David Cameron, political genius (not)

The reason we’re having a Referendum about EU membership has nothing much to do with EU membership. It’s because Cameron needed some way of getting the Europhobes in his party off his back. So he threw them a Referendum, much as one would throw a leg of lamb to a pack of baying wolves. Some thought it was a stroke of tactical genius at the time. In fact it was a colossal strategic error, because — whatever happens on June 23 — the Tory party has been rent asunder. And it’s hard to imagine a vote that will change that. Even a large Remain margin won’t appease the Euronutters. A narrow Remain vote will simply make them salivate for a return match. And of course a Leave vote will mean that both Cameron and the country are screwed. Some genius, eh?

Privacy is sooo… yesterday: Google’s Chief Economist

“One easy way to forecast the future is to predict that what rich people have now, middle class people will have in five years, and poor people will have in ten years. It worked for radio, TV, dishwashers, mobile phones, flat screen TV, and many other pieces of technology.

What do rich people have now? Chauffeurs? In a few more years, we’ll all have access to
driverless cars. Maids? We will soon be able to get housecleaning robots. Personal assistants? That’s Google Now. This area will be an intensely competitive environment: Apple already has Siri and Microsoft is hard at work at developing their own digital assistant. And don’t forget IBM’s Watson.

Of course there will be challenges. But these digital assistants will be so useful that everyone will want one, and the scare stories you read today about privacy concerns will just seem quaint and old­fashioned.”

Hal Varian, “Beyond Big Data”, NABE Annual Meeting, September 10, 2013, San Francisco.

Why the arrival, not the journey, matters

I have an article on the evolution of the Internet in a new journal — the Journal of Cyber Policy. I was asked to give a talk at the launch last week in Chatham House, home of the Royal Institute of International Affairs in London. Here’s my text.


One of my favourite autobiographies is that of Leonard Woolf, the saintly husband of Virginia. It’s a multi-volume work, but my favourite one is the volume covering the years 1939-1969. It’s entitled The Journey, Not the Arrival, Matters and it came to mind when I was pondering this talk, because in the case of the evolution of digital technology I think it’s the other way round: the arrival, not the journey, matters. And I’d like to explain why.

In 1999, Andy Grove, then the Chief Executive of the chip manufacturer Intel, said something interesting. “In five years’s time”, he declared, “companies that aren’t Internet companies won’t be companies at all”. He was speaking at the peak of the first Internet boom, when irrational exuberance ruled the world, but even so many people though he was nuts. Was the CEO of Intel really saying that all companies needed to be selling information goods by 2004?

In fact, Grove was being characteristically perceptive. What he understood — way back in 1999 — was that the Internet was on its way to becoming a General Purpose Technology or GPT, like mains electricity, and that every organisation in the world would have to adapt to that reality. So on the big story, Andy was right; he was just a bit optimistic on the timing front.

My article in the first issue of the new journal is entitled “The evolution of the Internet”, but the real meat is in the subtitle: “From military experiment to General Purpose Technology”. I say that because as the network has been evolving we have focussed too much on one aspect of its development and impact — namely the production, consumption and exchange of information goods — and too little on the direction of travel, which — as my subtitle implies — is towards becoming a GPT.

Arthur C Clarke is famous for saying that any sufficiently advanced technology is indistinguishable from magic, and for most of its users the Internet already meets that requirement. As Eric Schmidt, Google’s Chairman, once observed, it is the first technology that humans have built that humans do not understand. But while a General Purpose Technology may or may not be incomprehensible to humans, it has impacts which are visible to everyone

This is because GPTs have an impact on the world way beyond the domain in which they first appeared. They are technologies that can affect an entire economy and “have the potential to drastically alter societies through their impact on pre-existing economic and social structures”. Think steam engine, electricity, electronics, the automobile. GPTs have “the potential to reshape the economy and boost productivity across all sectors and industries, like electricity or the automobile”. And these transformations are about far more than simple technical innovation, because they often require the wholesale remaking of infrastructure, business models, and cultural norms. GPTs are the motive forces behind Joseph Schumpeter’s waves of ‘creative destruction’ and in that sense leave almost nothing untouched.

But if, as now seems obvious, the Internet is a GPT, then our societies are only at the beginning of a journey of adaptation, not the end. And this may surprise some people because the Internet is actually rather old technology. How you compute its age depends really on where you define its origins. But if you think — as I do — that it starts with Paul Baran’s concept of a packet-switched mesh in the early 1960s, then it’s now in its mid-fifties.

So you’d have thought that our society would have figured out the significance of the network by now. Sadly, not. And that’s not because we’re short of information and data about it. On the contrary, we are awash with the stuff. Our problem is that we don’t, as a culture, seem to understand it. We remain in that blissful state that Manuel Castells calls “informed Bewilderment”. So a powerful force is loose in our societies and we don’t really understand it. Why is that?

One good reason is that digital technology is incomprehensible to ordinary human beings. In that sense, it’s very different from some GPTs of the past. You didn’t have to be a rocket scientist to understand steam power, for example. You might not know much about Boyle’s Law, but you could readily appreciate that steam could powerfully augment animal muscle power and dramatically speed up travel. But most people have very little idea of what digital technology can — and potentially could — do. And this is getting worse, not better, as encryption, machine-learning and other arcane technologies become commonplace.

Another reason for our bewilderment is that digital technology has some distinctive properties — the posh term for them is ‘affordances’ — that make it very different from the GPTs of the past. Among these affordances are:

  • Zero (or near-zero) marginal costs;
  • Very powerful network effects;
  • The dominance of Power Law statistical distributions (which tend towards winner-takes-all outcomes);
  • Technological lock-in (where a proprietary technology becomes the de-facto technical standard for an entire industry);
  • Intrinsic facilitation of exceedingly fine-grained surveillance; low entry thresholds (which facilitates what some scholars call “permissionless innovation”);
  • A development process characterised by ‘combinatorial innovation’ which can lead to sudden and unexpected new capabilities, and an acceleration in the pace of change and development;
  • And the fact that the ‘material’ that is processed by the technology is information — which is, among other things, the lifeblood of social and cultural life, not to mention of democracy itself.

These affordances make digital technology very different from the GPTs of the past. They’re what led me once, when seeking a pithy summary of the Internet for a lay audience, to describe it as “a global machine for springing surprises”. Many of these surprises have been relatively pleasant — for example the World Wide Web; VoIP (internet telephony); powerful search engines; Wikipedia; social networking services; digital maps. Others have been controversial — for example the file-sharing technologies that overwhelmed the music industry; or the belated discovery (courtesy of Edward Snowden) of the pervasive surveillance enabled by the technology and exploited by governments and corporations. And some surprises — particularly the capabilities for cybercrime, espionage, IP and identity theft, malware, blackmail, harassment, and information warfare — have been worrying and, in some cases, terrifying.

But maybe another reason why we are taken aback by the rise of the Internet is because we have been so dazzled by the technology that we have been infected by the technological determinism that is the prevailing ideology in the reality distortion field known as Silicon Valley. The folks there really do believe that technology drives history, which is why their totemic figures like Marc Andreessen — the guy who co-authored Mosaic, the first proper web browser, and now heads a leading venture capital firm — can utter infantile mantras like “software is eating the world” and not get laughed off the stage.

But technology is only one of the forces that drives history because it doesn’t exist — or come into being — in a vacuum. It exists in a social, cultural, political, economic and ideological context, and it is the resultant of these multifarious forces that determines the direction of travel. So in trying to understand the evolution of the Internet, we need to take these other forces into account.

As far as the Internet is concerned, for example, the things to remember are that, first of all, it was a child of the Cold War; that in its early manifestations it was influenced by a social ethos which had distinct counter-cultural overtones; and that it was only relatively late in its development that it was taken over by the corporate interests and intelligence concerns which now dominate it.

Oh — and I almost forgot — there is that enormous elephant in the room, namely that it was almost entirely an American creation, which perhaps explains why all the world’s major Internet companies — outside of China — are US corporations and thus powerful projectors of American ‘soft power’, a fact which — coincidentally — might help to explain current European fears about these companies.

Just for the avoidance of doubt, though, this is not a rant about American dominance. My personal opinion is that US stewardship of the Internet was largely benign for much of the network’s early history. But such stewardship was only acceptable for as long as the Internet was essentially confined to Western industrialised nations. Once the network became truly global, US dominance was always likely to be challenged. And so it has proved.

Another problem with focussing only on the evolution of the network only in terms of technology is that it leads, inevitably, to a Whig Interpretation of its history — that is to say, a record of inexorable progress. And yet anyone who has ever been involved in such things knows that it’s never like that.

With hindsight, for example, we see packet-switching — the fundamental technology of the network — as an obvious and necessary concept. But, as Janet Abbatte has pointed out in her illuminating history, it wasn’t like that at all. In 1960 packet-switching was an experimental, even controversial, idea; it was very difficult to implement initially and some communications experts (mostly working for AT&T) argued that it would never work at all. With the 20/20 vision of hindsight, these sceptics look foolish. But that’s always the problem with hindsight. At the time, the scepticism of these engineers was so vehement that it led Paul Baran to withdraw his proposal to build an experimental prototype of a packet-switched network, thereby delaying the start of the project by the best part of a decade.

Focussing exclusively on the technology creates other blind spots too. For example, it renders us insensitive to the extent to which the Internet — like all major technologies — was socially constructed. This is how, for example, surveillance became “the business model of the Internet” — as the security expert Bruce Schneier once put it. In this case the root cause was the interaction between a key affordance of the technology — the power of network effects — and Internet users’ pathological reluctance to pay for online services. Since the way to succeed commercially was to “get big fast” and since the quickest way to do that was to offer ‘free’ services, the business model that emerged was one in which users’ personal data and their data-trails were harvested and auctioned to advertisers and ad-brokers.

Thus was born a completely new kind of industrial activity — dubbed “surveillance capitalism” by the Harvard scholar Shosana Zuboff — in which extractive corporations like Google and Facebook mine user data which can then be ‘refined’ (i.e. analysed) and sold to others for targeted advertising and other purposes. Although this kind of spying is technologically easy to implement, it could not have become the basis of huge industrial empires without user consent, or without legal arrangements which discourage assignation of ownership of distributed personal data.

One of the most noticeable things about our public discourse on the Internet is how a-historical it is. This is partly a reflection of the way the tech media work — most journalists who cover the industry are essentially perpetually engaged in “the sociology of the last five minutes,” chasing what Michael Lewis memorably described as The New New Thing. As a result, the underlying seismic shifts caused by the technology seem to go largely unnoticed or misunderstood by the public. Yet when we look back at the story so far, we can spot significant discontinuities.

One such, for example, was the appearance of Craigslist in 1996. It was a website providing free, localised classified advertising which started first in San Francisco and gradually spread to cover cities in 70 countries. For a surprisingly long time, the newspaper industry remained blissfully unaware of its significance. But if journalists had understood their industry better they would have seen the threat clearly.

For newspapers are value chains which link an expensive and loss-making activity called journalism with a profitable activity called classified advertising. But one of the affordances of the Internet is that it dissolves value chains, picking off the profitable bits that it can do better than conventional operations. And classified advertising turned out to be one of the things that the internet could do very well: instead of having to wade through acres of small print looking for that used car of your dreams, you simply typed your requirements into a search engine and Bingo! — there were the results. The end result was that newspapers were left holding only the unprofitable, loss-making, part of their value chains.

“The peace of God,” says the Bible, “passeth all understanding”. So too do the valuations of Internet companies. We saw that in the first Internet boom of 1995-2000 — that extraordinary outbreak of what the economist Robert Schiller dubbed “Irrational Exuberance” and which was later christened the “dot-com bubble”. What fuelled the mania was speculative interest in the stock-market valuation of the multitude of Web-based companies (‘dot-coms’) which materialised following Netscape’s IPO in 1995 and which was amplified by the fantasies of fund managers, stock analysts, journalists and pundits. As one sceptical observer put it, what really happened is that “Wall Street moved West”.

The core business model of these fledgling companies was the idea of harnessing the network effects implicit in the rapid growth of consumer interest in the Internet to obtain a dominant market share in a range of sectors. At the height of the frenzy, dot-com companies with few customers, few (sometimes no) revenues and handfuls of employees briefly enjoyed stock-market valuations greater than those of huge companies like General Motors.

The boom followed the traditional pattern of speculative manias through the centuries, and eventually, in March 2000, it burst. In just over a month the total market capitalisation of companies on the NASDAQ exchange fell from $6.71 trillion to $5.78 trillion. In other words, nearly a trillion dollars in value had been obliterated. And less than half of the dot-coms founded in the boom survived the crash.

But here’s the strange thing: the bubble created much of the technological infrastructure necessary to hasten the maturing of the network. When the mania began, some canny observers quoted the old maxim of the Californian gold rush of the 1850s – that the people who made most money in California were not the miners and prospectors, but the merchants who sold them pickaxes and shovels. The modern embodiments of those merchants were the telecommunications companies which in the 1990s invested heavily in building large fibre-optic cable networks and server farms to service the ‘new’ economy that was apparently coming into being. When the bubble burst, these companies were left with apparently unwanted assets, and some went bankrupt. But the infrastructure that they had built remained, and turned out to be critical for enabling what came next.

The interesting thing is that — to those who know their economic history — this is an old story. Brad DeLong points out, for example, that the ‘railway mania’ of the 19th century lost investors a lot of money, but the extensiveness of the railway network that was the product of the frenzy enabled completely new industries to be built. It was the completion of the railway network, for example, that enabled the rise of the mail-order industry — which for two generations was a licence to print money in the United States.

Similarly with the Internet. While the bubble caused a financial crash, it also resulted in a massive expansion in the communications infrastructure needed to turn the network into a ubiquitous public utility — a General Purpose Technology — much as happened with railway networks in the late 19th century. So now the internet is mature and extensive enough to serve as a foundation on which new kinds of innovation – much of it in areas apparently unrelated to information goods – can be built. In that context, it’s conceivable that enterprises like the cab-hailing application Uber, or the room-hiring service Airbnb may turn out to be the contemporary equivalent of the mail-order services of the 19th century: unthinkable before the technology and unremarkable afterwards.

We’ve taken a long time to get here, but we’ve made it. Now all we have to do is figure out how to deal with it. Which is why I say that the arrival, not the journey, matters.

Thank you.

Facebook can’t be just a ‘platform’ if it’s distributing news

This morning’s Observer column:

Many years ago, the political theorist Steven Lukes published a seminal book – Power: A Radical View. In it, he argued that power essentially comes in three varieties: the ability to compel people to do what they don’t want to do; the capability to stop them doing what they want to do; and the power to shape the way they think. This last is the kind of power exercised by our mass media. They can shape the public (and therefore the political) agenda by choosing the news that people read, hear or watch; and they can shape the ways in which that news is presented. Lukes’s “third dimension” of power is what’s wielded in this country by outlets like Radio 4’s Today programme, the Sun and the Daily Mail. And this power is real: it’s why all British governments in recent years have been so frightened of the Mail.

But as our media ecosystem has changed under the impact of the internet, new power brokers have appeared….

Read on

Apple vs. FBI ought to have gone to the Supreme Court

Today’s Observer column:

So the FBI sought a court order to compel Apple to write a special version of the operating system without this ingenious destructive mechanism – which could then be downloaded to the phone. Apple refused, on various grounds both technological and legalistic, and the stage was set – so some of us thought – for a legal battle that would go all the way to the supreme court.

In the end, it didn’t happen. The FBI bought a hack from an Israeli security company which had already found a way round the problem, called off the legal suit, and nobody got their day in front of the supremes. Which was a pity, because it means that a really important question posed by digital technology remains unresolved. Put simply, it’s this: what limits, if any, should be placed on the power of encryption technology to render citizens’ communications invisible to law enforcement and security authorities?

Read on

An hour a day

From today’s New York Times:

Facebook reported dazzling first quarter results last week: Net income nearly tripled to $1.5 billion, and monthly active users hit a record 1.65 billion. But it’s a much smaller number that leapt out at me.

Fifty minutes.

That’s the average amount of time, the company said, that users spend each day on its Facebook, Instagram and Messenger platforms (and that’s not counting the popular messaging app WhatsApp).

Maybe that doesn’t sound like so much. But there are only 24 hours in a day, and the average person sleeps for 8.8 of them. That means more than one-sixteenth of the average user’s waking time is spent on Facebook.

The average time that users spend on Facebook is nearing an hour…

But it’s not enough, because surveillance capitalism requires an ever-expanding amount of data.

Just one (more) Cornetto

Just one Cornetto _ blogsize

Venice, Friday.

I never see a gondola without thinking of that ludicrous (but very funny) ad for Cadbury’s Walls Cornetto ice-creams. On my first visit to Venice, years ago, I was walking along an alleyway when I heard someone singing ‘O Solo Mia’ in the distance. I came round a corner, found myself at a canal and there was a gondolier singing to his American tourist clients as he punted them round the city. For a moment, I thought I must be hallucinating. But it was real: parody made flesh.

The guy on Friday wasn’t singing. Mercifully.

Larger version here.