My notes on Pasquale, F. A. (2018). Tech Platforms and the Knowledge Problem. American Affairs, 2(2)

The most philosophically important aspect of Hayek’s work was his epistemological objection to central planning. He argued that the market was indispensable because it permitted distributed knowledge of a sort which a centralised decision maker couldn’t possibly hope to reconstruct. In this short paper, Frank Pasquale considers the renewed possibility of centralised planning which emerges when private tech giants have a gods eye view of consumer and business activity within their domains. As the examples he cites illustrate, this involves business-to-business as well as business-to-consumer insight:

Having logged and analyzed billions of transactions, Amazon knows intimate details about all its customers and suppliers. It can carefully calibrate screen displays to herd buyers toward certain products or shopping practices, or to copy sellers with its own, cheaper, in-house offerings. Mark Zuckerberg aspires to omniscience of consumer desires, by profiling nearly everyone on Facebook, Instagram, and WhatsApp, and then leveraging that data trove to track users across the web and into the real world (via mobile usage and device fingerprinting). You don’t even have to use any of those apps to end up in Facebook/Instagram/WhatsApp files—profiles can be assigned to you. Google’s “database of intentions” is legendary, and antitrust authorities around the world have looked with increasing alarm at its ability to squeeze out rivals from search results once it gains an interest in their lines of business. Google knows not merely what consumers are searching for, but also what other businesses are searching, buying, emailing, planning—a truly unparalleled matching of data-processing capacity to raw communication flows.

There is a parallel integration taking place in finance and insurance who increasingly operate in the manner of the platform. As he writes, “finance and insurance firms not only act as middlemen, taking a cut of transactions, but also aspire to capitalize on the knowledge they have gained from monitoring customers and providers in order to supplant them and directly provide services and investment”.

We now confront “a hierarchical, centralized regime, in which corporate power is immense, and in which large national apparatuses of regulation seem to be the only entities capable of reining it in”. What he calls populist localizers, Jeffersonians,  want a new era of antitrust to break up the tech giants, whose concentration they see as impeding new entrants and further technological innovation. In contrast the Hamiltonians argue that scale is essential to technological development (e.g. machine learning) and that we simply need to update our regulatory frameworks to take account of these new developments. Though Pasquale’s suggestion interoperability standards could address their concern is an interesting one e.g. by allowing diverse social networks to interconnect in the manner of mobile telephone networks.

This doesn’t follow a left/right divide. As he notes, a critic like Evgeny Morozov frames tech giants as natural monopolies which “get better and better at each task they take on when they have access to more and more pooled data from all the tasks they perform”. This is a reason to socialise them rather than to break them up into smaller fragments which couldn’t cope close to replicating their functionality at scale. In contrast, the Jeffersonians existing within the boundaries of contemporary statism, calling on the Federal Trade Commission to break up a firm like Facebook. For Jeffersonians concentration of data seems like a private data monopoly. For Hamiltonians it seems like a necessary measure to secure the data and mitigate the risks it generates. Understanding the basis of this disagreements rests on what a platform is:

The largest, most successful firms of digital capitalism tend to serve as platforms, ranking and rating other entities rather than directly providing goods and services. This strategy enables the platform to outsource risk to vendors and consumers, while it reliably collects a cut from each transaction. Just as a financial intermediary profits from transaction fees, regardless of whether particular investments soar or sour, the platform pockets revenues on the front end, regardless of the quality of the relationships it brokers.

This casts them in the role of policing the platform and adjudicating disputes, described by Pasquale as functional sovereignty when a private firm takes on functions previously confined to the nation state. They tend to assume these issue can be resolved through automation and generally take an absentee approach to what they manage. But this doesn’t matter under current antitrust law which seeks to protect competition, not competitors. The only concern is whether prices are going up or down. As Pasquale explains, this short-termism fails to take account of how superior offerings might have been in existence were it not for the competitive advantage of big tech:

To see the practical effects of this obsession with the short-term, imagine searching for “weather” in Google, and instantly seeing its own weather forecast filling your mobile screen. Had it linked to three forecasting sites in that precious screen space, it might have directed more exposure and advertising revenue to sites with diverse interfaces, more or less information, or other variations. For example, the site WeatherSpark used to give a beautifully precise image of storms’ movement over time—the perfect visual analogue to AccuWeather’s minute-by-minute forecasts of rain or clear skies. But WeatherSpark no longer offers that service, and who knows how many other start-ups gave up on occupying this space. To establishment antitrust authorities, there is no ground to intervene—consumers get the basics of weather from Google’s interface, and it is free. It’s a short-termist outlook that omits long-run considerations in the name of a presentist scientism. In their worldview, there is no room for argument about whether better or worse alternatives do or should exist. Antitrust is supposed to protect “competition, not competitors”—and a singular lack of concern for quality translates into profound lack of interest in whether current or future competitors could do a better job than a digital behemoth. But how can we know if there is competition, if there are no competitors to provide it?

For Hamiltonians the solution is not breaking up these firms but treating them as public utilities which can facilitate others. Regulators accepted the massiveness of power generation and phone networks but with the necessity of offering a countervailing power which could control their operations. In fact the centralisation of big tech could even be a beneficial thing in the move towards taking public control:

In a recent podcast, the socialists of Chapo Trap House joked that they were happy to see Amazon consolidate power. Once it takes over every business in the country, it will be easy to “cut off the head” and simply impose government control over the economy. “Free Whole Foods hot bar for everyone!” was the imagined denouement. Similarly, if all the private health insurers in the United States merged, the stage would finally be set for “single payer”: the government need only take over the one insurer left standing.

The Hamiltonian vision “can be the economic equivalent of geoengineering—an embrace of the radically new and large-scale, arising out of the sense that inequalities and climate change are such massive problems that only rapid technological advances can solve them”. In contrast to the precautionary principle of the Jeffersonians who question “whether any entity should accumulate the power necessary to, say, compare everyone’s genomes, convert millions of workers’ movements to patterns of behavior programmable in robotics, or maintain social credit scores on all citizens”. Interestingly, Pasquale places some of the blame on the expectations of investors:

Investors demand a fantasy of monopolization: that their firm not merely occupy a field, but develop “moats” against entrants in order to guarantee both present returns and future growth. The day-to-day reality of operational budget constraints, however, pushes the same firms toward the pathologies of absentee ownership.

I’m slowly making my way through Shoshana Zuboff’s The Age of Surveillance Capitalism and I thought I’d benefit from a quick recap of where I’d got to so far. In essence the first part of the book is an account of behavioural surplus: data about user behaviour  left over after narrowly technical requirements that can be leveraged for commercial benefit. Transactional data is produced as a by-product of activity mediated through digital systems, including firms and actors who existed prior to the nascent tech giants. But Google as one of the early firms which had no relationship to users other than through that digital system began to realise the commercial significance of transactional data. They were far from unique in seeing technological and engineering value in this data, even early stage Yahoo was interested in ‘click trails’ as a way of optimising their directory and finding ideas for new services.

What made Google unique, argues Zuboff, arose from their capacity to build a sustained business model around the insights into future behaviour which could be inferred from past data. This is something which has to be understood against the background of the dot com crash and the institutional pressure which a nascent firm like Google was subject to. The take away point from this is not only that it’s a matter of business model rather than technology but the contingency of how this business model came about in the first place. It’s a story about the institutionalisation of behavioural surplus much more than one about the technology which made that institutionalisation possible.

This is such an important point in Tim Carmody’s (highly recommended) Amazon newsletter. Not only is Amazon enormously popular but critics of the firm fail to understand the basis of this popularity, as opposed to the insight they have into the popularity of a firm like Apple:

One study last year showed that Amazon was the second most trusted institution in American life, behind only the military. If you only poll Democrats? Amazon is number one. People love Amazon. Most of them don’t know about and have never thought they needed a mesh router for their house. But they will now.

It suggests criticism of big tech could remain a marginal pursuit, embedded to the point of doxa within certain segments of the population while others remain oblivious to it. It also suggests the need for caution in how we treat ‘big tech’. It’s not a monolithic block and people have different relationships to these firms. I’ve assumed there’s a political value in using the designation, as it defines an issue in a way orientated towards action, but perhaps it’s a mistake while there’s a divergence in public affection between the firms in question.

A really interesting Vanity Fair piece exploring the assumption amongst American law makers and financiers that outrage against big tech will be limited because there is no constituency liable to be organised against it. In the absence of a collective agency pushing for political action to be taken, diffuse outrage is unlikely to lead to political action and will eventually dissipate. 

Facebook is in a world of hurt, or so it would seem, after The New York Times published a splashy, five-byline exposé last week that documented the social-media giant’s ponderous, self-serving response to Russian infiltration of its platform. Ditto Amazon, the e-commerce juggernaut that recently cajoled New York City into coughing up billions of dollars in tax breaks to host a new office building, provoking sustained liberal outrage. Netflix is facing new rulesgoverning its film and television libraries in Europe. Google, we are told, has its own problems, from selling A.I. to improve drone strikes to the news it reportedly paid out a top executive $90 million despite the fact that he allegedly coerced a colleague into sex. If you only got your news on Twitter, you might imagine the gold rush is over for the so-called FAANGs—as Facebook, Amazon, Apple, Netflix, and Google are known—and that the era of Big Government regulation is about to begin.


On the subject of the collapse of the tech mythology, a wonderful Slate headline succinctly conveys the significance of what is taking place: Facebook is a normal sleazy company now.  As Siva Vaidhyanathan puts it, “Facebook is now just another normal sleazy American company run by normal sleazy executives, engaged in normal sleazy lobbying and corporate propaganda”. He lists the controversies which have surrounded Facebook in the last few years and the founder’s response to them:

Over the past three years, Facebook has been outed for abusing the trust of its users, sharing personal data with third parties like Cambridge Analytica, unwittingly hosting Russian-backed propaganda intended to undermine American democracy, amplifying calls for religious and ethnic violence in places like Sri Lanka and Myanmar, and promoting violent authoritarian and nationalist leaders like Rodrigo Duterte in the Philippines and Narendra Modi in India. As these stories piled up and public trust eroded, the Times reports, Zuckerberg consistently exempted himself from crucial discussions with the Facebook security team and acted generally baffled that anyone would question his baby. After all, didn’t he just want, in his words, to “bring the world closer together?”

In contrast Sandberg initiated a lobbying operation with a particularly unseemly propaganda exercise attached to it, obviously at odds with the lofty rhetoric accompanying Facebook’s public pronouncements in the face of mounting scandal. Vaidhyanathan’s case is that the transition to sleaze is a recent phenomenon, reflecting the growing panic of a company which had formerly “made too much money to care about money and had too strong a reputation to care about its reputation”. Nonetheless, the mounting controversies are created by the platform working in the way it was designed to. As Vaidhyanathan says, “The problem with Facebook is Facebook.”

However my suggestion is that we have to recognise the collapse of the tech mythology as a distinct factor, beyond the current crisis in Facebook. There is an increasing  politicisation of Big Tech, as firms which positioned themselves as outside the normal rules of capitalism are increasingly recognised as what is driving a shift in capitalism itself. Their epochal rhetoric of disruptive innovation, bringing the world together through the power of their platforms, decreasingly obscures the material interests they embody. Without this broader collapse of the tech mythology, it would be easier for Facebook to make it through their present storm.

There’s a wonderful piece in the Atlantic talking about the accumulating scandals through which “the tech industry has gone from bright young star to death star”, with increasing public knowledge leading to a recognition that “Silicon Valley companies turned out to be roughly as dirty in their corporate maneuvering as any old oil company or military contractor”. It raises a crucial question: what happens if the controversies continue to accumulate while people remain inclined to use products upon which they have become profoundly dependent? How will these firms come to be seen if widespread rejection of their business practices co-exists with widespread use of their services? As Alex Madrigal puts it, “what if the news stays bad, but the people using their products can’t extract themselves from the platforms tech has built?” It’s a fascinating question for anyone interested in the politics of Silicon Valley and we could see this collapse of the tech mythology as facilitating a repoliticisation of (big) tech: things which were successfully framed as unalloyed social goods, so obviously beneficial to society as to be outside dispute, come to be contested and debated, as well as (we hope) subject to legal intervention and the construction of regulatory regimes.

Madrigal draws a fascinating parallel with the railroad network, using the work of the historian Richard White. The hyperbole with which the internet was greeted was once matched by a transcontinental rail network which opened up a seemingly infinite vista of possibilities to Americans, expanding the scope of social life and coming to define many people’s sense of the age in which they lived. However as controversies accumulated in the face of their novel practices (particularly the formation of their monopolies and the political lobbying operations used to defend them), they came to be widely recognised as detrimental to social life and this once lauded system was increasingly despised. The collapse of the mythology surrounding them “helped create an entire political ideology: the progressivism of the late 19th and early 20th centuries”. Much as the railroads generated the richest men of the time while being the object of vast political opposition, big tech increasingly finds itself the object of resistance while its founders enjoy the fruits of the “world-historic empires” they have built. The question this leaves is how we can ensure the collapse of the tech mythology goes hand-in-hand with a reining in of the apparatus that has been built and the defensive elites who have made their fortunes from it.

I found this comparison by Robin Wilton extremely thought-provoking. It’s correct as a statement about why we should treat these skills as fundamental to education. However it glosses over a number of differences and we should be cautious about the comparison:

  1. While there are corporate interests involved in reading, writing and arithmetic they exercise less power in society at large than big tech
  2. Connected to this is the fact that these corporate interests in no way control the infrastructure of reading, writing and arithmetic whereas big tech does, at least in a collective sense
  3. The harms children face in their future use of reading, writing and arithmetic have no connection to the firms who produce instruments for these purposes, as opposed to big tech which is itself a source of the privacy harms it seeks to educate children about

A conversation I had recently about the digitalisation of the archive left me thinking back to this section on pg 81-82 of World Without Mind by Franklin Foer:

There have been various stabs at coining a term to capture the dominant role of Google, Amazon, Facebook, and Apple. Mark Zuckerberg has called his company a “utility,” perhaps un aware how the term is historically an invitation for invasive regulation. But there’s something to his suggestion. In the industrial age, utilities were infrastructure that the public deemed essential to the functioning of everyday life—electricity and gas, water and sewage. In the end, the country couldn’t function without them, and the government removed these companies from the vicissitudes of the market, leashing them to publicly appointed commissions that set their prices. In the knowledge economy, the essential pieces of infrastructure are intellectual. With the inexhaustible choice made possible by the Internet comes a new imperative—the need for new tools capable of navigating the vastness. The world’s digital trove of knowledge isn’t terribly useful without mechanisms for searching and sorting the ethereal holdings. That’s the trick Amazon—and the other knowledge monopolists—have managed. Amazon didn’t just create the world’s biggest bookstore; it made its store far more usable, far more efficient, than browsing the aisles of a Barnes and Noble or cruising a library’s card catalog. And beyond that, Amazon anticipated your desires, using its storehouse of data to recommend your next purchase, to strongly suggest a course for navigating knowledge. This is the strange essence of the new knowledge monopolies. They don’t actually produce knowledge; they just sift and organize it. We rely on a small handful of companies to provide us with a sense of hierarchy, to identify what we should read and what we should ignore, to pick informational winners and losers. It’s incredible economic and cultural power that they have amassed because of a sudden change in the strange economics of the commodity they traffic in, a change they hastened.

There’s something enticingly simple about this account, framing contemporary knowledge monopolies as successors to the communications monopolies of the past, inviting comparable modes of regulation.