Our Data Is Worth Billions to Facebook and Google. Should We Really Be Giving It Away for Free?

Reading between the lines.
May 3 2013 1:00 PM

Facebookers of the World, Unite!

If the economy of the future runs on our data, does that make us slave labor?

1305_SBR_THEFUTURE_ILLO

Illustration by Lisa Hanawalt

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.

Will Oremus Will Oremus

Will Oremus is Slate's senior technology writer.

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.

Lanier proposes a novel solution: not a retreat into socialism or a ban on data harvesting but a market-based form of redistribution in which people are literally paid for their information, bit by bit. If your face shows up in a Facebook ad, you get a “micropayment” proportional to the value that Facebook derives from using your “likes” and your likeness for its own gain. If government surveillance cameras track you as you walk around town in order to improve pedestrian safety, they owe you a couple cents as well. The system would be underpinned by a new form of Internet architecture in which even the smallest scraps of data retain information about their human source. Whenever someone uses a data point, its source is automatically notified and compensated.

Author Jaron Lanier
Author Jaron Lanier

Courtesy of Jonathan Sprague

This far-out proposal seems highly unlikely ever to be implemented—not least because there’s a good chance our digital future will turn out to be far less dire than Lanier seems to believe.

Lanier’s analysis lumps together a bevy of problems that are really only tangentially related. For instance, the information that photographers, musicians, and writers create is not at all the same as the data exhaust that we all give off as we go about our Internet-connected lives. The former requires effort, produces a discrete result that has value in itself, and is relatively easy to trace to its creator. For this sort of creative work, there are already micropayment schemes in place, such as digital royalties. These schemes are flawed and require reform, but that’s a problem that’s confined mainly to the arts and entertainment sector rather than one that threatens the economy at large. As for the other kind of data—the kind that we emit when we browse the Web, go to the store, drive an Internet-connected car, or walk past a surveillance camera—the analogy to labor is flawed because it doesn’t cost us anything to create.

That doesn’t mean there’s no problem. Lanier may be right that the Siren Servers amount to virtual robber barons whose power in the marketplace will only grow and consolidate over time if left unchecked. It’s also possible that the hyper-productivity of the digital economy will lead to massive, sustained unemployment if we don’t take measures to protect working-class jobs. But Lanier at times conflates the so-far mild labor impacts of the collapse of companies like Borders and Kodak with the far greater effects of globalized trade, not to mention a financial sector run amok. Software has in fact played a big role in Wall Street’s growing volatility, a problem that Lanier struggles to shoehorn into his thesis.

Before we panic at the prospect of robots usurping our livelihoods, it’s worth recalling that similar concerns arose when machines revolutionized agriculture and manufacturing a century ago. That painful transition contributed to the Great Depression. But once we adapted our economy and our educational systems to the new realities, the U.S. economy—and middle class—flourished as never before. Our current recession may be partly attributable to a second sectoral shift, from a manufacturing economy to a service economy. Lanier is looking ahead to yet one more shift, from services to software, and it’s not unreasonable to start thinking about the potential consequences. But he may be underestimating the “creative” half of the creative destruction equation. Given the pace of change and the difficulty of predicting the future, it’s surely a little early to start floating policy proposals.

Lanier’s mind is so far-ranging, leaping from Aristotle to digital copyright in a single bound, that it often requires mental acrobatics just to follow the thread of his argument. When you reach the end, you may find yourself winded but no closer to any actionable conclusions than you were before. Still, it’s an exercise well worth performing, especially for those whose thinking about the future has grown flabby on a steady diet of Silicon Valley techno-utopianism. Lanier himself is coy as to whether he sees his micropayment scheme as a realistic solution or “a Swiftian modest proposal.” It works far better as the latter. A world in which we all eke out an income based on royalties from our data exhaust is hardly an inspiring alternative to the dystopia he fears. But if working for Facebook for peanuts sounds unappealing, perhaps it at least sounds better than working for Facebook for free.

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Who Owns the Future?
by Jaron Lanier. Simon & Schuster.

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