A complicated courtship

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In early April, two articles appeared in leading European newspapers — “Fear of Google” in Frankfurter Allgemeine Zeitung, and “Google, or the Road to Serfdom” in Le Monde — criticizing the consolidation of commercial and cultural power in the hands of Google and other large Internet companies. Shortly afterward, Eric Schmidt offered a rebuttal, in the form of an open letter to Europe published in FAZ. “On a continent in search of economic hope, the Internet represents the main motor of economic growth,” he wrote. On the cultural side of the equation, he went on, the Net was due equal praise: “Around the world, people admire Europe’s art, food, and lifestyle. The Internet makes these cultural treasures available to all.”

Rejecting any further regulation of his company, Schmidt argued that the online market should be allowed to develop unfettered. He pointed to Google’s recent advertising pact with Germany’s Axel Springer as a model for the kind of cooperative business approach that he believes will keep Europe from becoming an “innovation desert”:

It was a complicated courtship. For years, German publisher Axel Springer challenged us on issue after issue, from copyright to competition. I travelled to Germany numerous times to meet Springer executives to propose a different path – profitable partnership. I argued that through innovation we could build new business models and achieve mutual benefit from emerging mobile and social technologies. Late last year, we walked down the aisle and signed a multi-year partnership for automated advertising, covering both web and mobile. …

While many other European publishers including such marquee names as the Telegraph and the Guardian have signed similar partnerships, some publishers in Europe still seem to believe that the best way forward lies in calling for heavy-handed regulation, pushing for new copyright charges on links to their articles and calling for antitrust action against companies such as Facebook, Amazon and us. … If adopted, this approach creates serious economic dangers. Above all, it risks creating an innovation desert in Europe. Some companies will leave and, worse still, others will never get off the ground – blocked by rules designed to protect incumbents. I am convinced that a better, more prosperous model exists through cooperation and commercial agreements [such as] our path-breaking advertising deal with Axel Springer.

In a long, remarkable reply to Schmidt, also published in FAZ a week later, Axel Springer’s chief executive, Mathias Döpfner, offered a very different view of the “profitable partnership” between his company and Google:

We are afraid of Google. I must state this very clearly and frankly, because few of my colleagues dare do so publicly. And as the biggest among the small, perhaps it is also up to us to be the first to speak out in this debate. You wrote it yourself in your book: “We believe that modern technology platforms, such as Google, Facebook, Amazon and Apple, are even more powerful than most people realize (…), and what gives them power is their ability to grow – specifically, their speed to scale. Almost nothing, short of a biological virus, can scale as quickly, efficiently or aggressively as these technology platforms and this makes the people who build, control, and use them powerful too.” … In the long term I’m not so sure about the users. Power is soon followed by powerlessness. And this is precisely the reason why we now need to have this discussion in the interests of the long-term integrity of the digital economy’s ecosystem. This applies to competition, not only economic, but also political. It concerns our values, our understanding of the nature of humanity, our worldwide social order and, from our own perspective, the future of Europe. … It is we the people who have to decide whether or not we want what you are asking of us – and what price we are willing to pay for it.

Döpfner went on to question Google’s self-image as a cultural hero:

On the Internet, in the beautiful colorful Google world, so much seems to be free of charge: from search services up to journalistic offerings. In truth we are paying with our behavior –  with the predictability and commercial exploitation of our behavior. Anyone who has a car accident today, and mentions it in an e-mail, can receive an offer for a new car from a manufacturer on his mobile phone tomorrow. Terribly convenient. Today, someone surfing high-blood-pressure web sites, who automatically betrays his notorious sedentary lifestyle through his Jawbone fitness wristband, can expect a higher health insurance premium the day after tomorrow. Not at all convenient. Simply terrible. It is possible that it will not take much longer before more and more people realize that the currency of his or her own behavior exacts a high price: the freedom of self-determination. And that is why it is better and cheaper to pay with something very old fashioned – namely  money.

Google is the world’s most powerful bank – but dealing only in behavioral currency. Nobody capitalizes on their knowledge about us as effectively as Google. This is impressive and dangerous.

At the end of the month, Harvard business professor and Berkman Center associate Shoshana Zuboff provided another perspective on the exchange between Schmidt and Döpfner:

Six years ago I asked Eric Schmidt what corporate innovations Google was putting in place to ensure that its interests were aligned with its end users. Would it betray their trust? Back then his answer stunned me. He and Google’s founders control the super-voting class B stock. This allows them, he explained, to make decisions without regard to short-term pressure from Wall Street. Of course, it also insulates them from every other kind of influence. There was no wrestling with the creation of an inclusive, trustworthy, and transparent governance system.  There was no struggle to institutionalize scrutiny and feedback.  Instead Schmidt’s answer was the quintessence of absolutism: “trust me; I know best.” At that moment I knew I was in the presence of something new and dangerous whose effects reached beyond narrow economic contests and into the heart of everyday life.

Mr. Schmidt’s open letter to Europe shows evidence of such absolutism. Democratic oversight is characterized as “heavy-handed regulation.”  The “Internet”, “Web”,  and “Google” are referenced interchangeably, as if Goggle’s interests stand for the entire Web and Internet. That’s a magician’s sleight of hand intended to distract from the real issue. Google’s absolutist pursuit of its interests is now regarded by many as responsible for the Web’s fading prospects as an open information platform in which participants can agree on rules, rights, and choice.

“We are beyond the realm of economics here,” wrote Zuboff. “This is not merely a conversation about free  markets; it’s a conversation about free people”:

We often hear that our privacy rights have been eroded and secrecy has grown. But that way of framing things obscures what’s really at stake. Privacy hasn’t been eroded. It’s been expropriated. … Instead of many people having some privacy rights, nearly all the rights have been concentrated in the hands of a few.  On the one hand, we have lost the ability to choose what we keep secret, and what we share. On the other, Google, the NSA, and others in the new zone have accumulated privacy rights. How? Most of their rights have come from taking ours without asking. But they also manufactured new rights for themselves, the way a forger might print currency.  They assert a right to privacy with respect to their surveillance tactics and then exercise their choice to keep those tactics secret.

Finally – and this is key – the new concentration of privacy rights is institutionalized in the automatic undetectable functions of a global infrastructure that most of the world’s people also happen to think is essential for basic social participation. This turns ordinary life into the daily renewal of a 21st century Faustian pact.

A complicated courtship, indeed. Read the whole exchange. It’s fascinating.

Image: Roberto Baca.

4 Comments

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4 Responses to A complicated courtship

  1. John P.

    Taking this with a big grain of salt.

    “””
    Anyone who has a car accident today… receive an offer for a new car from a manufacturer on his mobile phone tomorrow. ….Today, someone surfing high-blood-pressure web sites… can expect a higher health insurance premium the day after tomorrow.”””

    We all know how Google works and makes money. They have access to mailboxes and search. At the time of the search or when we read the mail, they scan for keywords, link it up it pre-determined agreements to serve ads and they… serve ads and make money. At no time does the user need to get put into contact with the advertiser, unless of course, they choose to follow the ad’s link.

    Naive? The benefits, to Google, are clear. They expect us to put up with their ads for the sake of convenience and make money serving as a middleman. But, they also have a powerful incentive not to divulge our information to their ad-placing customers.

    Because it would break our trust? Let’s not trust them overmuch, shall we?

    More importantly, it goes against their economic interest as a middleman to leak our information directly to their clients. A middleman does not want to be bypassed.

    Other operators do not have this motivation. Enter your email to sign up for a free web site and it is an even bet that your information might be passed on to a third party, for a fee.

    Surf, don’t just search for, high blood pressure web resources and you leak information like a sieve on those sites. Be it through cookies or through IP logging. Who’s to say where that information ends up? Certainly there is a powerful economic incentive to monetize such sensitive information and the company who is serving the content often has no other direct way to profit without selling it on to someone else.

    Google, the gentle giant? Not what I am saying at all. First, Google would risk killing the golden goose by going the extra mile and getting caught passing on our information directly. Mostly, having set up a system where they conveniently broker ads, I see very little reason why they would jeopardize that position by cutting themselves out. Simple economics, really.

    I am highly sensitive to my own privacy. If you were to search the web on my name, you’d find minimal information, mostly dating back to before 2000. My Facebook account is barely used and has a totally bogus birth date and no address. You could even call me cynical. To me this sounds like self-serving drivel by a company who has ample reasons to dislike Google. Maybe that gentleman can contribute some proof? That would certainly make headlines and would be a very good way to put Google on the defensive.

    Not that Google has a leg to stand on when it serves other companies’ contents, including Axel Springer’s, and pockets the profits. But that’s a very different story.

  2. Ken

    Regarding the first comment.

    “But, they also have a powerful incentive not to divulge our information to their ad-placing customers.”

    I would say they have a powerful incentive to push the envelope as far as possible to make a buck.

    “First, Google would risk killing the golden goose by going the extra mile and getting caught passing on our information directly.”

    Google settled a lawsuit recently where they were leaking user’s search queries (which can include PII) to other web sites that participated in one of Google’s programs (like AdSense). Another example – the FTC managed to get Google to cough up a few million when they got caught bypassing Safari’s privacy controls. Or, how about Google Buzz and how by default it put all of your contacts out in the public. Or, how about the class action lawsuit whereby Google’s street view vans were hoovering up user’s data over wifi networks. Judge said that’s a violation of wiretapping laws. Or how about the one where Chrome was leaking PII over HTTP when using a shared connection with an iOS device.

    Really, it’s all out there and much, much more.

    “More importantly, it goes against their economic interest as a middleman to leak our information directly to their clients. A middleman does not want to be bypassed.”

    A middleman that has an effective monopolistic lock on a market is hardly concerned about being bypassed.

    “If you were to search the web on my name, you’d find minimal information”

    What are we to infer from that? What you see does not show you what has been collected and/or shared with other parties, with or without your consent.

    “Maybe that gentleman can contribute some proof?”

    As I said…it’s all out there and much, much more.

  3. John P.

    “Your honor, the accused is obviously guilty of this murder because he has been found guilty of robbery and larceny in the past.”

    i.e. stick to the particular trespass that Herr Dopfner and I were talking about, without dragging in the wifi story & sundry, and I _might_ take you more seriously.