As I mentioned in my last post, I am at the moment particularly interested in looking at the Internet giants and how they handle themselves with regard to the public good. With all the disruption – some good, some less so – created by the technological revolution in which our global society finds itself, and inspired by the examples of Rebecca MacKinnon and Ethan Zuckerman, I would like to discover whether there is any serious attempt being made by these companies to look beyond their short-term interests, to show leadership and to protect the rights of their customers for the long-term good of society.
What I have learned in recent months is that while there are pockets of long-term thinking, and a basic sympathy within these companies with the idea of protecting the common good in a wired society, it seems that they are overwhelmingly focused on the immediate priorities of maintaining and increasing market share, maximizing shareholder value and protecting their intellectual property. This is in some ways entirely understandable, as these are some of the blind-spots generated by the market-capitalist economic model, and are in no way limited to tech companies. But if your company motto is “Don’t be evil”
- from Google’s IPO prospectus: “Our goal is to develop services that significantly improve the lives of as many people as possible. In pursuing this goal, we may do things that we believe have a positive impact on the world, even if the near term financial returns are not obvious… Don’t be evil. We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company…”
and your products shape the way billions of people all over the planet access information every day, you have a responsibility to at least try to live up to it. For the common good.
We are at the beginning of a new era. No one really knows what is going to happen, what society will look like in 10 or 20 years. What is crystal clear is that revolutionary technologies and their applications are up-ending sector after sector – in the process, shaking the very foundations of our culture – and the pace of change is continually accelerating. So the stakes are high. We cannot afford to be short-sighted. We need to tread carefully. We need to avoid making dumb mistakes. The Internet giants can and must learn that doing so is in their own short-, medium- and long-term best interest, and that they can and must be part of the solution.
I don’t have any of the answers, nor do I think I will find any in the near future. Far smarter and more experience thinkers than I have been grappling with these concerns for years. But I do want to look into what can be done by the companies themselves, and am interested (possibly) in being involved in their efforts to police themselves – at best because they come to believe it’s the right thing to do; at worst because they come to understand that it’s the right thing to do… for their own bottom lines.
All that said, the research paper I intend to write will look at examples of the past and try to see if there are lessons there for us today. Specifically, I would like to investigate the development of journalistic codes of conduct, ethics and professionalism in the United States over a century ago, which followed an information revolution of sorts (the ability to print cheaply and mail newspapers). There may be something in that development which is applicable to the situation we face now. Noting that I do not yet have an argument, here is a basic outline for sections of the paper.
- Introduction
- Statement of problem
- State of newspaper industry in +/- 1900
- What were the precipitating events that caused the moral compass to twitch
- Parallels between internet and newspapers industries
- Parallels between precipitating events
- Recommendations
- Conclusion
I intend to lean heavily on Paul Starr’s The Creation of the Media: Political Origins of Modern Media, but would welcome suggestions for other relevant readings, as well as ideas and debate about the thesis.
The Pointy Bit 
This is the crux: “… while there are pockets of long-term thinking, and a basic sympathy within these companies with the idea of protecting the common good in a wired society, it seems that they are overwhelmingly focused on the immediate priorities of maintaining and increasing market share, maximizing shareholder value and protecting their intellectual property.”
I’ve lately (i.e. over the past three years or so) become convinced that a corporation cannot act effectively in the public interest unless a) its own interests coincide with that of the public, or b) it is regulated in such a way as to compel it to do so. I believe that this is the case even if the individuals in the company have the best of intentions and are committed to “not being evil”.
Here’s why. A for-profit company – any for-profit company – is essentially a machine for generating profit. Whatever the business model, the basic function of a company is to maximize revenue while minimizing costs. Whatever conflicts with this basic function is problematic, especially in a competitive environment where other companies may be willing to cut costs more ruthlessly.
Acting in the public interest is rarely profitable. It usually costs something or reduces revenue or both. At the very least it requires an inefficient allocation of resources. Unless all companies in the same sector are functioning under the same set of regulations, it will usually be to a company’s disadvantage to unilaterally engage in practices that will benefit the public while, to whatever extent, reducing its own profitability.
A further complication is that publicly traded companies have an obligation not to the public but to their own shareholders, whose interests begin and end with shareholder value, which depends on profitability. In other words, the officers of a publicly traded company are effectively required by law, as well as common sense, to place profitability over the public interest, whatever their personal values and best intentions may be.
Of course, a hugely profitable company such as Google can afford not to “be evil” because it has money to burn. So long as a company has a very high profit margin, it can provide free sushi and massages for employees and give to charitable causes and establish foundations to make the world a better place. Huzzah – I’m all for that. But I don’t believe that corporations in general can be counted on behave in the public interest unless they are somehow compelled to do so by regulation. The great majority of companies must function in competitive environments and make do with relatively slim profit margins. They can’t be expected to unilaterally sacrifice profits, and thus endanger their own prospects. Again, this is not because they’re evil; it’s because they have little practical choice.
Business models and profit margins have changed somewhat in the digital age, but I believe the age-old verities will still apply. Many highly successful internet companies have yet to turn a profit (indeed many have yet to figure out even HOW to turn a profit). Facebook, which is surely one of the greatest success stories in the history of entrepreneurialism, is struggling to figure out how to make money. They’re now resorting to pissing off users with various intrusive and clumsy forms of advertising, and are likely to develop a business model that depends on sharing personal information with retailers.
As you point out, it’s a brave new world and nobody can predict how things will look in a decade or two. But I do think it’s safe – and wise – to assume that any for-profit endeavor will (as it must) pursue whatever opportunities for growth and profit are available to it, regardless of public benefit. It is for the state to ensure that the public interest – i.e. the general welfare – is served. Polluters don’t pollute because there are laws against it. If the companies of the present and future are going to refrain from exploiting private information for financial gain, it’s not going to be because they decided that it wasn’t the right thing to do; it’s going to be because the law told them that the penalties for doing so outweigh the benefits.
Here’s a provocative question worth exploring: should pervasive and increasingly necessary internet services such as Google and Facebook be regulated as utilities? Given that almost everybody in the developed world is using them and coming to depend on them more and more, should they be allowed to function purely in their own interests, regardless of the impact on their users?
Crikey – I seem to be becoming a Marxist in my old age!
Shalom, hermano.
JP, first of all, thanks for your excellent post. As always, it is a pleasure to read your content.
I’m not sure it makes you a Marxist to think what you’re thinking. I agreed generally speaking with everything you said, but I have some areas of concern that I’d like to discuss.
1. State regulation: I would like to see this happen, so long as it is done competently, and with the interest of the citizen (and long-term interest of at least the nation, if not society at large) in mind. Bad regulation might be worse in this case than none. Why? I feel that we are at the sort of crossroads where a sort of Bill of Rights or Constitution or some other fundamental architecture for the ages is needed once again. There is simply too much at stake.
Unfortunately, having
– worked as a lobbyist for the hi-tech industry for six years,
– seen in recent years the result of attempts at regulation (or deregulation, more often than not), and
– watched the shenanigans that open, democratic governments currently get up to (while preaching internet freedom to authoritarian regimes)
I cannot say that I am optimistic about the state’s (any state’s) ability to regulate this sector competently or with the interest of the citizen in mind. Most government officials — even those with good intentions — are currently incompetent in this area, or powerless. Even if they were not, at least in the US, industry would likely view anything other than self-regulation as inimical to their interests, and their lobbying machines would automatically kick in to influence (or subvert, depending on your viewpoint) the final result. Our government (yes, even blue governments) in recent years has allowed some atrocious situations with huge knock on effects in the name of deregulation — in fact, they abdicated control of the internet entirely to what amounts to the private sector — and that does not inspire confidence. And in some cases, our government’s actions are what we need to be protected against.
You know me, JP. This is not a small government or anti-regulation rant. In fact, I would welcome it. But I don’t think we should hold our breaths waiting for good regulation to turn up.
2. From the inside: Industry (and when I say industry, I am thinking of a few leading giants, but most probably Google), could, if it wanted to, do something NOW. I agree with all the pressures you mention above. But they have the influence, resources, shareholder returns and the inclination (maybe) that are needed to do something immediate, if they can be convinced. The trick is how to show them where their bottom-line interest (and longer-term corporate survival) are directly linked to the interests of the citizen. You might have to pitch it as a way to avoid costly surprises. Or maybe a competitive advantage for customer loyalty. Or maybe something else.
But I think that if you could get a Google (or a Cisco or a Facebook or a whatever) to take this seriously and take action, other companies would have to sit up and take notice. And it could set the stage for an attempt at proper regulation.
3. What do we need? If you could let a regulator loose on the internet sector, JP, what would you want them to do? And is there anything in particular you think I should read?
Thanks again!
–kp.