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Emergence, Rise and Fall of Surveillance Capitalism, Part 1: Emergence

"We are still in the early days of an information civilization. The third decade is our opportunity to match the ingenuity and determination of our 20th-century forebears by building the foundations for a democratic digital century."1 (Shoshana Zuboff)

One of the consequences of the Jan 6th events is a renewed attention towards Surveillance Capitalism as a key doctrine undermining democracy.2 This 2-part series of articles discusses the emergence, rise, and fall of Surveillance Capitalism under the premise that the better we understand the danger at the door, the better we are able to confront it.

Born out of the opportunity to monetize data

"No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks." Article 12 UDHR3

Privacy is a human right! We communicate, trade, negotiate, love and hate over the Internet, but we have become used to and accept that someone somewhere is observing everything we do. How did this state of affair come about? We need to look at its history to get answers.

In the beginning, privacy was not even an issue. The first digital networks were small, privacy was simply expected and respected, and those who did not observe the rules became subjected to peer pressure. In 1989 Tim Berners-Lee's Hypertext Transfer Protocol (HTTP) enabled the creation of the World Wide Web, but things were still off for a slow start due to a lack of mass appeal.4 This changed in 1993 with the introduction of the mosaic browser that combined different protocols and increased the practical uses of the www to such an extent that it became an attractive proposition for commercial networks to offer services to consumers. Computers moved in status from being a nerd's luxury item to a must-have necessity, making the Internet the next "big thing." The world stood at the beginning of the digital age. Software was changing everything, and the steel and iron atoms of the industrial age began to be replaced by bits. Spurred on by the 1997 US Taxpayer Relief Act, which lowered the capital gains tax, venture capital investors, not wanting to lose out on new opportunities, found their way into Silicon Valley. An Entrepreneur would come up with an idea, and as there were no experiences and precedence to go by, its potential had to be guestimated. With a little bit of luck and a convincing pitch, investments enabled entrepreneurs to create the infrastructure they needed. The plan was to eventually go public with an initial public offering (IPO) to satisfy the initial investors and get the cash to grow. Investments in technologies were further encouraged by investment banks, that stood to profit most as even the most rudimentary dotcom companies achieved massive valuations that stood in stark contrast to their real potential earnings. In 2000 the majority of the supposedly golden cows still only ate green bucks but failed to give any milk, the so-called dotcom bubble burst taking with it the majority of dotcom startups.

Trendsetter Google

The Google startup survived and grew in the early 2000s, its search engine based on a dual revenue model of selling both keyword advertising and the resulting clicks to the highest bidder. Google was different from other search engines. It added meaning to numbers by basing its search result not just on how many times a page had been clicked on before, but its algorithm also took into account how the page related to others, giving the search result more relevance. Despite running into trouble when another company sued it over alleged infringements of pay-per-click and bidding patents, Google was growing. Under its CEO Eric Schmidt, who joined in 2001, Google systematically developed its capacity to make predictions about its users. True to Google's concept to add meaning to search, user data could be fed to algorithms to predict behavior, minimizing uncertainty and commercial risk. The data used was a free waste byproduct of the search that was previously stored unused on the Google servers. The more data, the better the predictions, so consequently, in 2003, Google began to acquire new data sources such as Blogger websites to increase its abilities to collect data. It never looked back. Many companies followed Google and offered their digital gadgets free of charge in exchange for personal data that could be monetized: Surveillance capitalism was born.5 The only small problem was that it was immoral and infringed on basic human rights, such as privacy.

About Unicorns

The dotcom bubble crash of the early 2000s put an end to many dotcom dreams. Both dotcoms and investors had to change the way they did business. The dotcoms discovered surveillance of its users' data as a reliable income stream, and venture capitalists learned that they could use the predictions to minimize their risk.

The hunt for the elusive "unicorns"6 was on. Unicorns are tech companies that achieved a market value of one billion USD or more by disrupting, taking over, and dominating existing human economic and social behaviors, like taking a taxi, finding a plumber, or just talking to neighbors and friends, through software. The new "business model" is to establish the unicorn as the sole communication channel between people and those who provided real work or service for their customers. Hardly any unicorn has any interest in the craft required to provide a product or service; its only interest is to control the exchange between provider and customers and so enabling a multitude of revenue making channels.7

Marauding Armies.

"Blitzscaling," seeking a lightning-fast path to building massively valuable companies, became the method for the creation of a Unicorn. The key factor for success is to control of the targeted marked segment by introducing and establishing new disruptive software as the "new way to do things", and doing so quick enough to deter competition, prevent regulators and existing businesses to react, and reach a market share that represented a de facto monopoly. The aim is to drive as many users as possible to the new ways in the shortest possible time. Blitzscaling is the cyber economy equivalent of a marauding army's attack on an unsuspecting country. All means to reach the goal are pursued and justified in the name of "innovation." If things got ugly and public, there was always the option to say sorry later after a new and secure digital beachhead has been created.

Blitzscaling unicorns were supported by technical and infrastructure advances that allowed entrepreneurs to create and deploy their software as apps requiring only a minimum of infrastructure. The smartphone became distribution channels for the product in the form of apps, social media became the medium for marketing, and cloud computing enabled startups to scale up with growing demand.

Feeding the Beast

Massive up-front investments where required to push the "innovation" into all aspects of a person's live and into their minds, with the Internet of Things (IoT) enlisting homes, cars, and electronic devices in that assault. The biggest part of the needed investment is to disrupt existing channels by undercutting prices for as long as required, to displace or incorporate existing players. Looking and acting big is the key to become big. Almost like Unicorns that are not real, the digital unicorn task is to make others believe that they are real and have unlimited growth potential. Unicorns begin life with massive debt owed to investors through increasingly bigger funding rounds that were justified with promoted/perceived increases in the dotcom's valuation.8 The promised day will come when the IPO rewards all handsomely. As a result, IPOs routinely overvalue the companies. While investment bankers' cash out with huge profits, the financial breadcrumbs together with debt and risk are frequently left to the personal investors and pension funds.9

Risk Free Investment

Dotcoms and investment funds seem to be a match made in heaven. Dotcoms need massive amounts of investment to feed their unicorns, but in return, they offer what investors want most: risk-free investment. The age-old problem of doing business is that the customer inconveniently has a certain amount of free will and choice, causing uncertainties and the risk of failure. Digital technologies can be used to predict and influence customers' behavior. The more and better the data, the lower the risks. The dotcoms had tasted the forbidden fruit of using private data that was not theirs. Why just observe existing behavior if there is the ability to manipulate behavior and to create the desired trends and realities? (How this is done we discuss later). It is no longer necessary to expose venture capitals to the risks associated with customers' fickle minds when customers can be created around a product.

The goal is to eliminate the human element completely when it comes to investments. The entrepreneur with his innovation is an uncertain decision-maker and is replaced by an algorithm that decides where investments are made. Surveillance capitalism algorithms analyze data to identify market segments to be exploited, create the software to take it over, manage the processes that manipulate people, and disrupt the existing channels until the predicted result is achieved. The real innovation is that the human factor has become predictable and eliminated as a hindrance to success and a risk factor: human needs and public good stop playing any role in investment. Subsequent "Innovation" only takes place to perfect the investment strategies and their execution.10

The goal is to create a golden age of surveillance capitalist-based investment banking, in which machines eliminated the human factor and citizens become mindless customers that create wealth for an ever richer elite. Well, it has not yet quite turned out like that. Following the sound advice to "know thy enemy," we will look at surveillance capitalist values and behavior in the next chapter. We will then discuss how to counter arbitrary interference with our privacy, family, home and correspondence, honor and reputation, and secure the protection of the law against such interference or attacks.

Surveillance Capitalism Values

The dotcom bubble put the Internet at a crossroads. Would users focus on searching the Internet for data, or would the Internet apps search user data for profit? In other words, would it be a space for human development governed by human rights, or would it be a space dominated by data mining and the accumulation of wealth by the few?

Surveillance capitalism still is a risky business. By eliminating some uncertainties, it created new ones. What would happen if Internet users fully understood internet search costs in terms of exploitative data use? Would they demand that their governments outlawed certain digital data use practices? Should morality stay in the way, or be pushed aside, in the cause of a good return. Should measures be taken to justify the unjustifiable in order to mitigate socio-political risks from unhappy citizens?

Separating what belongs together.

The way surveillance capitalist separates a person from one's data reveals that separating what belongs together is a basic principle and instrument for its disruptions disguised as innovations. Surveillance capitalists insist that they have rightful ownership of the personal data they collect. They use several arguments to justify this daylight robbery. One argument is they created and own the platforms. In terms of the data generated, what goes on there and through them is naturally theirs, and they can do with it what they want. Another argument that users willingly agreed to terms of use set out by the application, exchanging data privacy for application use. However, many (most?) users are not aware of what they have agreed to, or they have no choice but to agree because the platform has attained such a dominance that there is no alternative.

The principle that surveillance capitalism operates on is based on separating what belongs together in terms of one's basic human rights. The following explores some examples from the surveillance capitalist's book of separation tricks:

Separating price from product

Surveillance capitalism's digital practices extract meaning from data to sustain completely new business models. Traditionally trade is an exchange of goods against other goods or for monetary payment. There might be free samples as an inducement to try products or services, but that does not last. Surveillance capitalism permanently offers free digital products and services, such as games and social media platforms. It can do so for two reasons.

Digital goods and services basically have up-front costs of production, mainly involving their coding. Unlike a product like a watch or a shoe, where each unit has a distinct production cost, once created, the marginal cost of an online platform allows scaling, as use goes from the few to the millions, at a minimal cost. There may be little economy of scale, but there is also little diseconomy of scale.

Surveillance capitalism had created a new commodity-based currency: personal data and established digital business practices that make it readily exchangeable and transferable into monetized wealth. It created a new way of doing business:

  • Free digital platforms create personal data
  • Personal data is used to make predictions about individuals
  • The predictions are sold to companies to sell products
  • Consumers buy products
  • Profits pay for digital platform
  • Re-start the cycle, again and again11

As the digital marketplace grew, surveillance capitalism killed competition by offering their good for free. Customers became users, conditioned to get their goods for free on the Internet. Few dared to ask what the price was because as the saying goes: "Don't look a gift horse in the mouth".12 Surveillance capitalism, with their bribe of free goods managed to create image of trustworthiness. They had created a Trojan horse that we consumers willingly, gratefully, happily, and without suspicion, pulled into our homes and lives, only to wake up as subjects of surveillance capitalism. Today we need to update another old saying to: "Beware of digital gadgets bearing gifts!"13

Separate the Internet from law and governance.

Surveillance capitalism denies any jurisdiction over its digital business practices. In a space where there is no law, nobody can be held accountable for breaking it. Where there are no human rights protections, nobody can violate them. One must have the audacity to argue that the Internet is a governance free zone. This is just what Google's Eric Schmidt and Jarred Cohen (head of the Google Ideas think tank) did when they proclaimed in their 2013 book that the Internet is "the world's largest ungoverned space."14 Nature abhors a vacuum, and where there is no governance, the space will be filled by those whose who can assert power. Knowledge is power, and who is more powerful than those in possession of knowledge about everybody and everything. It comes with the territory that those who have the knowledge also think that they know what is best for everyone. Trust big cyber-brother; all it needs is to give him access. As Schmidt and Cohen state: "the best thing anyone can do to improve the quality of life around the world is to drive connectivity and technological opportunity," apparently in the absence of governance.

Separate what you say from what you do.

There is no contradiction when Schmidt and Cohen write in the next sentence; "When given the access, the people will do the rest." Another trick from the surveillance capitalist's playbook is to say exactly the opposite of what they really mean or do. When they talk about "the people," they mean big cyber brother, when they give themselves the motto "Don't be evil," they indicate their intention to be evil, and changing to "Do the right thing," tells us that they are not planning to do so. Google chief executive Sundar Pichai wrote in the NY Times that "privacy cannot be a luxury good."15 "Five months later, Google contractors were found offering $5 gift cards to homeless people of color in an Atlanta park in return for a facial scan."16 This reverse meaning speech of surveillance capitalism makes it easy to understand what is going on. If they say they care, you know, it may contribute to hard times for us all. If they talk about freedom, measures to increase digital subservience and slavery are implemented. If they talk about community, be prepared to lose friends. Understanding surveillance capitalism's reverse meaning patterns make every speech of Zuckerberg or Page quite an eyeopener.

Separate Rights from Responsibilities

If you want to take the evil turn on the road, if you want to deny freedom, if you want to stifle innovation, and violate human rights, send someone people might trust, preferable a wise white-bearded elder, and let him use reverse meaning speech to protest loudly against others that are doing what in fact you are doing. Present yourself as the defender of rights whilst your business is violating them.

Vint Cerf, widely acclaimed as one of the "fathers of the Internet" and Google's "Chief Internet Evangelist," demonstrated his mastery of the distraction trick in an NY Times article from 2014.17 Aware of the choice the Internet had to make, he sends everyone in the wrong direction by raising the alarm about others:

"The Internet stands at a crossroads. Built from the bottom up, powered by the people, it has become a powerful economic engine and a positive social force. But its success has generated a worrying backlash. Around the world, repressive regimes are putting in place or proposing measures that restrict free expression and affect fundamental rights."

He later exclaims: "Such proposals raise the prospect of policies that enable government controls but greatly diminish the "permissionless innovation" that underlies extraordinary Internet-based economic growth, to say nothing of trampling human rights." For Cerf, innovation justifies everything and gives it the status of a higher all overriding value, a golden calf that the people of Cyberspace worship. As a justification for the legal immunity of innovation he cites economic growth and perversely the defense of human rights.18 It is like letting a murderer go free because his freedom to kill justifies his deed.

Facebook and Amazon have different digital business models, but they are very similar when taking responsibility for content. The former refuses to prevent harm to their users from fake news and hate speech, while the latter refuses to protect its customers from dangerous and counterfeit goods. They both claim to be just providing a platform for the activities of others.

Separate yourself from Regulations and Product Responsibility

As the Cerf example above shows, one of the main concerns of surveillance capitalism is to avoid regulations that would restrict their activities at all costs.

If the platforms and apps are the means of production, the data they generate and host are the product. Surveillance capitalists are very keen on denying responsibility for content their platforms host. They have no interest whatsoever in content and are interested only in the data that is derived from it. Data is portrayed as neutral, in the sense that enabling someone to do something with the content does not establish any responsibility for the platform.

But data is never neutral; it always has consequences in one way or another. Platforms and apps are enablers, in the same way, that a gun shop enables the purchase of a gun. Surveillance capitalists are gun shop owners who insist that their freedom and their customers are paramount, and any restrictions constitute an infringement of their fundamental digital data processing rights. Like the NRA, they have an army of lobbyists active in the seats of political power to make their point, and as we will see below, they even managed to make governments the defenders of their exploitation.

Separating action from consequence, rights from responsibilities, and data from content has one chilling consequence. Surveillance capitalism simply does not care about the fate of the individual or group. Humanity is reduced to data sources that are to be managed according to my corporate needs without any obligation or reason to care. It is a very sobering thought that today we live in a world where the main providers of the technology on which we are increasingly dependent simply do not care about us.

Governments have the powers to regulate, so the corporate goal has been to stop them from doing so or make them co-conspirators that valued their association with surveillance capitalism as higher than protecting their own citizens. A big moment along the path to this goal came with 9/11. Intelligence agencies and commerce have one thing in common: they hate uncertainty. While people asked how it could happen and why nobody noticed anything, the surveillance capitalist realized the moment. They could bribe governments into submission through lobbyist bearing gifts or use economic arguments. Still, now there was a way to make governments addicted to the stuff surveillance capitalism sold: data and its analysis. It had what security agencies wanted, a way to observe and know all, and security agencies came knocking on the door. Surveillance capitalism was only too happy to oblige the new customer with data. A whole new market opened up, and surveillance capitalism was quick to exploit it (see Cambridge Analytica), not just for profit but also the interrelationship and dependencies it created. Governments quickly realized that regulating surveillance capitalism would harm them too, and so ensured that, with some harmful exceptions that have more the character of a band-aid than an effective law, the Internet is basically a law and governance free zone.

We can observe more or less effective Internet governance mechanisms, such as ICANN, only in areas that strengthen the technical stability of the network as the means of production itself, but nearly no governance that regulates its digital business practices and products.

Separating humans and humanity from knowledge

One way surveillance capitalism is keeping control is by controlling the labor market for computer scientists. It is able to do so by being able to pay the level of salaries that enables a graduate to pay of the student loan that she or he had occurred in educational institutions that are often heavily influenced by surveillance capitalists. ''In 2016, 57 percent of American computer science Ph.D. graduates took jobs in the industry, while only 11 percent became tenure-track faculty members. It is not just an American problem. In Britain, university administrators contemplate a "missing generation" of data scientists. A Canadian scientist laments, "the power, the expertise, the data are all concentrated in the hands of a few companies."19

Surveillance capitalisms need to control knowledge is also reflected in its increasing efforts to stop employees to move to other firms or to form start-ups. Knowledge once obtained has become exclusive property, sharing, and therefore enabling innovation is prohibited.20

We talked above the simple truth that knowledge is power. Surveillance capitalism has created a digital one-way system for knowledge that ensures that it knows, but we do not. They suck in all available data but never return it to the user, resulting in an ever-increasing imbalance between itself and the rest of the world, increasing the power of its corporation's day by day. Data can only be accessed and released in return for money or political protection.

Humanity reduced to a Data Source.

The main principle and way to operate surveillance capitalism are based on separating what belongs together. The person from its data, rights from responsibility, product from price and product responsibility, humans, and humanity from knowledge.

Through these separations' surveillance, capitalism avoids responsibility while at the same time ensuring maximum stability, access, and freedom not to care.

Separating action from consequence, rights from responsibilities, and data from content has one chilling consequence. Surveillance capitalism simply does not care about the fate of an individual or group. Humanity is reduced to a data source that to be managed independently of my needs or rights and without any obligation or reason to care. It is a very sobering thought that today we live in a world where the leading purveyors of the technology we increasingly depend on simply don't care about us.

Part 2, published here discusses the rise and fall of Surveillance Capitalism.

The author would like to give a big THANKS to Prof. Sam Lanfranco. Without his support and input these articles would not be possible.

  1. Shoshana Zuboff's New York Times Opinion article, 01.29.2021, "The Coup We Are Not Talking About", https://www.nytimes.com/2021/01/29/opinion/sunday/facebook-surveillance-society-technology.html 
  2. For example: Apple CEO Tim Cook's recent speech at Brussels' International Data Privacy Day. https://www.inc.com/justin-bariso/tim-cook-may-have-just-ended-facebook.html 
  3. https://www.un.org/en/universal-declaration-human-rights/index.html 
  4. Geoff Huston n the ISP Column "NANOG 68 — A Brief Potted History of the IANA", citing Scott Bradner:" Of course at the time the Internet was a well-kept secret, and from a wider perspective at the time no one had even the slightest interest in this project. Even when the Internet started to gain some attention in the academic and research environment in the late '80s and early '90s, there was much skepticism from the mainstream IT and communications enterprise sectors. So much so that at one conference at the time, the Internet folk in attendance used the bumblebee as the Internet's icon because in theory bumblebees could not fly -as with the common perception of the Internet at the time!", https://www.potaroo.net/ispcol/2016-10/iana.pdf 
  5. For definitions and further Information see: https://en.wikipedia.org/wiki/Surveillance_capitalism 
  6. The term was phrased in 2013 by Aileen Lee, the founder of Cowboy ventures 
  7. Surveillance capitalist corporations fall into two categories. They are either product based like Google, Search Engine, Predictions and Advertising besides many others in the Alphabet Soup, Facebook with its social platform, data harvesting, and advertising used to change human behavior. Other companies like Amazon and Uber are more process-based, meaning they are digitalizing an existing commercial transaction such as buying or ordering a cap. The distinction between product or process based is often blurred as they become mixed and companies like Amazon introduce products such as Alexa and the failed Fire phone to enable them to access more and more precise user data, and companies like Facebook are trying to enter process-based products like online currency. 
  8. See chart: Losing their way, The Economist 04.20.19, Briefing, Unicorns going to the market 
  9. See chart: Horses for causes, The Economist 04.20.19, Briefing, Unicorns going to the market 
  10. Governments and politicians can observe how companies manage data to create their customers, so why not use the same technologies to create desired political allegiance? They might argue that digital surveillance and manipulation are necessary for security, stability, and economic growth. Those that did not agree could be viewed as deviants (aliens?) not worthy of full citizenship, as in the case of the Chinese social credit system, with the argument that it is all for the best and the common good. 
  11. In the context of government, you can add information in the form of fake news into the equation.
    • Disseminate fake news through a free platform.
    • Fake news influences personal data and the predictions about individuals in the required direction.
    • Government controls public opinion and policy-making processes.
    • Government stays in power and pays (from taxes!)
    • Profits pay for digital platform.
    • Start again. 
  12. See: https://en.wiktionary.org/wiki/don%27t_look_a_gift_horse_in_the_mouth 
  13. "Timeo Danaos et dona ferentes" is a Latin phrase from Aeneid (II, 49), written by Virgil between 29 and 19 BC. It has been paraphrased in English as the proverb "Beware of Greeks bearing gifts". See: https://en.wikipedia.org/wiki/Timeo_Danaos_et_dona_ferentes 
  14. The New Digital Age: Reshaping the Future of People, Nations, and Business by Eric Schmidt and Jared Cohen, Knopf, 2013 
  15. See: https://www.nytimes.com/2019/05/07/opinion/google-sundar-pichai-privacy.html 
  16. See CNBC, "Google contractor reportedly tricked homeless people into face scans. Published Thu, Oct 3 2019, https://www.cnbc.com/2019/10/03/google-contractor-reportedly-tricked-homeless-people-into-face-scans.html 
  17. Vinton G. Cerf, "Keep the Internet Open", The New York Times, May 24, 2012. 
  18. Much later, Cerf distanced himself from permissionless innovation, saying "All of this openness that let to what many of us called permissionless innovation, all of which was very satisfying for me, watching this grow in a very organic way. There is only one very small detail that had not penetrated my mind in the early stages: What happens when the general public gets access?" (the Internet and the data). IGF USA, 2018, https://www.youtube.com/watch?v=J4HxqfJK13I Note his article defending permissionless innovation is from 2014, long after the Internet was open to the public. 
  19. Shoshana Zuboff, NYT, Jan 24, 2020, Opinion. "You Are Now Remotely Controlled Surveillance capitalists control the science and the scientists, the secrets and the truth." https://www.nytimes.com/2020/01/24/opinion/sunday/surveillance-capitalism.html See also: Brookings Now, 11 Facts about the Millennial Generation, Fred Dews Monday, June 2, 2014, https://www.brookings.edu/blog/brookings-now/2014/06/02/11-facts-about-the-millennial-generation/ 
  20. See article: "Stop, Thief", by Charles Duhigg, The New Yorker, October 22, 2018 

By Klaus Stoll, Digital Citizen – Klaus has over 30 years' practical experience in Internet governance and implementing ICTs for development and capacity building globally. He is a regular organizer and speaker at events, advisor to private, governmental and civil society organizations, lecturer, blogger and author of publications centering empowered digital citizenship, digital dignity and integrity. Visit Page

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Comments

Surveillance Capitalism vs Privacy By John Poole  –  Feb 02, 2021 1:25 pm PDT

Thank you for this timely article and your analysis. The U.S. has fallen so far behind Europe and much of the world, on privacy and data protection, no doubt due to the dominance of American tech giants such as Google, Facebook, and others, whose core business models are based on surveillance capitalism.

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