All internet giants that offer their services for free (and otherwise) actually depend on their users for their data.
Without the data, these internet giants simply would not survive.
That is why it is a high time that these internet giants and their users come together and form a new relationship in order to deliver genuine value to the larger society.
The one kind of engine that has dominated all other engines for the past hundred years or so is the internal combustion engine.
And it didn’t do that by being the best type of engine there ever existed.
The internal combustion engine gained a very early advantage over all other engines via nothing but a historical accident.
One can easily notice a similar trend in many other areas.
For example, take the case of the QWERTY keyboard.
The first designers of the QWERTY keyboard designed the keyboard layout to deliberately promote inefficiency.
By decreasing the speed at which typewriters could write, designers made sure that a given typewriter’s mechanical keys would not jam too frequently.
Of course, with the advancement of technology, that kind of a feature truly lost its relevance.
However, that doesn’t really matter.
Because people are still happily typing on the now ubiquitous QWERTY keyboards.
And, in turn, why is that?
Because it has now become convenient (since one can find QWERTY keyboard in every electronic shop on the planet) and people, generally speaking, have become rather used to the more inefficient keyboard layout.
More importantly though, this same principle applies to some of the world’s biggest technology companies.
In fact, some believe it is precisely because of such principles that technology companies such as Amazon and/or Facebook have managed to become so massive.
People use Facebook and Amazon services not because they are the best.
They use them because their services are ubiquitous, convenient and are what people have gotten used to.
To put things in perspective, Google is no longer just the world’s most popular search engine.
Now, the company is also an email service.
It is also an email address.
The company can also call itself as a free conference-call maker through its products such as Google Hangouts.
Then there is Google Docs (which millions of writers around the world use on a daily basis) that enable users to create and edit documents.
Google has designed all these services so that, as a whole, the services are able to maximize the benefits that come to users who stick with Google for everything they do on the internet.
How does the company do that exactly?
Well, if a user doesn’t happen to have a Gmail email address then the company doesn’t allow the user to take advantage of its other services such as Google Hangouts and Google Keep.
Similar is the case with Facebook and Amazon.
But some of the more discerning users might legitimately ask, why is one company’s dominance over a particular area such a huge issue?
Well, such situations cause a lot of problems.
The first of these is the fact that these technology giants have managed to make a ton of profits and revenue for themselves to consume by using technologies that were originally created with nothing else than the taxpayer’s money.
More precisely, the National Science Foundation funded projects of researchers who managed to develop Google’s search engine algorithm.
Moreover, without DARPA funding, perhaps we would not have been able to experience the internet as it is today.
Similar things can be said for other technologies such as,
- Touch-screen displays
Technology giants all over the world have taken advantage of these technologies to not only profit themselves but also create de facto absolute monopolies.
All the while, these technology companies have also managed to evade the level of regulation that other real-world companies have to come under.
As a result, regulators haven’t found any success in reining in digital monopolies as they would do in any other given industry in the United States of America.
The other fact that somehow doesn’t get enough attention is that all of the technology companies of our time have one business model (generally speaking).
They provide people with great services for free and then take advantage of the private information and online habits of their customers.
Those customers are also the taxpayers who actually funded these technologies all those years ago when there was no Google, Amazon and/or Facebook.
Of course, there is always a certain section of apologists who take each and every opportunity to portray these internet technology giants as nothing but massive forces for good.
These apologists miss no shots when it comes to praising the sharing economy.
Sharing economy, according to these apologists, enable and empower online consumers via easy and free access to almost everything from health monitoring and GPS navigation to social networking.
However, here is the thing:
Google, or any other technology company, doesn’t really give anyone anything without a charge.
Nothing is free, in other words.
In fact, if online consumers pay a little attention, it is the other way around.
The users, the people/online consumers, are the ones who are handing technology companies such as Google precisely what they need.
Think of it this way, whenever a user makes use of a given Google service, on first impressions, it may seem like the user is getting a lot of stuff for free.
But the reality is that, for companies like Google, the user is not even the company’s customer.
The user is actually the company’s product.
How is that?
Well, the vast majority of Google’s revenue is generated via advertising.
To make that business model work and make a profit, what Google does is that it sells advertising space to third-party marketing companies.
The company also sells its user’s data to various marketing and advertising firms.
Both Google and Facebook have made billions on the simple business model of commodifying the user’s personal data.
In the process of doing so, they have transformed the online community at large.
These technology companies have affected people’s,
and many other things into sellable and profitable propositions.
What many describe a sharing economy (which is actually a so-called sharing economy) is, in reality, based on the kind of principles.
Technology companies have used harmless sounding labels such as the sharing economy to stop people from interacting with any kind of institutions (such as a good travel agency).
Instead of initiating an interaction with them, customers now have the opportunity to interact with other customers.
This basically changes the role of any given company.
Instead of providing a product or a service, the job of the company is to connect buyers and sellers.
Sellers, in this case, may come in the form of a person who has a car and wants to drive it for another person.
Buyers, in this case, are the people who need a ride at any given time in a day.
For clarity’s sake, these are only so-called platforms.
But technology companies such as Amazon and Google do a great job of presenting these “platforms” as a radically different and transformed way of producing, sharing and delivering services and goods.
That may sound very beneficial for everyone.
However, these “platforms” provide technology companies like Amazon, Google, and Facebook (not to mention their Chinese counterparts like Alibaba and Tencent) an easy way to avoid any kind of responsibility.
For example, when a given user who has a disability complain to a service like Uber that his/her Uber driver refused to put his/her wheelchair in the vehicle’s trunk, Uber can easily get out of the situation by saying that they are not really a taxi company and are just an online platform for connecting drivers with riders.
Similar is the case with Airbnb.
The house-sharing platform has always shown a lot of reluctance to take any kind of responsibility for offering safety measures for the premises that people offer on its official website.
It also doesn’t do much for problems such as racial discrimination by property owners against renters.
Again, the excuse on part of Airbnb is the same.
It is nothing but a platform and had nothing to do with building the apartments or owning them.
Additionally, because of problems such as the network effects, these new gig economies don’t really help to spread the created wealth.
In fact, the gig economy concentrates the generated wealth even more than any other business model before it.
Most of the time, all of the generated revenue goes into the hands of a tiny number of firms.
And just like in the case of the QWERTY keyboard and the internal combustion engine, any company that finds success in establishing itself as the sole leader in a given market and achieves total dominance actually becomes completely self-perpetuating nearly automatically.
Let’s take the example of Google.
Currently, Google can proudly boast about accounting for a total of 70 percent of all online searches made in the United States of America.
Move to Europe and Google accounts for a mammoth 90 percent of the total online searches.
Coming to other technology companies such as Facebook, we see a similar kind of dominance.
Facebook currently boasts over a total of 2 billion online users.
In perspective, the 2 billion market is about a quarter of the total population of the planet.
In the ebooks department, we have Amazon that can account for almost fifty percent of the total US book market.
It racks up similar statistics for e-books as well.
Then we have fix technology firms such as Amazon, Twitter, AOL, Yahoo, Google and Facebook that, when combined together, account for a total of 53 percent of the total US digital advertising market.
If we break it down further then Facebook and Google alone make up 39 percent of the digital advertising market.
The world simply has not seen such kind of a dominance before.
And such a complete dominance means that online technology giants have nothing standing in their way to impose their own rules and conditions on customer firms and users.
For example, book publishers may or may not agree to some of the conditions that Amazon puts on them.
But they have to live happily with those conditions because they have little to no leverage.
If they move away from Amazon, they really have no other platform to carry out their business.
In a similar vein, a given user may not feel entirely comfortable about how Facebook appropriates, stores, analyzes and sells his/her personal data to all the advertising and marketing companies around the world.
However, as long as all of the user’s family and friends are using Facebook as their primary social media platform, they don’t really have an equivalent competitor.
From a historical perspective, any industry has the natural tendency to move towards monopolies.
Examples include the water and railways industry.
That is the reason why governments heavily regulate these industries in order to protect the interest of the public against all the corporate power abuses.
One form of power abuse by a corporation if price gouging.
As mentioned before, as far as online monopolistic platforms go, for the large part they still remain unregulated.
That, in turn, means that the companies/firms who managed to come first into any given online service and established market control have this tremendous opportunity to reap rewards of astronomical proportions.
But that’s not the worst part.
The worst part is the very low tax rate that these technology companies generally pay to the country in which they are operating.
Sitting on such large rewards and not paying the proportional percentage of taxes due on those rewards is also something very perverse.
It is especially perverse when one considers the fact that these technology companies found success based on technologies that were developed and funded by very high-risk public investments.
In fact, some believe that if anything these technology companies which owe the majority of their fortunes to investments made via taxpayer-funded projects should actually repay the customer (in other words, the taxpayer) instead of seeking all opportunities for massive tax breaks.
People should be asking all sorts of questions on how these companies have managed to create such massive value and how can we all measure that value accurately.
The other relevant question that people should ask is who really gains the benefit from all the value that these companies are generating.
Let’s take the liberty of going the way of national accounts.
Using such an approach, the total contribution of all these internet platforms to a nation’s income (if the national income is measured via metrics such as GDP) is comprehensively represented via all the advertisement-related services that these platforms sell.
However, users should really think about whether that makes sense or not.
In other words, there is no way to make clear that advertisements have the potential of contributing to the total national product.
And currently, we’re not even talking about whether these technology companies do anything for society’s well-being.
When all is said and done, the most important aim of any economic activity is to contribute to the national product.
If one measures the individual value of technology companies such as Facebook and/or Google via the total number of advertisements that these companies sell, it would become clear that the value is pretty much consistent with what experts call standard neoclassical economics.
The standard neoclassical economics model interprets any given market-based business/deal/transaction as a signal.
It is a signal of production.
Production of what exactly?
Production of any kind of output.
To put it in simpler terms, it doesn’t matter what the specific thing or activity is, as long as that activity or thing enables a price to be received then it must have some value and thus is valuable.
However, in the cases of all these internet technology companies, that number is pretty much misleading.
If any of these given online technology giants make a contribution to a society’s well-being, they are only able to do it via the online services that they provide to their users.
These technology companies don’t provide social well-being via all the accompanying ads.
We understand that many readers would find such a method of ascribing value to anything and everything that these internet technology giants produce as a bit confusing, if not totally confusing.
But perhaps that is the reason why it has managed to generate such a paradoxical result.
Currently, we count the advertising activities related to these technology giants as a form of net contribution to the country’s national income.
And while doing that, we don’t count the very much more valuable of services that these companies provide to their users.
Users would do well to not forget that the major portion of the necessary data and technology that these companies use only came into existence, partly, because of the taxpayers.
Hence, the data and the technology should belong to all the taxpayers.
Moreover, what people also need to understand is that, they (the people themselves) indirectly and collectively created the underlying infrastructure which all the modern technology giants so dearly rely on.
The country used tax dollars that came from the incomes of taxpayers to build the internet.
Moreover, that same infrastructure also has this need of feeding off, what experts are now calling, network effects.
These networks effects are also something that people produce collectively.
Hence, there is little to no reason why a public repository should not own the public’s data that in turn sells the public data to these technology giants.
It should not be vice versa.
On the other hand, the main issue is not about coming up with a mechanism to send a small portion of these companies’ profits back to the citizens from whose data they created those profits from.
The key issue, in this case, is to allow people to actually shape the future of the digital economy in such a way that the digital economy satisfies and safeguards public needs.
Making use of AI and big data in order to enhance all the services that any welfare state provides such as social housing and health care is just a single useful example among many other examples.
Zohair is currently a content crafter at Security Gladiators and has been involved in the technology industry for more than a decade. He is an engineer by training and, naturally, likes to help people solve their tech related problems. When he is not writing, he can usually be found practicing his free-kicks in the ground beside his house.
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