The internal combustion engine has been dominant for over a hundred years—not because it’s the best engine, but as they gained the initial advantage through historical accidents. A keyboard layout designed to be deliberately inefficient so that the mechanical keys of the typewriter jam less often. This feature is no longer relevant, but it doesn’t matter what you’re still typing on a QWERTY keyboard, because that’s what people used to.
The same principle is what makes Google or Facebook or Amazon is so huge. We use it because we used to use them. Google not just a search engine; it is the e-mail address (Gmail), conference-calling the maker (Hangouts), a document creator and editor (levels). All designed to maximize the advantages of sticking with Google: if you don’t have a Gmail address, you can’t use Google Hangouts. And so on.
Why is this a problem? Maybe it’s because these giant companies are making huge profits from the techniques originally created with taxpayers ‘ money. The Google algorithm has been developed with funding from the National Science Foundation, and the internet came from DARPA funding. The same applies to touch screen monitors, GPS, and Siri. This technology giants to create de facto requirements when running the type of regulation that would curb monopolies in any other industry. And the business model is built on leveraging of public and private information from taxpayers who are representative of the techniques in the first place.
This story is part of the July-August 2018 issue
See the rest of the issueSubscribe
Defenders like to portray internet giants such as forces for good. Praise on the sharing economy in the digital platforms in the empowerment of people through free access to everything from social networking to GPS navigation to health surveillance.
But Google doesn’t give us anything for free. It’s really the opposite we deliver Google exactly what it needs. When you use Google services, you may feel as if you’re getting something for nothing, but you’re not even a customer—you’re the product. The bulk of Google’s profits come from selling ad space and user data to companies. Facebook and Google business models are built on a commodity personal data, convert our friends, interests, beliefs and preferences in the sale of his proposals.
Let’s not forget that a large part of the technology required for the data created by each one of us.
The so-called sharing economy is based on the same idea. Instead of thinking with some kind of institution (such as a travel agency), and customers interact with each other. The role of the police, then, is not to provide the service, but contact the vendor (such as a person owns a car and is willing to pay it) with buyers (someone who needs a ride). This is what allows the platform to display a radical shift in the way goods and services produced, shared, and delivered. But it’s also an easy way for companies to avoid liability. When you disable users complain that Uber drivers refuse to put the wheelchair in the trunk, Uber says: Well, we’re not a taxi company, we’re just a platform. Airbnb similarly reluctant to take responsibility for the safety of the buildings displayed on the site or on the racial discrimination against the tenants by the owners of real estate. After all, Airbnb did not build the apartments and don’t have them—it’s just a platform.
Recommended for you
Using WiFi to “see” behind closed doors is easier than anyone believed
Strong new battery can give our electric planes that don’t pollute
That a self-driving car killed the baby or grandma? Depends on where you are.
IBM $ 34 million to buy a red hat mega-bet on the coding revolution
Ethereum founder Vitalik Buterin says his creation can only succeed if he takes a step back
Because of the network effects in the new gig economy doesn’t spread the wealth as far as the focus is more in the hands of a few companies (see restrain the data barons). Like the internal combustion engine or a keyboard, the company that is establishing itself as a market leader achieves domination to become sustainable, almost automatically.
Google represents 70 percent of online searches in the United States and 90 percent in Europe. Facebook more than 2 million users, a quarter of the population of the planet. Amazon is now about half the United States market books, not to mention e-books. Six companies (Facebook, Google, Yahoo, AOL, Twitter, Amazon) constitute about 53% of the market of digital advertising (with Google and Facebook constitute 39%). This means that the dominance of the Giants on the internet can impose their terms on the users and customers of the companies. Book publishers, for example, you may be happy with Amazon conditions, but they have no leverage—there is no Amazon. By the same token may not be happy Facebook is to capture, store and sell your personal data to third parties, but as long as all of your friends on Facebook, there is no equivalent competitor.
Historically, industries naturally prone to monopoly such as rail and water—has been cleaned significantly to protect the public against abuses of corporate power, such as gouging. But the fraudulent online platforms are still largely unregulated, which means that companies that are first to develop the hedge market can reap exceptional rewards. Lower tax rates to technology companies usually pay these big bonuses are also harmful, given that their success is built on financing techniques developed by high-risk public investment: if anything, companies that owe their wealth to the taxpayer-funded investment must be repaid, taxpayers do not seek tax breaks.
Participate in the chain letter
Blockchains, cryptocurrency, and why this issue.
By signing up you agree to receive email newsletters,
Notifications from MIT Technology Review. You can change your preferences at any time. View our
We have to ask how much the value of these companies was created, how value is measured, and who benefits from it. If we go by the national accounts, the contribution of online platforms to national income (as measured, for example, of GDP) represented by advertising the same services that you sell. But does this make sense? It is not clear that the ads really help in the gross national product, not to mention social well-being which should be the goal of economic activity. Measuring the value of a company like Google or Facebook by the number of ads that it sells conforms to the standard new classical economics, which explains why any market-based Page also refers to the production of a type of output—in other words, it does not matter what thing as long as the price received should be the same value. But in the case of these companies on the internet, is misleading: if internet giants help in social welfare, they do so through the services it provides to users, not through companion ads.
That way we have is because the value of what the Giants of the internet produces completely confusing, offers a paradoxical result: the announcement of the activities is calculated net of the contribution in the national income, while the more valuable the services provided to users.
Let’s not forget that a large part of the necessary technology data created by all of us, thus we should belong to each one of us. Basic infrastructure to all these companies rely on creating beauty (through the taxes that built the internet), as it changes on the network effects produced collectively. There really is no reason why public data should not be owned by a public repository which sells data to technology giants, and not vice versa. But the main issue here is not just the Send part of the profits of the data back to the citizens but also allow them to shape the digital economy in a way that meets the needs of the audience. Using big data and AI to improve the services provided by the welfare state—from health care, social housing—is just one example.
Only through understanding of digital platforms as collective creations, we can build a new model that offers something of real value, driven by the general-purpose. We are never far from the media story that raises the debate about the need for clean technology companies, which creates a feeling that there is a war between their interests and the interests of national governments. We must move beyond this novel. The digital economy should be subject to the needs of all parties; the partnership helps where regulators should have the confidence to market creators and value creators.
Mariana Mazzucato is professor in economics of innovation public value in University College, London, where she directs the Institute for innovation in general-purpose. This article is an edited excerpt from her new book the value of everything: the make and take in the global economy.
Keep up with the latest in privacy at EmTech Digital.Don’t be left behind.March 25-26, 2019San Francisco, CA