ma and pa and superheroes, this is part of a military industrial complex as well – Absolutely, and I think that's going to be one of the big topics in the next five years It's very interesting, you see different big tech companies approaching their work with the government depending on what side of that scenario they're on A company like Google, Facebook, maybe they think that they still have a chance of playing in China and so, there's a lot of internal dissent about do we wanna work with the Pentagon? Amazon, on the other hand, knows it's not going to compete in China, and so it's all in And I hear from other, not just small companies, but big companies saying they're ring-fencing government procurement and trying to really make that part of the business model and that's– – Well, we also see predation vis-a-vis intellectual property rights

The deep pocketed can come to you and say I'm going to buy your firm for a third of what it's worth, and if not, they attack you with lawsuits – It's very true and, you know, I have a whole section in my book about the revamping of the patent system in the second term of the Obama administration, which even some liberals felt went too far in terms of protecting the interests of big tech over some of the smaller players This is bringing up the fact that Silicon Valley has really taken over from big banks, big pharmaceutical companies as the biggest and most active lobbyists in Washington And you can see that, the amount of money being poured into DC

, not just to buy up politicians, but to buy up academics One of the interesting things in this book, actually, was how difficult it was to get really, truly, independent research because when you start digging down into the fine print, you see that pretty much, on both sides, somebody is getting funding from one of the big companies – Julian Ted always says, "Study the silences, what's deterred from being explored is where the truth is where power resides" And I think that these questions that you're exploring about how intellectual property rights or research about market behavior or whatever, they're not really interested in research, they're interested marketing material that makes them look innocent – You know, there is something unique, I think, about technology, and that's the level of hubris

I remember, actually, meeting with the founders of Google many years ago, in Davos And this was years, a decade or so, before 2016, and all the election meddling scandals and really realizing where we were with the power of surveillance capitalism And a bunch of journalists at that time had been called in to one of the, sort of, secret chalets to talk to the founders, and at the time, they were trying to convince all of us that big tech was not going to eat up media, and that we were still going to have jobs And like it always is with journalists, there was a lot of naval-gazing What's going to happened to my job? What's going to happen to my publication? But towards the end of this I remember feeling very concerned that actually there was something bigger here, and it was the future of democracy

And I raised my hand, and I asked the question, I said, "Well, really isn't democracy the topic here, I mean, what are you all going to do? Who's going to look after this when the Fourth Estate is gone?" Because that's a different model than what you all are doing, and I remember Larry Page actually sort of turning around and looking, and saying, "Oh yeah, we have a lot of people thinking about that" And here we are, lot of people are still thinking about it – The other thing that I think is interesting is the analogy between these types of monopolies, these platforms, which are very involving in centralizing control, and the traditional monopoly, which was essentially about pricing power But the control monopoly weren't so big in the information system Goes beyond commerce, goes on, what you might call the violation of you by participating, being used as part of that aggregation of big data which is their true commodity

But it also goes into the poisoning of our culture Eli Pariser wrote the book "Filter Bubble" about how we're all conditioned to affirmation, positive reinforcement We don't see the stories they can sense we disagree with because it gooses volume and allows them to raise their advertising rates What's interesting about this is, is I always said new economic thinking was about reading old books (Rana laughs) This is actually new and novel

This is a first time, we're actually in a new domain but looming about all these ramifications, is very interesting in the observation of defensive behavior by the tech leaders is not, I guess not surprising, but quite vivid – Well, I have three things to say and I would push back a little bit around the newness I think there are some things that are novel and one of the most novel perhaps, is what Shoshana Zuboff described so eloquently in "The Age of Surveillance Capitalism", which is what you're getting at The idea that we are not the consumer, we are the product We are actually the thing being monetized

But you're also getting at the fact that the architects of these products always knew that they were addictive – Not only the addictive properties but the research into cultivating addiction – One of the whole chapters in my book is about persuasive technology And it sounds kind of Orwellian but that's exactly what this is There was a man named BJ Fogg who started a lab at Stanford, it's called the Stanford Persuasive Technology Lab

I've met a number of people that have studied there The founder of Instagram, any number of entrepreneurs Go into the lab and you're essentially taking psychological techniques, BF Skinner, combining it with casino gaming techniques combining it with coding and coming up with products that are meant to be addictive

And that actually brings me to the story of why I decided to write this book anyway You know, of all the topics that one could tackle right now I came to this for two reasons One, when I started at the FT, my mandate was to write about the biggest economic and business stories in commentary And so when I start a new position like that one of the things I do is to follow the money

And I looked and I started kind of tracking where things had gone from 2008 until 2017 And I saw that there'd been this tremendous shift of money from the banking sector into big tech And big tech was doing the same kind of financialized things with the cash on the balance sheet that a lot of the big banks had been doing in many ways beforehand There was a kind of a Kafkaesque off-shoring of profit at the same time that you had the issuance of debt at very cheap rates to do buybacks Companies like Apple, artificially jacking up their share prices

We know this story but it was incredible how the largest holders of cash were now these firms And in some ways, they were even acting like big banks They were buying up corporate debt, almost underwriting bonds the way Goldman Sachs would except they're not even regulated the way Goldman Sachs would be You can argue whether they should be regulated more So that was one reason but the other reason was a very personal reason

And it was that I came home one day and I opened up a credit card bill And I looked at it and there were all of these small charges in the amount of $199, $5, that I didn't recognize And I thought, my god, I'd been hacked Then I started looking a little more closely at them and I thought, huh, they're all from the app store

Who else has my password? (Rob laughs) My ten year old son (laughs) So I did a little interview with him and turns out he had gotten completely addicted to a game called Free For Mobile Which is a game that you download, like so many of these, for free Free, quotation marks – In-app purchases

– Exactly And then you're lured in And you're offered up things, essentially known in the trade as loot boxes Where you have to buy players or equipment in order to keep going with the game And it's all done in a way that is just like casino marking is done

You don't completely realize that you're being sold something, you're in the game It's all very exciting There's a completely addictive quality to it So as a mother, I was sort of horrified But as a journalist, I was fascinated

I mean, this was like discovering big tobacco for the first time And as I dug down into this and really began to see the development of these technologies, I realized this is not just the biggest economic story or the biggest political story, from the point-of-view of hacking and election manipulation This is a huge cultural, social, psychological story – And educational – And educational

– The interesting thing there is that the model that we're taught in economics to, what you might call sanctify markets The market takes what we want and delivers it most efficiently What you're telling me about the in-app purchases and the addiction is that they are pulling your wants down the path – Hundred percent – Amplifying your wants

– Hundred percent – That's not the traditional market notion, that you define your wants and then you but you get what you ask for from the market Now the market's using psychological tools to influence what you want – Actually, I want to make two points there One is that you're underscoring something really profoundly important and this is something I would say is true not just for big tech but many industries

There's such an asymmetry of information between the individual using these products and the companies that are offering them And as we get deeper and deeper into an era in which it's not just Facebook or Google or Apple tracking you Starbucks knows plenty about you Johnson & Johnson knows about you John Deere knows more about people that work on farms than anybody else

Surveillance capital is everywhere around us and so that's point number one It's not just big tech, it's all industries that are going to be trying to track your data and monetize it But there's an interesting opportunity here Some companies may see it as a competitive advantage to respect your privacy more To offer up a different kind of way of interacting with you in this new digital world

– So we went from don't be evil to see no evil, speak no evil, hear no evil (Rana laughs) – There you go – Even when it's hiding in plain sight The questions here that you ask are very important and there is a geopolitical frontier upon which it's rising And it's this interface between digital commerce platforms, that aggregation, that information that comes off of them, and cyber security

The notion that America and China just say, can have two platforms side-by-side and interact depends on the ability to control hacking And almost every official that I meet with and talk to says with virtual private networks, hackers are very successful They can pretend to be in Washington, attacking Beijing when they're sitting in Saskatchewan Or they can be in Armenia and pretend they're in New York attacking Shanghai And nobody knows how to enforce the rules of fair play

And so everybody's anxiety is heightened You have two societies which come from different cultural traditions You have the woundedness of China associated with the Opium Wars, the role of the British, then the Japanese in Beijing and wanting to regain that leadership dignity that was their historic position And then you have the United States which is the leader of a system that's moving towards a multilateral system And so there's distrust, there's tension, there's misunderstanding all in the wind

But we now have invented the technology when we can't assure each other that we're playing fair and converge towards trust And I don't know how we're going to unwind that – It's very interesting I think we are headed towards a splinter-net, as they call it, in which there will be different systems in different countries I think people will see the internet differently in different countries

There's a big debate about how this is all going to play out and in some ways it underscores this larger debate about one world, two systems, right? The idea that China is now on the scene China is taking a lead in many of these cutting edge technologies There is some like Kai-Fu Lee, who is a Chinese venture capitalist who would argue that actually we've passed the stage of innovation in big data and that we've entered the stage of implementation And in that paradigm China has an advantage because it doesn't have to worry about these sort of pesky civil liberties debates and these problematic democracy debates It can simply collect information, monetize it, use it to feed the algorithms that develop artificial intelligence

And there are some people that think China will be very successful in that model Having been a business journalist for 28 years, I'm not so sure that I want to be that quick to say that we've left the innovation stage I think that there's a lot that is still unknown particularly as these technologies work their way into different industries and different applications We're at the tip of the consumer internet – There's a lot of D to do in R&D still

(laughs) – (Rana laughs) That's it – What I want to do is thank you for excavating and illuminating this story This is a work in progress but you're at the, how you say, the cutting edge of new developments that are very important And just like with your book on finance, I think you're bringing dilemmas to the surface that help people debate the real issues and envision governments and envision, however you say, the challenges of creating a better society And besides you helped me justify why I stand with strong feet when my six-year-old daughter tells me she wants that iPad back

(laughs) – (laughs) Parental controls Thanks so much – By the way, when I went to Apple and said I don't mind her having an iPad but I need to be able to lock the folder with which apps she could use, which apps she can't, they said they don't make that – There you go – Maybe they should

– Maybe they should Maybe they will – Yeah Thanks very much – Thanks

Source: Youtube

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