Facebook is on pace to make $6 billion this year without charging its users a penny. Or, as Jaron Lanier would put it, Facebook’s users are on pace to make the company $6 billion this year without a penny in return.
By now most people are at least vaguely aware that the bulk of Facebook’s value lies in the data the site gleans from its users automatically, often without their knowledge. By analyzing their “likes,” status updates, profile information, and browsing habits—yes, any page on the Web that sports a “like” button is feeding information about you back to Facebook, even if you never click on it—Facebook’s algorithms can determine which ads are most likely to appeal to each user. These days Facebook has its eye on you even when you aren’t online at all: Through deals with database-marketing firms, it can track your purchases at the supermarket and use that information to refine its internal model of you as a consumer.
It has become a cliché of the digital age that if you aren’t paying for a product—like Facebook—then you are the product. That isn’t quite right. Facebook’s main product is still the social network itself. It’s the quality and usefulness of that product that compels people to sign up and share their data. But what makes the social network good and useful? To some extent, of course, it’s the clean layout and intuitive features. But the real draw is its content. And who supplies that content? Its users. To recap: The users’ content makes the site good, and their personal information makes it valuable.
All of which helps to explain how a company that employs fewer than 5,000 people could be worth more than $65 billion today—at last check, more than Whole Foods, Mattel, J.C. Penney, U.S. Steel, Goodyear, JetBlue, and Barnes & Noble combined. Facebook employs talented and hardworking people, but they aren’t worth $13 million apiece. Rather, the site’s users are so productive that all the employees really have to do is keep the lights on and the servers running. We do the work, and they harvest the profits.
To Lanier, a dreadlocked virtual-reality pioneer turned classical-music composer and techno-pundit, that’s more than an injustice—it’s a fatal flaw in the dawning information economy. In his new book Who Owns the Future?, Lanier looks to a future in which it isn’t just our social networks and search engines that reap billions from our data. It’s everyone: retailers, banks, health care providers. Lanier thinks they’ll all offer us wonderful services at irresistible prices—yet leave us unemployed and at their mercy.
The idea that tech companies are taking over the economy is perhaps best articulated by venture capitalist Marc Andreessen in a 2011 Wall Street Journal essay, “Why Software Is Eating the World.” Unfathomably rapid advances in computing power are enabling industries to replace armadas of workers and vast physical distribution networks with a few servers and a few dozen talented programmers. Sometimes it’s insurgent startups that harness new technology to turn an industry on its head, as when Amazon upended Borders and Barnes & Noble. In other industries the existing power players are quietly reinventing themselves as software-based companies. Wal-Mart, for instance, pioneered software-based logistics and distribution systems and is now developing a “Social Genome” that maps consumers’ interests and relationships based on their online behavior. Wal-Mart, in other words, is becoming more like Facebook.
But where Andreessen sees “a profoundly positive story for the American economy,” Lanier sees dystopia waiting to happen. He recalls that in 1988, when Kodak was king of the digital imaging industry, it employed 140,000 workers around the world. Today it is bankrupt, felled by technology that lets people snap, store, and share their photos for free with services like Instagram. When Facebook bought Instagram for $1 billion last year, Instagram employed exactly 13 people. So where did those other 139,987 jobs go? Lanier’s thesis is that they went “off the books.” Instagram’s workers are its 100 million active users, and instead of being paid in cash, they’re compensated with access to the Instagram app.
Lanier envisions a future economy in which everyone has access to free or cheap goods and services but not to jobs. As computers replace human workers, efficiency will skyrocket, but wealth and employment will become more and more concentrated in the hands of the few who write the code and control the servers that crunch the data. The rest of us will face unemployment and financial insecurity, even as the data that we create fuels the global information economy.
Lanier’s critique is compelling because it runs deeper than the complaint that everyone has about Facebook today, which is that it’s “creepy.” If that were the only problem, the easy solution would be for people to quit Facebook. Lanier thinks quitting Facebook, at least for a while, might be good for your soul. But he recognizes that it will do nothing to stop the big-data revolution that is transforming the economy at large. You might be able to quit Facebook, but can you quit Google? Maybe you could now—but when the roads are dominated by Google’s self-driving cars, which already harness a stunning 750 megabytes of data per second to avoid accidents better than a human driver ever could, could you opt out then? Most people won’t—and neither will today’s truck drivers, who number 1.6 million in the United States alone, be able to opt out of losing their jobs.
In economics, that’s called a collective-action problem. It can’t be solved through individual decisions in a free market but only through society-wide changes in policy or social norms. In many ways, it’s a new form of the same problem that has haunted capitalism from the time of Marx. Just as money begets money, so does data beget data. Instead of landowners and industrialists, the nodes of power in Lanier’s world are what he calls “Siren Servers.” These are the vast networks of machines at companies like Google and Amazon that lure you in with attractive services and then suck up your data to fuel the continual refinement of their algorithms. The capitalists of old required human labor in order to multiply their wealth, and the reaction was a labor movement that insisted on fair compensation for a hard day’s work. The Siren Servers require only your information. And, remember, you’re giving it to them for free.