Spying on kids to save kids from spying is very, very stupid
Iβm on tour with my new book, The Reverse Centaurβs Guide to Life After AI. Catch me TONIGHT (Jun 23) in TORONTO at Osler Records, and TOMORROW (Jun 24) in NYC at The Strand. After that, itβs Philly and Chicago.
The literature on harms to kids from online platforms is complex and nuanced, rife with people citing small, ambiguous studies as iron-clad evidence that kids are being destroyed by the internet:
https://www.youtube.com/watch?v=Ype6c6DdHQY
It's a weird coalition of anti-Big Tech campaigners (who are rightly angry at the platforms' callous disregard for user welfare) and Heritage Foundation-backed culture warriors (who think that if their kids aren't exposed to LGBTQ content they won't come out as queer). While there's plenty these groups disagree about, they share one consensus: there should be a "minimum age" for certain kinds of internet use.
The problem is, there's no such thing as "age verification" for the internet. What we call "age verification" is actually mass surveillance, so invasive and pervasive that it makes the ad-tech industry's commercial surveillance look like some kind of cypherpunk darknet pirate utopia:
"Age verification" means that everyone who does anything online will have to submit to fine-grained tracking and recording of all their online activities. This nightmare is the surveillance advertising industry's fondest dream, a world where it's literally illegal to avoid their tracking, all in the name of saving kidsβ¦from them!
So it's not just a weird alliance of anti-Big Tech crusaders and the conspiratorial right that's pushing for age verification β they are unwitting allies of the very tech industry they think they're fighting. Those tech industry insiders are fully aware that an "age verification" mandate is really a way for the government to teach every child how to use a VPN. They're also fully aware that the next move is to ban VPNs:
Tech bosses are the ones sitting on our shoulders saying, "Go ahead, swallow that fly β it'll be fine. And if you do have to swallow a spider afterward, well, that'll surely be the end of it":
Behind them is a long line of caliper-wielding grifters who claim they can use your phone's camera to distinguish a child who is 17 years, 364 days old from an adult who's just turned 18:
It's beyond farce. After all, whatever harms you believe the internet is inflicting on kids β and there's absolutely some kids who are being harmed by their internet use β those harms all start with surveillance. Your kids can't be targeted by algorithms without the surveillance data that's being used to target them. They can't be funneled into pro-anorexia content or extreme misogyny forums without that funnel being primed by commercial spying.
Why do tech companies spy on your kids? The same reason your dog licks its balls: because they can, and no one stops them:
America hasn't updated its consumer privacy laws since 1988 (when Congress banned the disclosure of your VHS rentals). The EU has the GDPR, but it also has Ireland, the country where all GDPR cases against Big Tech go to die, because any tax haven inevitably becomes a crime haven:
Other countries have privacy laws to varying degrees, but are grossly outmatched by US tech giants, who have fused with the Trump regime, to the extent that Trump will impose penalties on your country if you attempt to regulate his tech companies β he'll even have your top officials cut off from the internet in retaliation:
Any attempt to save kids from online harms should start with saving kids from online surveillance, but that's the opposite of what we're doing today. After decades of failing to pass and enforce privacy controls for the internet, those same governments are breaking all land-speed records to pass "age verification" laws that make privacy illegal:
The fact that these bills have the firm backing of the tech industry's most controlling, most spying companies tells you everything you need to know about them:
Kids are being harmed by online spying, and so are the rest of us. Whether you think that the algorithm made Grampy go Qanon or you're suspicious that online surveillance data was used to deny you a loan, a job, or a lease, you should want privacy:
You can't protect kids from online surveillance by spying on them. You just can't. Anyone who tells you otherwise is trying to get you to swallow a fly so they can sell you a spider, a bird, a cat, and an ICE chud in a gaiter, Oakleys and plate carrier (beneath which lurks a stick-and-poke Totenkopf tattoo).
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
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Even by Amazon standards, this is extraordinarily sleazy: starting March 28, each Amazon Echo device will cease processing audio on-device and instead upload all the audio it captures to Amazon's cloud for processing, even if you have previously opted out of cloud-based processing:
It's easy to flap your hands at this bit of thievery and say, "surveillance capitalists gonna surveillance capitalism," which would confine this fuckery to the realm of ideology (that is, "Amazon is ripping you off because they have bad ideas"). But that would be wrong. What's going on here is a material phenomenon, grounded in specific policy choices and by unpacking the material basis for this absolutely unforgivable move, we can understand how we got here β and where we should go next.
Start with Amazon's excuse for destroying your privacy: they want to do AI processing on the audio Alexa captures, and that is too computationally intensive for on-device processing. But that only raises another question: why does Amazon want to do this AI processing, even for customers who are happy with their Echo as-is, at the risk of infuriating and alienating millions of customers?
For Big Tech companies, AI is part of a "growth story" β a narrative about how these companies that have already saturated their markets will still continue to grow. It's hard to overstate how dominant Amazon is: they are the leading cloud provider, the most important retailer, and the majority of US households already subscribe to Prime. This may sound like a good place to be, but for Amazon, it's actually very dangerous.
Amazon has a sky-high price/earnings ratio β about triple the ratio of other retailers, like Target. That scorching P/E ratio reflects a belief by investors that Amazon will continue growing. Companies with very high p/e ratios have an unbeatable advantage relative to mature competitors β they can buy things with their stock, rather than paying cash for them. If Amazon wants to hire a key person, or acquire a key company, it can pad its offer with its extremely high-value, growing stock. Being able to buy things with stock instead of money is a powerful advantage, because money is scarce and exogenous (Amazon must acquire money from someone else, like a customer), while new Amazon stock can be conjured into existence by typing zeroes into a spreadsheet:
But the downside here is that every growth stock eventually stops growing. For Amazon to double its US Prime subscriber base, it will have to establish a breeding program to produce tens of millions of new Americans, raising them to maturity, getting them gainful employment, and then getting them to sign up for Prime. Almost by definition, a dominant firm ceases to be a growing firm, and lives with the constant threat of a stock revaluation as investors belief in future growth crumbles and they punch the "sell" button, hoping to liquidate their now-overvalued stock ahead of everyone else.
For Big Tech companies, a growth story isn't an ideological commitment to cancer-like continuous expansion. It's a practical, material phenomenon, driven by the need to maintain investor confidence that there are still worlds for the company to conquer.
That's where "AI" comes in. The hype around AI serves an important material need for tech companies. By lumping an incoherent set of poorly understood technologies together into a hot buzzword, tech companies can bamboozle investors into thinking that there's plenty of growth in their future.
OK, so that's the material need that this asshole tactic satisfies. Next, let's look at the technical dimension of this rug-pull.
How is it possible for Amazon to modify your Echo after you bought it? After all, you own your Echo. It is your property. Every first year law student learns this 18th century definition of property, from Sir William Blackstone:
That sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe.
If the Echo is your property, how come Amazon gets to break it? Because we passed a law that lets them. Section 1201 of 1998's Digital Millennium Copyright Act makes it a felony to "bypass an access control" for a copyrighted work:
That means that once Amazon reaches over the air to stir up the guts of your Echo, no one is allowed to give you a tool that will let you get inside your Echo and change the software back. Sure, it's your property, but exercising sole and despotic dominion over it requires breaking the digital lock that controls access to the firmware, and that's a felony punishable by a five-year prison sentence and a $500,000 fine for a first offense.
The Echo is an internet-connected device that treats its owner as an adversary and is designed to facilitate over-the-air updates by the manufacturer that are adverse to the interests of the owner. Giving a manufacturer the power to downgrade a device after you've bought it, in a way you can't roll back or defend against is an invitation to run the playbook of the Darth Vader MBA, in which the manufacturer replies to your outraged squawks with "I am altering the deal. Pray I don't alter it any further":
The ability to remotely, unilaterally alter how a device or service works is called "twiddling" and it is a key factor in enshittification. By "twiddling" the knobs and dials that control the prices, costs, search rankings, recommendations, and core features of products and services, tech firms can play a high-speed shell-game that shifts value away from customers and suppliers and toward the firm and its executives:
https://pluralistic.net/2023/02/19/twiddler/
But how can this be legal? You bought an Echo and explicitly went into its settings to disable remote monitoring of the sounds in your home, and now Amazon β without your permission, against your express wishes β is going to start sending recordings from inside your house to its offices. Isn't that against the law?
Well, you'd think so, but US consumer privacy law is unbelievably backwards. Congress hasn't passed a consumer privacy law since 1988, when the Video Privacy Protection Act banned video store clerks from disclosing which VHS cassettes you brought home. That is the last technological privacy threat that Congress has given any consideration to:
This privacy vacuum has been filled up with surveillance on an unimaginable scale. Scumbag data-brokers you've never heard of openly boast about having dossiers on 91% of adult internet users, detailing who we are, what we watch, what we read, who we live with, who we follow on social media, what we buy online and offline, where we buy, when we buy, and why we buy:
To a first approximation, every kind of privacy violation is legal, because the concentrated commercial surveillance industry spends millions lobbying against privacy laws, and those millions are a bargain, because they make billions off the data they harvest with impunity.
Regulatory capture is a function of monopoly. Highly concentrated sectors don't need to engage in "wasteful competition," which leaves them with gigantic profits to spend on lobbying, which is extraordinarily effective, because a sector that is dominated by a handful of firms can easily arrive at a common negotiating position and speak with one voice to the government:
Starting with the Carter administration, and accelerating through every subsequent administration except Biden's, America has adopted an explicitly pro-monopoly policy, called the "consumer welfare" antitrust theory. 40 years later, our economy is riddled with monopolies:
Every part of this Echo privacy massacre is downstream of that policy choice: "growth stock" narratives about AI, twiddling, DMCA 1201, the Darth Vader MBA, the end of legal privacy protections. These are material things, not ideological ones. They exist to make a very, very small number of people very, very rich.
Your Echo is your property, you paid for it. You paid for the product and you are still the product:
Now, Amazon says that the recordings your Echo will send to its data-centers will be deleted as soon as it's been processed by the AI servers. Amazon's made these claims before, and they were lies. Amazon eventually had to admit that its employees and a menagerie of overseas contractors were secretly given millions of recordings to listen to and make notes on:
https://archive.is/TD90k
And sometimes, Amazon just sent these recordings to random people on the internet:
Fool me once, etc. I will bet you a testicle* that Amazon will eventually have to admit that the recordings it harvests to feed its AI are also being retained and listened to by employees, contractors, and, possibly, randos on the internet.
*Not one of mine
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Instacart reaches into your pocket and lops a third off your dollars
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There's a whole greedflation-denial cottage industry that insists that rising prices are either the result of unknowable, untameable and mysterious economic forces, or they're the result of workers having too much money and too many jobs.
The one thing we're absolutely not allowed to talk about is the fact that CEOs keep going on earnings calls to announce that they are hiking prices way ahead of any increase in their costs, and blaming inflation:
Nor are we supposed to notice the "price consultancies" that let the dominant firms in many sectors β from potatoes to meat to rental housing β fix prices in illegal collusive arrangements that are figleafed by the tissue-thin excuse that "if you use an app to fix prices, it's not a crime":
And we're especially not supposed to notice the proliferation of "personalized pricing" businesses that use surveillance data to figure out how desperate you are and charge you a premium based on that desperation:
Surveillance pricing β when you are charged more for the same goods than someone else, based on surveillance data about the urgency of your need and the cash in your bank account β is a way for companies to reach into your pocket and devalue the dollars in your wallet. After all, if you pay $2 for something that I pay $1 for, that's just the company saying that your dollars are only worth half as much as mine:
The economy is riddled with surveillance pricing gouging. You are almost certainly paying more than your neighbors for various items, based on algorithmic price-setting, every day. Case in point: More Perfect Union and Groundwork Collaborative teamed up with Consumer Reports to recruit 437 volunteers from across America to login to Instacart at the same time and buy the same items from 15 stores, and found evidence of surveillance pricing at Albertsons, Costco, Kroger, and Sprouts Farmers Market:
The price-swings are wild. Some test subjects are being charged 23% more than others. The average variance for "the exact same items, from the exact same locations, at the exact same time" comes out to 7%, or "$1,200 per year for groceries" for a family of four.
The process by which your greedflation premium is assigned is opaque. The researchers found that Instacart shoppers ordering from Target clustered into seven groups, but it's not clear how Instacart decides how much extra to charge any given shopper.
Instacart β who acquired Eversight, a surveillance pricing company, in 2022 β blamed the merchants (who, in turn, blamed Instacart). Instacart also claimed that they didn't use surveillance data to price goods, but hedged, admitting that the consumer packaged goods duopoly of Unilever and Procter & Gamble do use surveillance data in connection with their pricing strategies.
Finally, Instacart claimed that this was all an "experiment" to "learn what matters most to consumers and how to keep essential items affordable." In other words, they were secretly charging you more (for things like eggs and bread) because somehow that lets them "keep essential items affordable."
Instacart said their goal was to help "retail partners understand consumer preferences and identify categories where they should invest in lower prices."
Anyone who's done online analytics can easily pierce this obfuscation, but for those of you who haven't had the misfortune of directing an iterated, A/B tested optimization effort, I'll unpack this statement.
Say you have a pool of users and a bunch of variations on a headline. You randomly assign different variants to different users and measure clickthroughs. Then you check to see which variants performed best, and dig into the data you have on those users to see if there are any correlations that tie together users who liked a given approach.
This might let you discover that, say, women over 40 click more often on headlines that mention kittens. Then you generate more variations based on these conclusions β different ways of mentioning kittens β and see which of these variations perform best, and whether the targeted group of users split into smaller subgroups (women over 40 in the midwest prefer "tabby kitten" while their southern sisters prefer "kitten" without a mention of breed).
By repeatedly iterating over these steps, you can come up with many highly refined variants, and you can use surveillance data to target them to ever narrower, more optimized slices of your user-base.
Obviously, this is very labor intensive. You have to do a lot of tedious analysis, and generate a lot of variants. This is one of the reasons that slopvertising is so exciting to the worst people on earth: they imagine that they can use AI to create a self-licking ice-cream cone, performing the analysis and generating endless new variations, all untouched by human hands.
But when it comes to prices, it's much easier to produce variants β all you're doing is adding or subtracting from the price you show to shoppers. You don't need to get the writing team together to come up with new ways of mentioning kittens in a headline β you can just raise the price from $6.23 to $6.45 and see if midwestern women over 40 balk or add the item to their shopping baskets.
And here's the kicker: you don't need to select by gender, racial or economic criteria to end up with a super-racist and exploitative arrangement. That's because race, gender and socioeconomic status have broad correlates that are easily discoverable through automated means.
For example, thanks to generations of redlining, discriminatory housing policy, wage discrimination and environmental racism, the poorest, sickest neighborhoods in the country are also the most racialized and are also most likely to be "food deserts" where you can't just go to the grocery store and shop for your family.
What's more, the private equity-backed dollar store duopoly have waged a decades-long war on community grocery stores, enveloping them with dollar stores that use their access to preferential discounts (from companies like Unilever and Procter & Gamble, another duopoly) to force grocers out of business:
Then these dollar stores run a greedflation scam that is so primitive, it's almost laughable: they just charge customers much higher amounts than the prices shown on the shelves and price-tags:
When you live in a food desert where your only store is a Dollar General that defrauds you at the cash-register, you are more likely to accept a higher price from Instacart, because you have fewer choices than someone in a middle-class neighborhood with two or three competing grocers. And the people who live in those food deserts are more likely to be poor, which, in America, is an excellent predictor of whether they are Black or brown.
Which is to say, without ever saying, "Charge Black people more for groceries," Instacart can easily A/B split its way into a system where they predictably and reliably charges Black people more for groceries. That's the old cod-Marxism at work: "from each according to their desperation."
This is so well-understood that anyone who sets one of these systems in motion should be understood to be deliberately seeking to do racist profiteering under cover of an algorithm. It's empiricism-washing: "I'm not racist, I just did some math" (that produced a predictably racist outcome):
This is the dark side and true meaning of "business optimization." The optimal business pays its suppliers and workers nothing, and charges its customers everything it can. Obviously, businesses need to settle for suboptimal outcomes, because workers won't show up if they don't get paid, and customers won't buy things that cost everything they haveβΉ.
βΉ Unless, of course, you are an academic publisher, in which case this is just how you do business.
A business "optimizes" its workforce by finding ways to get them to accept lower wages. For example, they can bind their workers with noncompete "agreements" that ban Wendy's cashiers from quitting their job and making $0.25 more per hour at the McDonald's next door (one in 18 American workers have been locked into one of these contracts):
Or they can lock their workers in with "training repayment agreement provisions" (TRAPs) β contractual clauses that force workers to pay their bosses thousands of dollars if they quit or get fired:
But the most insidious form of worker optimization is "algorithmic wage discrimination." That's when a company uses surveillance data to lower the wages of workers. For example, contract nurses are paid less if the app that hires them discovers (through the unregulated data-broker sector) that they have a lot of credit-card debt. After all, nurses who are heavily indebted can't afford to be choosy and turn down lowball offers:
This is the other form of surveillance pricing: pricing labor based on surveillance data. It's more cod-Marxism: "From each according to their desperation."
Forget "becoming ungovernable": to defeat these evil fuckers, we have to become unoptimizable:
How do we do that? Well, nearly every form of "optimization" begins with surveillance. They can't figure out whether they can charge you more if they can't spy on you. They can't figure out whether they can pay you less if they can't spy on you, either.
And the reason they can spy on you is because we let them. The last consumer privacy law to pass out of Congress was a 1988 bill that bans video-store clerks from disclosing your VHS rental history. Every other form of consumer surveillance is permitted under US federal law.
So step one of this process is to ban commercial surveillance. Banning algorithmic price discrimination is all well and good, but it is, ultimately, a form of redistribution. We're trying to make the companies share some of the excess they extract from our surveillance data. But predistribution β ending surveillance itself, in this case β is always far more effective than redistribution:
How do we do that? Well, we need to build a coalition. At the Electronic Frontier Foundation, we call this "privacy first": you can't solve all the internet's problems by fixing privacy, but you won't fix most of them unless we get privacy right, and so the (potential) coalition for a strong privacy regime is large and powerful:
But of course, "privacy first," doesn't mean "just privacy." We also need tools that target algorithmic pricing per se. In New York State, there's a new law that requires disclosure of algorithmic pricing, in the form of a prominent notification reading, "THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA."
This is extremely weaksauce, and might even be worse than nothing. In California we have Prop 65, a rule that requires businesses to post signs and add labels any time they expose you to chemicals "known to the state of California to cause cancer." This caveat emptor approach (warn people, let them vote with their wallets) has led to every corner of California's built environment to be festooned with these warnings. Today, Californians just ignore these warnings, the same way that web users ignore the "privacy policy" disclosures on the sites they visit:
The right approach isn't to (merely) warn people about carcinogens (or privacy risks). The right approach is regulating harmful business practices, whether those practices give you a tumor or pick your pocket.
Under Biden, former FTC chair Lina Khan undertook proceedings to ban algorithmic pricing altogether. Trump's FTC killed that, along with all the other quality-of-life enhancing measures the FTC had in train (Trump's FTC chair replaced these with a program to root out "wokeness" in the agency).
Today, Khan is co-chair of Zohran Mamdani's transition team, and she will use the mayor's authority (under the New York City Consumer Protection Law of 1969, which addresses "unconscionable" commercial practices) to ban algorithmic pricing in NYC:
Khan wasn't Biden's only de-optimizer. Under chair Rohit Chopra, Biden's Consumer Finance Protection Bureau actually banned the data-brokers who power surveillance pricing:
These are efforts to optimize corporations for human thriving, by making them charge us less and pay us more. For while we are best off when we are unoptimizable, we are also best off when corporations are totally optimized β for our benefit.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
I'm on a 20+ city book tour for my new novel PICKS AND SHOVELS. Catch me TORONTO on SUNDAY (Feb 23) at Another Story Books, and in NYC on WEDNESDAY (26 Feb) with JOHN HODGMAN. More tour dates here.
The commercial surveillance industry is almost totally unregulated. Data brokers, ad-tech, and everyone in between β they harvest, store, analyze, sell and rent every intimate, sensitive, potentially compromising fact about your life.
Late last year, I testified at a Consumer Finance Protection Bureau hearing about a proposed new rule to kill off data brokers, who are the lynchpin of the industry:
The other witnesses were fascinating β and chilling, There was a lawyer from the AARP who explained how data-brokers would let you target ads to categories like "seniors with dementia." Then there was someone from the Pentagon, discussing how anyone could do an ad-buy targeting "people enlisted in the armed forces who have gambling problems." Sure, I thought, and you don't even need these explicit categories: if you served an ad to "people 25-40 with Ivy League/Big Ten law or political science degrees within 5 miles of Congress," you could serve an ad with a malicious payload to every Congressional staffer.
Now, that's just the data brokers. The real action is in ad-tech, a sector dominated by two giant companies, Meta and Google. These companies claim that they are better than the unregulated data-broker cowboys at the bottom of the food-chain. They say they're responsible wielders of unregulated monopoly surveillance power. Reader, they are not.
Meta has been repeatedly caught offering ad-targeting like "depressed teenagers" (great for your next incel recruiting drive):
And Google? They just keep on getting caught with both hands in the creepy commercial surveillance cookie-jar. Today, Wired's Dell Cameron and Dhruv Mehrotra report on a way to use Google to target people with chronic illnesses, people in financial distress, and national security "decision makers":
Google doesn't offer these categories itself, they just allow data-brokers to assemble them and offer them for sale via Google. Just as it's possible to generate a target of "Congressional staffers" by using location and education data, it's possible to target people with chronic illnesses based on things like whether they regularly travel to clinics that treat HIV, asthma, chronic pain, etc.
Google claims that this violates their policies, and that they have best-of-breed technical measures to prevent this from happening, but when Wired asked how this data-broker was able to sell these audiences β including people in menopause, or with "chronic pain, fibromyalgia, psoriasis, arthritis, high cholesterol, and hypertension" β Google did not reply.
The data broker in the report also sold access to people based on which medications they took (including Ambien), people who abuse opioids or are recovering from opioid addiction, people with endocrine disorders, and "contractors with access to restricted US defense-related technologies."
It's easy to see how these categories could enable blackmail, spear-phishing, scams, malvertising, and many other crimes that threaten individuals, groups, and the nation as a whole. The US Office of Naval Intelligence has already published details of how "anonymous" people targeted by ads can be identified:
The most amazing part is how the 33,000 targeting segments came to public light: an activist just pretended to be an ad buyer, and the data-broker sent him the whole package, no questions asked. Johnny Ryan is a brilliant Irish privacy activist with the Irish Council for Civil Liberties. He created a fake data analytics website for a company that wasn't registered anywhere, then sent out a sales query to a brokerage (the brokerage isn't identified in the piece, to prevent bad actors from using it to attack targeted categories of people).
Foreign states, including China β a favorite boogeyman of the US national security establishment β can buy Google's data and target users based on Google ad-tech stack. In the past, Chinese spies have used malvertising β serving targeted ads loaded with malware β to attack their adversaries. Chinese firms spend billions every year to target ads to Americans:
Google and Meta have no meaningful checks to prevent anyone from establishing a shell company that buys and targets ads with their services, and the data-brokers that feed into those services are even less well-protected against fraud and other malicious act.
All of this is only possible because Congress has failed to act on privacy since 1988. That's the year that Congress passed the Video Privacy Protection Act, which bans video store clerks from telling the newspapers which VHS cassettes you have at home. That's also the last time Congress passed a federal consumer privacy law:
The legislative history of the VPPA is telling: it was passed after a newspaper published the leaked video-rental history of a far-right judge named Robert Bork, whom Reagan hoped to elevate to the Supreme Court. Bork failed his Senate confirmation hearings, but not because of his video rentals (he actually had pretty good taste in movies). Rather, it was because he was a Nixonite criminal and virulent loudmouth racist whose record was strewn with the most disgusting nonsense imaginable).
But the leak of Bork's video-rental history gave Congress the cold grue. His video rental history wasn't embarrassing, but it sure seemed like Congress had some stuff in its video-rental records that they didn't want voters finding out about. They beat all land-speed records in making it a crime to tell anyone what kind of movies they (and we) were watching.
And that was it. For 37 years, Congress has completely failed to pass another consumer privacy law. Which is how we got here β to this moment where you can target ads to suicidal teens, gambling addicted soldiers in Minuteman silos, grannies with Alzheimer's, and every Congressional staffer on the Hill.
Some people think the problem with mass surveillance is a kind of machine-driven, automated mind-control ray. They believe the self-aggrandizing claims of tech bros to have finally perfected the elusive mind-control ray, using big data and machine learning.
But you don't need to accept these outlandish claims β which come from Big Tech's sales literature, wherein they boast to potential advertisers that surveillance ads are devastatingly effective β to understand how and why this is harmful. If you're struggling with opioid addiction and I target an ad to you for a fake cure or rehab center, I haven't brainwashed you β I've just tricked you. We don't have to believe in mind-control to believe that targeted lies can cause unlimited harms.
And those harms are indeed grave. Stein's Law predicts that "anything that can't go on forever eventually stops." Congress's failure on privacy has put us all at risk β including Congress. It's only a matter of time until the commercial surveillance industry is responsible for a massive leak, targeted phishing campaign, or a ghastly national security incident involving Congress. Perhaps then we will get action.
In the meantime, the coalition of people whose problems can be blamed on the failure to update privacy law continues to grow. That coalition includes protesters whose identities were served up to cops, teenagers who were tracked to out-of-state abortion clinics, people of color who were discriminated against in hiring and lending, and anyone who's been harassed with deepfake porn:
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Your car spies on you and rats you out to insurance companies
I'm on tour with my new, nationally bestselling novel The Bezzle! Catch me TOMORROW (Mar 13) in SAN FRANCISCO with ROBIN SLOAN, then Toronto, NYC, Anaheim, and more!
Another characteristically brilliant Kashmir Hill story for The New York Times reveals another characteristically terrible fact about modern life: your car secretly records fine-grained telemetry about your driving and sells it to data-brokers, who sell it to insurers, who use it as a pretext to gouge you on premiums:
This is true whether you own or lease the car, and it's separate from the "black box" your insurer might have offered to you in exchange for a discount on your premiums. In other words, even if you say no to the insurer's carrot β a surveillance-based discount β they've got a stick in reserve: buying your nonconsensually harvested data on the open market.
I've always hated that saying, "If you're not paying for the product, you're the product," the reason being that it posits decent treatment as a customer reward program, like the little ramekin warm nuts first class passengers get before takeoff. Companies don't treat you well when you pay them. Companies treat you well when they fear the consequences of treating you badly.
Take Apple. The company offers Ios users a one-tap opt-out from commercial surveillance, and more than 96% of users opted out. Presumably, the other 4% were either confused or on Facebook's payroll. Apple β and its army of cultists β insist that this proves that our world's woes can be traced to cheapskate "consumers" who expected to get something for nothing by using advertising-supported products.
But here's the kicker: right after Apple blocked all its rivals from spying on its customers, it began secretly spying on those customers! Apple has a rival surveillance ad network, and even if you opt out of commercial surveillance on your Iphone, Apple still secretly spies on you and uses the data to target you for ads:
Even if you're paying for the product, you're still the product β provided the company can get away with treating you as the product. Apple can absolutely get away with treating you as the product, because it lacks the historical constraints that prevented Apple β and other companies β from treating you as the product.
As I described in my McLuhan lecture on enshittification, tech firms can be constrained by four forces:
When companies have real competitors β when a sector is composed of dozens or hundreds of roughly evenly matched firms β they have to worry that a maltreated customer might move to a rival. 40 years of antitrust neglect means that corporations were able to buy their way to dominance with predatory mergers and pricing, producing today's inbred, Habsburg capitalism. Apple and Google are a mobile duopoly, Google is a search monopoly, etc. It's not just tech! Every sector looks like this:
Eliminating competition doesn't just deprive customers of alternatives, it also empowers corporations. Liberated from "wasteful competition," companies in concentrated industries can extract massive profits. Think of how both Apple and Google have "competitively" arrived at the same 30% app tax on app sales and transactions, a rate that's more than 1,000% higher than the transaction fees extracted by the (bloated, price-gouging) credit-card sector:
But cartels' power goes beyond the size of their warchest. The real source of a cartel's power is the ease with which a small number of companies can arrive at β and stick to β a common lobbying position. That's where "regulatory capture" comes in: the mobile duopoly has an easier time of capturing its regulators because two companies have an easy time agreeing on how to spend their app-tax billions:
Apple β and Google, and Facebook, and your car company β can violate your privacy because they aren't constrained regulation, just as Uber can violate its drivers' labor rights and Amazon can violate your consumer rights. The tech cartels have captured their regulators and convinced them that the law doesn't apply if it's being broken via an app:
In other words, Apple can spy on you because it's allowed to spy on you. America's last consumer privacy law was passed in 1988, and it bans video-store clerks from leaking your VHS rental history. Congress has taken no action on consumer privacy since the Reagan years:
But tech has some special enshittification-resistant characteristics. The most important of these is interoperability: the fact that computers are universal digital machines that can run any program. HP can design a printer that rejects third-party ink and charge $10,000/gallon for its own colored water, but someone else can write a program that lets you jailbreak your printer so that it accepts any ink cartridge:
Tech companies that contemplated enshittifying their products always had to watch over their shoulders for a rival that might offer a disenshittification tool and use that as a wedge between the company and its customers. If you make your website's ads 20% more obnoxious in anticipation of a 2% increase in gross margins, you have to consider the possibility that 40% of your users will google "how do I block ads?" Because the revenue from a user who blocks ads doesn't stay at 100% of the current levels β it drops to zero, forever (no user ever googles "how do I stop blocking ads?").
The majority of web users are running an ad-blocker:
Web operators made them an offer ("free website in exchange for unlimited surveillance and unfettered intrusions") and they made a counteroffer ("how about 'nah'?"):
Here's the thing: reverse-engineering an app β or any other IP-encumbered technology β is a legal minefield. Just decompiling an app exposes you to felony prosecution: a five year sentence and a $500k fine for violating Section 1201 of the DMCA. But it's not just the DMCA β modern products are surrounded with high-tech tripwires that allow companies to invoke IP law to prevent competitors from augmenting, recongifuring or adapting their products. When a business says it has "IP," it means that it has arranged its legal affairs to allow it to invoke the power of the state to control its customers, critics and competitors:
https://locusmag.com/2020/09/cory-doctorow-ip/
An "app" is just a web-page skinned in enough IP to make it a crime to add an ad-blocker to it. This is what Jay Freeman calls "felony contempt of business model" and it's everywhere. When companies don't have to worry about users deploying self-help measures to disenshittify their products, they are freed from the constraint that prevents them indulging the impulse to shift value from their customers to themselves.
Apple owes its existence to interoperability β its ability to clone Microsoft Office's file formats for Pages, Numbers and Keynote, which saved the company in the early 2000s β and ever since, it has devoted its existence to making sure no one ever does to Apple what Apple did to Microsoft:
Regulatory capture cuts both ways: it's not just about powerful corporations being free to flout the law, it's also about their ability to enlist the law to punish competitors that might constrain their plans for exploiting their workers, customers, suppliers or other stakeholders.
The final historical constraint on tech companies was their own workers. Tech has very low union-density, but that's in part because individual tech workers enjoyed so much bargaining power due to their scarcity. This is why their bosses pampered them with whimsical campuses filled with gourmet cafeterias, fancy gyms and free massages: it allowed tech companies to convince tech workers to work like government mules by flattering them that they were partners on a mission to bring the world to its digital future:
For tech bosses, this gambit worked well, but failed badly. On the one hand, they were able to get otherwise powerful workers to consent to being "extremely hardcore" by invoking Fobazi Ettarh's spirit of "vocational awe":
On the other hand, when you motivate your workers by appealing to their sense of mission, the downside is that they feel a sense of mission. That means that when you demand that a tech worker enshittifies something they missed their mother's funeral to deliver, they will experience a profound sense of moral injury and refuse, and that worker's bargaining power means that they can make it stick.
Or at least, it did. In this era of mass tech layoffs, when Google can fire 12,000 workers after a $80b stock buyback that would have paid their wages for the next 27 years, tech workers are learning that the answer to "I won't do this and you can't make me" is "don't let the door hit you in the ass on the way out" (AKA "sharpen your blades boys"):
With competition, regulation, self-help and labor cleared away, tech firms β and firms that have wrapped their products around the pluripotently malleable core of digital tech, including automotive makers β are no longer constrained from enshittifying their products.
And that's why your car manufacturer has chosen to spy on you and sell your private information to data-brokers and anyone else who wants it. Not because you didn't pay for the product, so you're the product. It's because they can get away with it.
Cars are enshittified. The dozens of chips that auto makers have shoveled into their car design are only incidentally related to delivering a better product. The primary use for those chips is autoenshittification β access to legal strictures ("IP") that allows them to block modifications and repairs that would interfere with the unfettered abuse of their own customers:
The fact that it's a felony to reverse-engineer and modify a car's software opens the floodgates to all kinds of shitty scams. Remember when Bay Staters were voting on a ballot measure to impose right-to-repair obligations on automakers in Massachusetts? The only reason they needed to have the law intervene to make right-to-repair viable is that Big Car has figured out that if it encrypts its diagnostic messages, it can felonize third-party diagnosis of a car, because decrypting the messages violates the DMCA:
Big Car figured out that VIN locking β DRM for engine components and subassemblies β can felonize the production and the installation of third-party spare parts:
The fact that you can't legally modify your car means that automakers can go back to their pre-2008 ways, when they transformed themselves into unregulated banks that incidentally manufactured the cars they sold subprime loans for. Subprime auto loans β over $1t worth! β absolutely relies on the fact that borrowers' cars can be remotely controlled by lenders. Miss a payment and your car's stereo turns itself on and blares threatening messages at top volume, which you can't turn off. Break the lease agreement that says you won't drive your car over the county line and it will immobilize itself. Try to change any of this software and you'll commit a felony under Section 1201 of the DMCA:
Tesla, naturally, has the most advanced anti-features. Long before BMW tried to rent you your seat-heater and Mercedes tried to sell you a monthly subscription to your accelerator pedal, Teslas were demon-haunted nightmare cars. Miss a Tesla payment and the car will immobilize itself and lock you out until the repo man arrives, then it will blare its horn and back itself out of its parking spot. If you "buy" the right to fully charge your car's battery or use the features it came with, you don't own them β they're repossessed when your car changes hands, meaning you get less money on the used market because your car's next owner has to buy these features all over again:
And all this DRM allows your car maker to install spyware that you're not allowed to remove. They really tipped their hand on this when the R2R ballot measure was steaming towards an 80% victory, with wall-to-wall scare ads that revealed that your car collects so much information about you that allowing third parties to access it could lead to your murder (no, really!):
That's why your car spies on you. Because it can. Because the company that made it lacks constraint, be it market-based, legal, technological or its own workforce's ethics.
One common critique of my enshittification hypothesis is that this is "kind of sensible and normal" because "thereβs something off in the consumer mindset that weβve come to believe that the internet should provide us with amazing products, which bring us joy and happiness and we spend hours of the day on, and should ask nothing back in return":
What this criticism misses is that this isn't the companies bargaining to shift some value from us to them. Enshittification happens when a company can seize all that value, without having to bargain, exploiting law and technology and market power over buyers and sellers to unilaterally alter the way the products and services we rely on work.
A company that doesn't have to fear competitors, regulators, jailbreaking or workers' refusal to enshittify its products doesn't have to bargain, it can take. It's the first lesson they teach you in the Darth Vader MBA: "I am altering the deal. Pray I don't alter it any further":
Your car spying on you isn't down to your belief that your carmaker "should provide you with amazing products, which brings your joy and happiness you spend hours of the day on, and should ask nothing back in return." It's not because you didn't pay for the product, so now you're the product. It's because they can get away with it.
The consequences of this spying go much further than mere insurance premium hikes, too. Car telemetry sits at the top of the funnel that the unbelievably sleazy data broker industry uses to collect and sell our data. These are the same companies that sell the fact that you visited an abortion clinic to marketers, bounty hunters, advertisers, or vengeful family members pretending to be one of those:
Decades of pro-monopoly policy led to widespread regulatory capture. Corporate cartels use the monopoly profits they extract from us to pay for regulatory inaction, allowing them to extract more profits.
But when it comes to privacy, that period of unchecked corporate power might be coming to an end. The lack of privacy regulation is at the root of so many problems that a pro-privacy movement has an unstoppable constituency working in its favor.
At EFF, we call this "privacy first." Whether you're worried about grifters targeting vulnerable people with conspiracy theories, or teens being targeted with media that harms their mental health, or Americans being spied on by foreign governments, or cops using commercial surveillance data to round up protesters, or your car selling your data to insurance companies, passing that long-overdue privacy legislation would turn off the taps for the data powering all these harms:
Traditional economics fails because it thinks about markets without thinking about power. Monopolies lead to more than market power: they produce regulatory capture, power over workers, and state capture, which felonizes competition through IP law. The story that our problems stem from the fact that we just don't spend enough money, or buy the wrong products, only makes sense if you willfully ignore the power that corporations exert over our lives. It's nice to think that you can shop your way out of a monopoly, because that's a lot easier than voting your way out of a monopoly, but no matter how many times you vote with your wallet, the cartels that control the market will always win:
Name your price for 18 of my DRM-free ebooks and support the Electronic Frontier Foundation with the Humble Cory Doctorow Bundle.
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Picks and Shovels is a new, standalone technothriller starring Marty Hench, my two-fisted, hard-fighting, tech-scam-busting forensic accountant. You can pre-order it on my latest Kickstarter, which features a brilliant audiobook read by Wil Wheaton.
The social function of the economics profession is to explain, over and over again, that your boss is actually right and that you don't really want the things you want, and you're secretly happy to be abused by the system. If that wasn't true, why would your "choose" commercial surveillance, abusive workplaces and other depredations?
In other words, economics is the "look what you made me do" stick that capitalism uses to beat us with. We wouldn't spy on you, rip you off or steal your wages if you didn't choose to use the internet, shop with monopolists, or work for a shitty giant company. The technical name for this ideology is "public choice theory":
Of all the terrible things that economists say we all secretly love, one of the worst is "price discrimination." This is the idea that different customers get charged different amounts based on the merchant's estimation of their ability to pay. Economists insist that this is "efficient" and makes us all better off. After all, the marginal cost of filling the last empty seat on the plane is negligible, so why not sell that seat for peanuts to a flier who doesn't mind the uncertainty of knowing whether they'll get a seat at all? That way, the airline gets extra profits, and they split those profits with their customers by lowering prices for everyone. What's not to like?
Plenty, as it turns out. With only four giant airlines who've carved up the country so they rarely compete on most routes, why would an airline use their extra profits to lower prices, rather than, say, increasing their dividends and executive bonuses?
For decades, the airline industry was the standard-bearer for price discrimination. It was basically impossible to know how much a plane ticket would cost before booking it. But even so, airlines were stuck with comparatively crude heuristics to adjust their prices, like raising the price of a ticket that didn't include a Saturday stay, on the assumption that this was a business flyer whose employer was footing the bill:
With digitization and mass commercial surveillance, we've gone from pricing based on context (e.g. are you buying your ticket well in advance, or at the last minute?) to pricing based on spying. Digital back-ends allow vendors to ingest massive troves of commercial surveillance data from the unregulated data-broker industry to calculate how desperate you are, and how much money you have. Then, digital front-ends β like websites and apps β allow vendors to adjust prices in realtime based on that data, repricing goods for every buyer.
As digital front-ends move into the real world (say, with digital e-ink shelf-tags in grocery stores), vendors can use surveillance data to reprice goods for ever-larger groups of customers and types of merchandise. Grocers with e-ink shelf tags reprice their goods thousands of times, every day:
Here's where an economist will tell you that actually, your boss is right. Many groceries are perishable, after all, and e-ink shelf tags allow grocers to reprice their goods every minute or two, so yesterday's lettuce can be discounted every fifteen minutes through the day. Some customers will happily accept a lettuce that's a little gross and liztruss if it means a discount. Those customers get a discount, the lettuce isn't thrown out at the end of the day, and everyone wins, right?
Well, sure, if. If the grocer isn't part of a heavily consolidated industry where competition is a distant memory and where grocers routinely collude to fix prices. If the grocer doesn't have to worry about competitors, why would they use e-ink tags to lower prices, rather than to gouge on prices when demand surges, or based on time of day (e.g. making frozen pizzas 10% more expensive from 6-8PM)?
And unfortunately, groceries are one of the most consolidated sectors in the modern world. What's more, grocers keep getting busted for colluding to fix prices and rip off shoppers:
Surveillance pricing is especially pernicious when it comes to apps, which allow vendors to reprice goods based not just on commercially available data, but also on data collected by your pocket distraction rectangle, which you carry everywhere, do everything with, and make privy to all your secrets. Worse, since apps are a closed platform, app makers can invoke IP law to criminalize anyone who reverse-engineers them to figure out how they're ripping you off. Removing the encryption from an app is a potential felony punishable by a five-year prison sentence and a $500k fine (an app is just a web-page skinned in enough IP to make it a crime to install a privacy blocker on it):
Large vendors love to sell you shit via their apps. With an app, a merchant can undetectably change its prices every few seconds, based on its estimation of your desperation. Uber pioneered this when they tweaked the app to raise the price of a taxi journey for customers whose batteries were almost dead. Today, everyone's getting in on the act. McDonald's has invested in a company called Plexure that pitches merchants on the use case of raising the cost of your normal breakfast burrito by a dollar on the day you get paid:
Surveillance pricing isn't just a matter of ripping off customers, it's also a way to rip off workers. Gig work platforms use surveillance pricing to titrate their wage offers based on data they buy from data brokers and scoop up with their apps. Veena Dubal calls this "algorithmic wage discrimination":
Take nurses: increasingly, American hospitals are firing their waged nurses and replacing them with gig nurses who are booked in via an app. There's plenty of ways that these apps abuse nurses, but the most ghastly is in how they price nurses' wages. These apps buy nurses' financial data from data-brokers so they can offer lower wages to nurses with lots of credit card debt, on the grounds that crushing debt makes nurses desperate enough to accept a lower wage:
This week, the excellent Lately podcast has an episode on price discrimination, in which cohost Vass Bednar valiantly tries to give economists their due by presenting the strongest possible case for charging different prices to different customers:
Bednar really tries, but β as she later agrees β this just isn't a very good argument. In fact, the only way charging different prices to different customers β or offering different wages to different workers β makes sense is if you're living in a socialist utopia.
After all, a core tenet of Marxism is "from each according to his ability, to each according to his needs." In a just society, people who need more get more, and people who have less, pay less:
Price discrimination, then, is a Bizarro-world flavor of cod-Marxism. Rather than having a democratically accountable state that sets wages and prices based on need and ability, price discrimination gives this authority to large firms with pricing power, no regulatory constraints, and unlimited access to surveillance data. You couldn't ask for a neater example of the maxim that "What matters isn't what technology does. What matters is who it does it for; and who it does it to."
Neoclassical economists say that all of this can be taken care of by the self-correcting nature of markets. Just give consumers and workers "perfect information" about all the offers being made for their labor or their business, and things will sort themselves out. In the idealized models of perfectly spherical cows of uniform density moving about on a frictionless surface, this does work out very well:
But while large companies can buy the most intimate information imaginable about your life and finances, IP law lets them capture the state and use it to shut down any attempts you make to discover how they operate. When an app called Para offered Doordash workers the ability to preview the total wage offered for a job before they accepted it, Doordash threatened them with eye-watering legal penalties, then threw dozens of full-time engineers at them, changing the app several times per day to shut out Para:
And when an Austrian hacker called Mario Zechner built a tool to scrape online grocery store prices β discovering clear evidence of price-fixing conspiracies in the process β he was attacked by the grocery cartel for violating their "IP rights":
Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.
Of course, there wouldn't be any surveillance pricing without surveillance. When it comes to consumer privacy, America is a no-man's land. The last time Congress passed a new consumer privacy law was in 1988, when they enacted the Video Privacy Protection Act, which bans video-store clerks from revealing which VHS cassettes you take home. Congress has not addressed a single consumer privacy threat since Die Hard was still playing in theaters.
Corporate bullies adore a regulatory vacuum. The sleazy data-broker industry that has festered and thrived in the absence of a modern federal consumer privacy law is absolutely shameless. For example, every time an app shows you an ad, your location is revealed to dozens of data-brokers who pretend to be bidding for the right to show you an ad. They store these location data-points and combine them with other data about you, which they sell to anyone with a credit card, including stalkers, corporate spies, foreign governments, and anyone hoping to reprice their offerings on the basis of your desperation:
Under Biden, the outgoing FTC did incredible work to fill this gap, using its authority under Section 5 of the Federal Trade Commission Act (which outlaws "unfair and deceptive" practices) to plug some of the worst gaps in consumer privacy law:
But now the burden of enforcing these rules falls to Trump's FTC, whose new chairman has vowed to end the former FTC's "war on business." What America desperately needs is a new privacy law, one that has a private right of action (so that individuals and activist groups can sue without waiting for a public enforcer to take up their causes) and no "pre-emption" (so that states can pass even stronger privacy laws):
How will we get that law? Through a coalition. After all, surveillance pricing is just one of the many horrors that Americans have to put up with thanks to America's privacy law gap. The "privacy first" theory goes like this: if you're worried about social media's impact on teens, or women, or old people, you should start by demanding a privacy law. If you're worried about deepfake porn, you should start by demanding a privacy law. If you're worried about algorithmic discrimination in hiring, lending, or housing, you should start by demanding a privacy law. If you're worried about surveillance pricing, you should start by demanding a privacy law. Privacy law won't entirely solve all these problems, but none of them would be nearly as bad if Congress would just get off its ass and catch up with the privacy threats of the 21st century. What's more, the coalition of everyone who's worried about all the harms that arise from commercial surveillance is so large and powerful that we can get Congress to act:
Economists, meanwhile, will line up to say that this is all unnecessary. After all, you "sold" your privacy when you clicked "I agree" or walked under a sign warning you that facial recognition was in use in this store. The market has figured out what you value privacy at, and it turns out, that value is nothing. Any kind of privacy law is just a paternalistic incursion on your "freedom to contract" and decide to sell your personal information. It is "market distorting."
In other words, your boss is right.
Check out my Kickstarter to pre-order copies of my next novel, Picks and Shovels!
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
On SEPTEMBER 24th, I'll be speaking IN PERSON at the BOSTON PUBLIC LIBRARY!
Time and again, I find myself thinking about radium suppositories: specifically, I get to thinking about the day that the consensus shifted from "radium suppositories are great" to "stop putting radioisotopes up your ass."
The thing is, people really liked radium-based quack remedies. They drank radium-infused water, smeared radium cream on their faces and bodies, and yes, rammed radium suppositories up their assholes:
The fact that this made whatever ailed you sicker didn't deter the radium true believers: if you're getting sicker, then you must need more radium.
When I think about the debate over radium, I imagine that the people who understood that radium was really bad for you must have run up against critics who told them they were being unreasonable. "You can't tell people to stop using radium. Tell them to use suppositories with less radium. Tell them to use them less frequently. But you can't just tell people, 'stop putting radium up your asshole.' They won't take you seriously."
About 20 years ago, I started pitching various institutions that reviewed consumer tech policy on the idea that they should reject any product that had DRM. After all, DRM didn't just restrict how you used a gadget today, it provided a facility for nonconsensually, irreversibly field-updating that gadget to add new restrictions tomorrow. How could a reviewer in good conscience say, "Go ahead and buy this device if you need this feature," if they knew that at any time in the future, the gadget's maker could take that feature away and leave the buyer with no recourse?
Here's the warning I (half-seriously) suggested magazines run alongside such products:
WARNING: THIS DEVICEβS FEATURES ARE SUBJECT TO REVOCATION WITHOUT NOTICE, ACCORDING TO TERMS SET OUT IN SECRET NEGOTIATIONS. YOUR INVESTMENT IS CONTINGENT ON THE GOODWILL OF THE WORLDβS MOST PARANOID, TECHNOPHOBIC ENTERTAINMENT EXECS. THIS DEVICE AND DEVICES LIKE IT ARE TYPICALLY USED TO CHARGE YOU FOR THINGS YOU USED TO GET FOR FREE β BE SURE TO FACTOR IN THE PRICE OF BUYING ALL YOUR MEDIA OVER AND OVER AGAIN. AT NO TIME IN HISTORY HAS ANY ENTERTAINMENT COMPANY GOTTEN A SWEET DEAL LIKE THIS FROM THE ELECTRONICS PEOPLE, BUT THIS TIME THEYβRE GETTING A TOTAL WALK. HERE, PUT THIS IN YOUR MOUTH, ITβLL MUFFLE YOUR WHIMPERS.
No one took me up on my offer. Over and over again, magazine editors, managers of nonprofit review outlets, and indie gadget reviewers told me that it was unrealistic to publish a roundup of, say, this year's portable music players with the recommendation, "Just don't buy any of these. None of them are fit for purpose."
In other words: No one wanted to publish, "The correct amount of radium to stuff up your asshole is zero."
But the correct amount of rectal radium for you to administer is "none" and the correct car for you to buy today is none of the cars:
This isn't the first time the correct automotive recommendation was "don't buy any of these cars." Back before seatbelts came standard in cars, the correct car was "don't buy a car." Sometimes, the correct answer is "none of the above." Even if that makes you sound unserious, the alternative is that you counsel people to put radium up their asses in a bid to seem "reasonable."
Today, DRM-infected products are routinely downgraded and bricked:
The reality is that we're living at the end of a catastrophic experiment in deregulation and its handmaidens, corruption and regulatory capture, and there are lots of "normal" things that we just need to stop doing. Not do less of them β just stop.
Like, the correct amount of collusion between realtors representing sellers and realtors representing buyers is zero:
We got that one right, but there's plenty more that we're still engaged in this pathetic, denialist bargaining over. What's the correct degree to which White House officials should cycle back into working at the industries they oversaw? Zero. How many times should such a person come back to work at the White House? Again: zero:
When the Biden admin dropped its executive order on ethics just hours after the inauguration, they trumpeted that it "went further than any other towards slowing the revolving door and limiting conflicts of interest while in office":
And it did. But it was also full of loopholes, because banning these conflicts of interest altogether was viewed as politically unserious, so the correct amount of radium up the administration's asshole was set at non-zero. The result? Well, it's about what you'd expect:
Congress hasn't updated consumer privacy law since 1988, when it took the bold step ofβ¦banning video-store clerks from telling the newspapers which VHS cassettes you took home. Since then, a coalition of commercial surveillance companies and the cops and spies who treat their data-lakes as massive, off-the-books anaerobic lagoons of warrantless surveillance data has prevented the passage of any new privacy protections for Americans.
The result? Stalkers, creeps, spies (both governmental and corporate), identity thieves, spearphishers and other villainous scum are running wild, endangering every American's financial, physical and political wellbeing. The correct amount of commercial data-brokerage for America is zero:
In other words, we should order every data-broker, every tech giant, every consumer electronics company and app vendor to delete all their surveillance data. All of it. The correct amount of radium in that asshole is β as with every other orifice zero:
From the perspective of the radium pitchmen, the most shocking thing about the past four years has been antitrust enforcers β like Lina Khan, Rohit Chopra, and Jonathan Kanter β who refused to bargain about how much radium we needed to stick up our butts. Fearless of being branded as "unserious" and "unreasonable," they seriously, reasonably said the right amount is none, actually.
None. Which is why they're so mad at Khan and co. Which is why they're so bent on getting Kamala Harris to fire Khan β despite the fact that this would burn precious political capital in the senate. Some people just love the feeling they get from a radium suppository β especially the suppository salesmen:
The paperback edition of The Lost Cause, my nationally bestselling, hopeful solarpunk novel is out this month!
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
I'm on a 20+ city book tour for my new novel PICKS AND SHOVELS. Catch me in AUSTIN on Mar 10. I'm also appearing at SXSW and at many events around town, for Creative Commons, Fediverse House, and EFF-Austin. More tour dates here.
Big Tech's astonishing scale is matched only by its farcical valuations β price-to-earnings ratios that consistently dwarf the capitalization of traditional hard-goods businesses. For example, Amazon's profit-to-earnings ratio is 37.65; Target's is only 13.34. That means that investors value every dollar Amazon brings in at three times the value they place on a dollar spent at Target.
The fact that Big Tech stocks trade at such a premium isn't merely of interest to tech investors, or even to the personal wealth managers who handle the assets of tech executives whose personal portfolios are full of their employers' stock options.
The high valuations of tech stocks don't just reflect an advantage over bricks and mortar firms β they are the advantage. If you're Target and you're hoping to hire someone who's just interviewed at Amazon, you have to beat Amazon's total compensation offer. But when Amazon makes that offer, they can pay some β maybe even most β of the offer in stock, rather than in cash.
This is a huge advantage! After all, to get dollars, both Amazon and Target have to convince you to spend money in their stores (or, in Amazon's case, with its cloud, or as a Prime sub, etc etc). Both Amazon and Target get their dollars from entities outside of the firm's four walls, and the dollars only come in when they convince someone else to do business with them.
But stock comes from inside the firm. Amazon makes new Amazon shares by typing zeroes into a spreadsheet. They don't have to convince you to buy anything in order to issue that new stock. That is their call, and their call alone.
Amazon can buy lots of things with stock β not just the labor of in-demand technical workers who command six-figure salaries. They can even buy whole companies using stock. So if Amazon and Target are bidding against one another for an anticompetitive acquisition of a key supplier or competitor, Amazon can beat Target's bid without having to spend the dollars its shareholders would like them to divert to dividends, stock buybacks, etc.
In other words, a company with a fantastic profit/earning ratio has its own money-printer that produces currency that can be used to buy labor and even acquire companies.
But why do investors value tech stocks so highly? In part, it's just circular reasoning: a company with a high stock price can beat its competitors because it has a high stock price, so I should buy its stock, which will drive up its stock price even further.
But there's more to this than self-fulfilling prophecy. The high price of tech stocks reflects the market's belief that these companies will continue to grow. If you think a company will be ten times bigger in two years, and it's only priced at three times as much as mature rivals that have stopped growing altogether, then that 300% stock premium is a bargain, because the company will have 1,000% growth in just a couple years. Tech companies have proven themselves, time and again, to be capable of posting incredible growth β think of how quickly Google went from a niche competitor to established search engines to the dominant player, with a 90% market share.
That kind of growth is enough to make anyone giddy, but it eventually runs up against the law of large numbers: doubling a small number is easy, doubling a large number is much, much harder. A search engine that's used by 90% of the world can't double its users β there just aren't enough people to sign up. They'd need to breed several billion new humans, raise them to maturity, and then convince them to be Google users.
And here's the thing: the flipside of the huge profits that can be reaped by investors who buy stocks at a premium in anticipation of growth is the certainty that you will be wiped out if you're still holding the stock when the growth halts. When Amazon stops growing, its PE ratio should fall to something like Target's, which means that its stock should decline by two thirds on that day.
Which is why Big Tech investors tend to be twitchy, hair-trigger types, easily stampeded into mass selloffs. That's what happened in 2022, when Facebook admitted to investors that it had grown more slowly than it had projected, and investors staged the largest stock selloff in history (to that point β hi, Nvidia!), wiping a quarter-trillion dollars off Meta's valuation in a day:
As Stein's Law has it: "anything that can't go on forever eventually stops." Growth stocks have to stop growing, eventually, and when they do, you'd better beat everyone else to the fire exit, or you're going to get crushed in the stampede.
Which is why tech companies are so obsessed with both actual growth, and stories about growth. Facebook spent tens of billions on bribes to telcos around the world, demanding that they charge extra to access non-Facebook websites and apps, in a bid to sign up "the next billion users":
That wasn't just about some ideological commitment to growth β it was about the real, material advantages that a growing company has, namely, that it can substitute the stock it creates for free by typing zeroes into a spreadsheet for money that it can only get by convincing you to give your money to it.
"Facebook Zero" (as this bribery program was called) was about actual growth: finding people who weren't Facebook users and turning them into Facebook users, preferably forever (thanks to Facebook's suite of lock-in tactics that make it a digital roach motel that users check into but don't check out of):
But plenty of the things that Big Tech gets up to are about the narrative of growth. That's why Big Tech has pumped every tech bubble of this stupid decade: metaverse, cryptocurrency, AI. These technologies have each been at the forefront of Big Tech marketing and investor communications, but not solely because they represented a market opportunity. Rather, they represented a more-or-less plausible explanation for how these companies that were on the wrong side of the law of large numbers could continue to double in size, without breeding billions of new customers to sign up for their services.
The tell β as always β comes in the way that these companies refute their critics. When critics point out that Facebook spent $1.2 billion on a metaverse product that only has 32 users:
Or that hardly anyone uses AI, and what uses it does have are often low-value:
https://www.wheresyoured.at/oai-business/
The "narrative entrepreneurs" behind the claims of infinite growth from these technologies all have the same response: "That's what they said about the web, and yet it grew really fast! People who lacked the vision to understand the web's potential missed out. Buy [crypto|metaverse|AI] or have fun being poor!"
It's true β there were a lot of people who were blithely dismissive of the web, and they were wrong. But the fact that the web's skeptics were wrong doesn't mean that skepticism itself is foolish. People were also skeptical of Qibi, Beanie Babies, and the Segway β all of which were predicted to continue to increase in value forever and become permanently installed as significant facts in the economy. The fact that lots of people think something is stupid is not a reliable indicator that it is actually great.
So it's not just that capitalism adopts "the ideology of a tumor" in insisting that infinite growth is possible. The value in corporate claims to eternal growth is not aesthetic, it is material. If the market believes a company will grow, then that company gets to print its own money, which lets it outcompete mature rivals, which lets it grow some more.
But! When the company runs out of growth potential, the process runs in reverse. Not only do executives β whose portfolios are stuffed full of their own company's shares β stand to lose most of their net worth overnight, but once a company's stock starts to decline, it can expect to see an exodus of the key personnel who are compensated in now-worthless stock. That means that once a company hits a bad bump in the road that sets it off course, it needs to worry about losing all the skilled employees who can get it back on the road.
So growth is important, not for its own sake, but for how it affects the cost basis of companies, and thus determines their competitive outlook. But not all growth is created equal.
Remember when Facebook pissed away billions in a bid to capture "the next billion users"? Those users β people from poor countries in the global south β were not as valuable to Facebook as its US customers. The news that sparked a $250 billion, one-day selloff of Facebook shares wasn't merely about anemic growth β it was specifically about anemic growth in the USA.
American customers are worth more than other users to Big Tech β that's true even of users from other populous countries, and of users from other wealthy countries. Norway is rich as hell, but each Norwegian Facebook user is worth pennies on the kroner compared to American users. And there are brazilians of people in South America, but they're worth even less per capita than Norwegians are. Even the whole EU, with its 500m+ relatively wealthy consumers, is only worth a fraction of the US market.
Why is the American market so prized by Big Tech? Because it the only country in the world at the center of a Venn diagram with three overlapping circles. America is the only country in the world that is:
a) populous;
b) wealthy; and
c) totally lacking in legal privacy protections.
The US Congress last updated American consumer privacy law in 1988, when the Video Privacy Protection Act was passed to protect Americans from the high-tech threat ofβ¦video store clerks leaking your rental history to the newspapers. Despite the bewildering, obvious, serious privacy risks that have emerged since Die Hard was in theaters, Congress has done nothing to extend Americans' consumer privacy rights.
There are other rich countries where privacy law sucks, but they are small countries with few people. There are extremely populous poor countries with shitty privacy laws, but they're poor. Tech has to steal the private data of dozens of those people to make as much money as they can get from selling the data of just one American. And there are other rich, populous countries β like Germany, say β but those countries actually defend the privacy of the people who live there, and so the revenue tech gets from each of those users is even lower than the RPU for the undefended poor people of the global south.
America is exceptional in that it represents the one place where there are lots of wealthy people who are totally defenseless. We're an all-you-can-eat buffet for the privacy-annihilating voyeurs of Silicon Valley.
These are the two dirty secrets of Big Tech's economics. These companies are reliant on the fragile narrative of infinite growth, and that narrative isn't merely about global growth, but it is particularly and especially about growth in the USA.
Tech's power comes from an implausible story of discovering an endless stream of Americans to sign up and screw over. That story is extremely load-bearing β so much so that by the instant at which the first crack appears, collapse is only moments away. And boy, are there cracks:
https://www.wheresyoured.at/power-cut/
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