Big Data’s infinite harvest
Welcome, customers, to this column. I write articles and you subscribe to the FT and tell me how wrong I am (to be fair, some of your are kinder). Now, let us imagine you read this piece, or other FT content, for free on Facebook or Google. It is a far sweeter deal, right? You get something for nothing and Big Data can bask in its own beneficence. Apply that to any amount of diverse content. Rarely in the history of human knowledge have so few offered so much to so many for nothing.
That, at least, is the story most of us have downloaded. In the rare cases where an entity — such as the European Commission, which is probing Google’s alleged abuse of its dominant position — raises objections, the obloquy is instant. Google, the US government and others accuse Brussels of thinly veiled protectionism.
If Europe could innovate like the US, perhaps it would spend less time trying to bring others down. There is a reason Google’s motto is “Don’t be evil”. It invests in ways of bringing ever more knowledge to humankind.
Peter Thiel, a co-founder of PayPal, describes Google as a benign monopoly. If it encountered real competition, its research and development budget would vanish — and with it the self-driving car, wearable computers, “loon balloons” beaming cellular data from the stratosphere and so on. We should appreciate the upside to its dominance. Google’s monopoly returns enable it to fund the equivalent of AT&T’s legendary Bell Labs, or Xerox Park, which made so many breakthroughs. Besides, the data industry’s barriers to entry are low. The disrupters can be disrupted.
But there are other sides to this story. The first is that Google’s chief complainants are US companies. This is not a transatlantic spat. It just so happens that Brussels has a tougher competition regime.
Yelp, Microsoft, Expedia and others have complained both to Brussels and Washington’s Federal Trade Commission about Google’s alleged anti-competitive practices. Indeed, in a 2012 report, the FTC’s own staff recommended action on three counts against Google for conduct that had resulted in “real harm to consumers and to innovation”. Google had been presenting content “scraped” from other sites as its own. It had also been privileging its own commercial sites in search results — a clear conflict of interest. However, the FTC’s commissioners rejected their staff’s conclusions. It might have been different had the probe been carried out by the Department of Justice, as was the case with Microsoft, which was penalised on both sides of the Atlantic more than a decade ago.
Not even Goldman Sachs can match Google’s lobbying clout nowadays. When the report was leaked to the Wall Street Journal in March, Google cajoled the FTC into distancing itself from its own conclusions.
The idea that US regulators had in fact agreed with their EU counterparts was too dangerous. Johanna Shelton, Google’s chief lobbyist, has visited the White House more than 100 times . Eric Schmidt, Google’s chairman, is closer to President Barack Obama than any other business leader. Google even has its own “data diplomacy” outfit, Google Ideas, which is headed by a former state department official. It combines data initiatives against autocracies with business acumen to open up new markets. What is good for Google is good for America — and the world.
But there are hidden costs. Ponder how Google and Facebook, are interacting with you. In exchange for free social networking, emails, videos, search, satellite maps and now telephone calls, they are building your profile in ever more granular detail.
Without really digesting it, we have made a Faustian bargain. They give us free computing power — beyond our wildest imagination — and we reveal ever more about ourselves. The more Google knows about you, the better it teases out preferences you never realised you had.
It is an asymmetric exchange. Big Data has our profiles but few of us know how extensive that is. It is the information equivalent of Walmart. The big box retailer drove countless Mom and Pop stores to the wall by acquiring ever more pricing leverage. The job losses went deep, and some of the victims were customers. The model is self-cannibalising.
Apply the Walmart example to the data industry. We now receive most of our content for free (like Asterix against the Romans, the FT, among others, is holding out). Producers of content are suffering.
By the end of this decade, most of the world’s books will have been uploaded to Google’s online library. The company’s sway over our culture and knowledge will be unprecedented. Should we charge Big Data for our personal data? Jeff Hammerbacher, former head of data at Facebook, said: “The best minds of my generation are thinking about how to make people click ads.” In a parallel universe, they might be figuring out something more noteworthy. But what they do brings us untold benefits. Evil does not come into it.
We should nevertheless embrace the bargain with open eyes. We are not Big Data’s customers but its product. As long as we grasp that we users are also being used, let the harvest continue.