I’ve been following the story of generative AI a bit too obsessively over the past nine months, and while the story’s cooled a bit, I don’t think it any less important. If you’re like me, you’ll want to check out MIT Tech Review’s interview with Mustafa Suleyman, founder and CEO of Inflection AI (makers of the Pi chatbot). (Suleyman previously co-founded DeepMind, which Google purchased for life-changing money back in 2014.)
Inflection is among a platoon of companies chasing the consumer AI pot of gold known as conversational agents – services like ChatGPT, Google’s Bard, Microsoft’s BingChat, Anthropic’s Claude, and so on. Tens of billions have been poured into these upstarts in the past 18 months, and while it’s been less than a year into since ChatGPT launched, the mania over genAI’s potential impact has yet to abate. The conversation seems to have moved from “this is going to change everything” to “how should we regulate it” in record time, but what I’ve found frustrating is how little attention has been paid to the fundamental, if perhaps a bit less exciting, question of what form these generative AI agents might take in our lives. Who will they work for, their corporate owners, or …us? Who controls the data they interact with – the consumer, or, as has been the case over the past 20 years – the corporate entity?
The Dude knows the pitfalls of scattering a loved ones’ ashes…
Every so often I get an idea for a new website or service. I imagine you do as well. Thinking about new ideas is exciting – all that promise and potential. Some of my favorite conversations open with “Wouldn’t it be cool if….”
Most of my ideas start as digital services that take advantage of the internet’s ubiquity. It’s rare I imagine something bounded in real space – a new restaurant or a retail store. I’m an internet guy, and even after decades of enshittification, I still think the internet is less than one percent developed. But a recent thought experiment made me question that assumption. As I worked through a recent “wouldn’t it be cool” moment, I realized just how moribund the internet ecosystem has become, and how deadening it is toward spontaneous experimentation.
The buildings are the same, but the information landscape has changed, dramatically.
Today I’m going to write about the college course booklet, an artifact of another time. I hope along the way we might learn something about digital technology, information design, and why we keep getting in our own way when it comes to applying the lessons of the past to the possibilities of the future. But to do that, we have to start with a story.
Forty years ago this summer I was a rising Freshman at UC Berkeley. Like most 17- or 18- year olds in the pre-digital era, I wasn’t particularly focused on my academic career, and I wasn’t much of a planner either. As befit the era, my parents, while Berkeley alums, were not the type to hover – it wasn’t their job to ensure I read through the registration materials the university had sent in the mail – that was my job. Those materials included a several-hundred-page university catalog laying out majors, required courses, and descriptions of nearly every class offered by each of the departments. But that was all background – what really mattered, I learned from word of mouth, was the course schedule, which was published as a roughly 100-page booklet a few weeks before classes started.
The Gather founding team from top left: Zan Doan, CTO, Sudhir Kandula, COO, Mengmeng Chen, Cofounder & CPO, Sumit Agarwal, Cofounder & CEO
A few weeks ago I was genuinely thunderstruck. My co-editor atP&G Signal (thanks Stan!) introduced me to a new company – one that promised to give consumers control over their personal data in new and innovative ways. At first I was skeptical – I’d seen quite a few “personal data lockers” come and go over the past decade or so. I even invested in one way back in 2012. Alas, that didn’t work out.
For as long as I can remember, I’ve been writing –over andover andover – about how the Internet’s central problem is the lack of leverage that consumers have over the data they co-create with the hundreds of apps, sites, and platforms they use. But data lockers never got any traction – most were confusing to install and run, and they all suffered from a lack of tangible consumer benefits. Sure, having a copy of all my personal data sounds great, but in the end, what can it do for me? Up till now, the answer was not much.
It was with all those caveats – and honestly pretty low expectations – that I took a meeting with Sumit Agarwal and his team at Palo Alto, CA-basedGather, an early stage startup still in its first year of operation. Fifteen minutes later I was hooked – here was a company that was addressing the “what can my data do for me” problem by building out a generative AI agent that just might spark the kind of personal data revolution I’ve been writing about for more than a decade. And this was no fly-by-night startup – the company’s founders, team, and investors are all deeply experienced in AI, Internet security, scaled engineering, product design, marketing, and much more.
Before diving in, a caveat: Gather is still at a very early stage, as is the overheated AI ecosystem in which Gather’s products will eventually live. Agarwal told me he’s not even sure if his company will be called Gather by the time its first product becomes available later this year. In addition, the company faces fearsome obstacles to success – including entrenched platform players like Google, Amazon, and Apple, whose business interests do not align with the concept of a newly empowered consumer base. While I usually like to write about companies and products that readers can use immediately, I’m breaking that rule for Gather. No matter the business you’re in, it will pay to understand the shift in consumer behavior that tools like Gather could unlock. And as I said before, this company is the first I’ve seen that has assembled the team, vision, and execution chops to pull it off.
Timing Is Everything
With startups, timing is everything. There’s only so much you can control – what you make, how you spend your investors’ money, the people you hire. But nearly everything else is driven by externalities you must navigate. Is the technology ecosystem capable of supporting your vision, or is your product ahead of its time? Netflix, for instance, had to wait until broadband was pervasive enough to launch its streaming service. Are consumers ready for your idea, or is it out of sync with their expectations? Uber and Airbnb faced this challenge in their early years. Will huge competitors copy your idea, or change their policies and make it impossible for you to thrive? Ask Yelp how it feels about Google’s review summaries, or ask Epic Games about Apple’s 30 percent tax in the app store.
Gather faces all these timing challenges and more, but the company does have one huge tailwind: AI is hot, and investors can’t get enough of it. This past month alone,VCs poured more than $11 billion into AI startups, up 86 percent from a year ago. But while AI funding tipped into a frenzy with OpenAI’s launch of ChatGPT last November, Gather managed to raise an impressive seed round five months earlier, in June of 2022. Agarwal and several of his co-founders were already seasoned operators with a billion-dollar exit in the Internet security sector (Shape Security, sold to F5 three years ago). Gather’s $9 million round was led by general partners at respected firms Bain, Floodgate, and Wing Ventures, with participation from experienced Valley angels like Gokul Rajaram – an investor and director at The Trade Desk, Pinterest, and Coinbase, among many others – and Vivek Sharma, the co-founder and CEO of Movable Ink.
“I’ve known Sumit for about 15 years,” said Gaurav Garg, founder of Wing Venture Capital and early investor and board member at Gather. “He has a deep background in consumer and enterprise products used by hundreds of millions of people, as well as exposure to government policy, across technology areas including security, identity, privacy, and e-commerce.” Garg also noted that Sumit has the attributes of a great founder – drive, persuasiveness, perspective, and a learning mindset – crucial when you’re looking to reimagine something as big as how consumers will interact with AI and the Internet.
“The team are all exceptional founders,” added Bain Capital Venture’s Ajay Agarwal, who’s known and worked with several of the Gather team over the past 25 years. He added a key observation: The tech ecosystem is at an inflection point – mainstream devices like phones and computers can now power distributed platforms like Gather, large language models have evolved to conversational levels, and there’s even just the right amount of government regulation to create conditions for a sea change in how consumers control their data. We’ll get into all of that, but first, the product.
First, Gather The Data
My Amazon data in Gather: Who knew I bought that back in 2006?!
Gather acts as your trusted and secure agent, logging into various data-hoarding services like Google (think Maps, Search, Mail, Android Play, YouTube), Amazon, Uber, Strava, and many more. At your direction, Gather then downloads copies of your data from each service to your local device – a right codified into law by the 2018European General Data Protection Regulation (GDPR) and adopted, in broad strokes, by several states in the US –California chief among them. Till Gather came along, no one had built a service that automates what is otherwise a tedious and frankly pretty pointless process – almost no one actually downloads copies of their data from online services, because, as we’ve already established, there was simply no use case for doing so.
But once you have a critical mass of that data, and it’s organized in a way where questions can be asked of it, a whole new world opens up. Gather added me to a pre-release version of its platform, and it was magical to watch the service engage with Amazon, Uber, Google, Twitter, Venmo, Strava, and many others. Within minutes, copies of my data were presented and organized in my Gather app. And that’s when things start to get interesting. As Gather marketing lead Niki Aggarwal pointed out, now that I had the data in my control, I could start to ask it questions. What kind of bias, if any, might be evident in the stories I was reading from Google News? How much did I spend on Amazon each month, and would I have saved money if I had bought those same items at Walmart? Was there an optimal time of day to get a personal best when riding on Strava?
Of course, this is only the tip of the proverbial iceberg when it comes to what’s possible with data sets like these. Sure, it’s cool to have a copy on my own device, in my control. But the real fun will start when you add a personalized AI agent capable of instantaneously answering those initial questions, as well as conjuring up ones you’ve not thought to ask. Even more exciting, imagine that same agent as a trusted confidant, leveraging your data as it interacts with the rest of the online world. Now that’s a consumer benefit – a personal agent that knows my preferences and can, say, plan a complicated business trip, or negotiate for the best price for an item I want to buy online. The time savings alone make the idea compelling. I’ve come to call such agents “genies” – because they work only for you, and they can produce all kinds of magic (and as a bonus, they aren’t limited to three wishes!).
Where Genies Play
Gather hasn’t released its “genie” yet, but it’s working on it. Codenamed “Sidekick,” the product will consist of several elements. First is your personal datastore, which lives on your own device and remains under your control at all times. Second is the Sidekick agent, which Agarwal describes as “an AI product that proactively and intuitively helps you.” He continues: “We are trying to get away from ‘blinking cursor in an empty text box’ and get to ‘intelligent character that thinks about your needs, intuits your desires, [and] acts on your behalf.'” Gather’s third element is a platform that manages how outside organizations interact and create value with your data.
Agarwal offers an example of how Sidekick might work: “You visit Amazon Music, and there’s an offer for six months of free service if you upload your Spotify play history. Your Gather Sidekick allows you to upload with a single click. Your data moves to an external service (Amazon Music) and you get value. You can think of the same example in many contexts – food/dieting, fitness, other entertainment apps, medical apps, etc. The concept is simply that a specific – and sometimes complex – “slice” of your data needs to move somewhere in order for you to receive some value (economic or otherwise).” (This example calls to mind my 2018 piece, in which I imaginedhow Walmart might compete with Amazon online by leveraging a consumer’s Amazon purchase history.)
Agarwal’s second example envisions an instance where you don’t necessarily trust the service that wants to leverage your data. Imagine, for example, that a third-party developer has created “the ultimate music recommendation app.” It sounds appealing, but you’re wary of uploading your Spotify or Apple Music data to a service that has yet to prove it’s trustworthy. In this case, Gather becomes a secure platform that runs on your device. “With Gather,” Agarwal explains, “that recommendation app can run locally in your environment. This is a win for you because you have no data sharing concerns, so you can comfortably let the app engage with your data to get the very best recommendations. The Gather platform keeps your data local but publishes the schema so developers know how to interact with the platform – without seeing your data.”
I think of Gather’s platform as like Apple’s app store or Google Play, but with one critical difference: The power to decide who gets access to the platform resides not with a massive corporation, but with you, the consumer. This seemingly small distinction is in fact a massive shift in power, agency, and value from the centralized model of Web 2 toward a decentralized vision more aligned with the original architecture of the Internet –pushing intelligence and control to the edge of the network.
The Iceberg Metaphor
Over the course of many emails, calls and Zoom meetings with Agarwal and his co-founders Sudhir Kandula and Mengmeng Chen, both colleagues with Agarwal at Shape Security, we touched on topics as varied as security and privacy, Internet history, and information theory. Gather emerged from its founders’ dissatisfaction with what author and Internet OG Cory Doctorow calls the Internet’s “ensh*ttification.” As large companies have consolidated control of our online lives, our experiences have begun to degrade. This is why so many technology observers are excited by Microsoft’s integration of ChatGPT into its Bing search service. Google search is so clogged up with low-quality results and ads, Microsoft’s “conversational search” promises a better, clutter-free user experience. But Agarwal sees many more use cases beyond search – and to understand how it might work, it’s worth a dive into what he calls “the iceberg metaphor,” a visualization of how humans might best communicate with infinitely capable AIs.
As we know, 90 percent of an iceberg is underwater. At its tip – the 10 percent – is human interaction with AI – the prompts we type, or soon, the words we utter. That interaction is limited by our ability to speak or type – which compared to machines, is very low bandwidth, about 50 words per minute. But human speech is richly nuanced, and informed by executive function – this is where decision making occurs.
It’s in the 90 percent underwater where AI can excel. Machines can speak to other machines at mind bending speeds – one AI genie speaking to countless others, negotiating information demands, price comparisons, complex, multi-step transactions like scheduling a meeting or building a travel itinerary. “Underneath the water the GPT is listening, watching, reading, and comprehending on your behalf,” Agarwal says. “It’s unconstrained by our puny 50 word-per-minute input.”
The key to the iceberg model is that ten percent – no substantive decisions are taken, no meaningful action, until the human in charge says so. Good genies will surface questions and clarifications at the speed of human language, then dive back below the surface to negotiate next steps in the underwater world of machine-to-machine communication.
Will Tech Giants Let It Happen? The Plaid Example.
For Gather to scale, it needs hundreds of thousands, if not millions, of people to engage with its platform. Agarwal is reserved when pressed on the use cases that might drive that engagement, but it’s not hard to imagine any number of “killer apps” that could get the startup to its first million users. But as challenging as scaling an initial user base may be, Gather faces an even larger threat:The data use policies of big platforms like Amazon and Google. Regulations like GDPR guarantee a user’s right to access and download their own data, but most big tech platforms have “terms of service” policies that prohibit automated retrieval of user data. These policies are ostensibly in place to counter malicious actors who are spoofing real user’s accounts, but they could also be employed to stymie Gather’s work on behalf of its user base.
This is where the Gather team’s experience at Shape Security comes into play. Shape’s core business was to help large financial institutions fight automated attacks against the banking industry’s consumer portals. Agarwal and his colleagues spent years understanding and perfecting defenses against sophisticated “attack vectors” in a sector where the stakes are high – people do not like to lose their money. For much of their time at Shape, one of their most vexing opponents was a company called Plaid – then a startup, but now a $15 billion industry leader that offers consumers a platform to retrieve, manage, and gain value from their personal financial data across a majority of banking institutions online. If you’ve ever used RobinHood, or moved money from your bank to Venmo, you’ve used Plaid. Like Gather, Plaid works as an agent on behalf of its individual customers. For years big banks fought against the idea of their own consumers taking control of their data, and Shape Security was one of their most potent weapons. While Shape was able to win at the tactical level – stopping Plaid from accessing data on behalf of clients like Capital One –Plaid managed to win the overall war, because its ardent users pressured their financial institutions (and regulators) to allow them access to their own data.
The Plaid example can’t but be front and center in the Gather team’s minds as they embark on the next phase of their journey. Agarwal, a former Network Warfare Officer with the United States Air Force, often uses military terminology when describing the state of consumer data rights. “In the military there’s a term called preparing the battlefield – months and months of preparatory work before you commit,” Agarwal says. “As soon as we finished up at our acquirer, we started brainstorming about how to protect more users in more profound ways.” The idea for Gather, he said, hit him “like a lightning bolt” and work on Gather began almost immediately afterward.
What’s In It For Brands?
Agarwal is committed to making Gather free for its users, a tactic that will certainly help the company garner its initial user base. Once a critical mass of consumers are on the platform, he envisions charging enterprises API fees when they reach out to consumers and request consumer data, with the consumer’s permission, of course. As Agarwal imagines it, brands might want to offer promotions much like the example he mentioned above – where Amazon Music offers six months free in exchange for a user’s Spotify data. Walmart might do the same in a bid to lure away Amazon customers. But the examples can get even more granular – McDonald’s might offer otherwise hard to reach consumers in a certain zip code free delivery via DoorDash, or a company like P&G might pilot a Pampers subscription service based on a user’s past purchase data. The possibilities are infinite – if Gather gets to scale.
Should he succeed, Agarwal and team are hoping to jumpstart an entirely new value equation for consumer-driven data, one that just might force all businesses to abandon today’s dominant model of hoarding data and steering consumers into a limited set of choices. “Today, our data is so siloed, but it’s so valuable,” Agarwal told me. “We can change the power balance from the platform back to the user.”
Long time readers know how I feel about Agarwal’s sentiment – I believe unleashing the consumer data economy could drive a huge increase in economic innovation and flourishing. I suspect this won’t be the last time I write about Gather, and certainly not the last time I write about the sea change it hopes to spark. In the meantime, Agarwal will be presenting his vision for Gather at P&G Signal this coming July 12th. You can find a registration link for the event here.
I’ve been thinking about retirement lately. I’m not retired, at least I don’t think I am, though moving on from The Recount has left me uncertain about how to answer the inevitable “so what do you do” questions – the ones that anchor nearly every social gathering I attend:
Person I Just Met:So what do you do besides hang out at dinner parties?
Me: I’ve been trying to come up with a good answer for that one.
Person I Just Met: So, you’re retired?
Well no, in fact, I’m not retired. Why does everyone jump to that term? The word has always bothered me. It lands poorly, evoking decay and senescence. Its cousin “retiring” conjures a person who wishes to disengage from the world, and its root is, well, tired. I mean, who wants to be tired, much less, thanks to the prefix “re” – tired over and over again?
I know there are tens of millions of proudly retired folk, people who embrace the term as an achievement. Fine, but I’m not joining that team. To me, it signals that you’re done adding anything productive to the world in terms of your career. You’re on the penultimate leg of life, and the only meaningful stop left is a long dirt nap.
So maybe it’s time to retire the word’s first definition: “to leave one’s job and cease to work, typically upon reaching the normal age for leaving employment.” It’s such an industrial framing.
I suppose I am technically leaving one aspect of my life, a core narrative that’s driven me for more than thirty years: That of a founding executive in a startup. But I’ve always had a number of projects that ran alongside those companies – conferences like Signal and Web 2.0, board positions on private, public, and non-profit corporations, writing, investing, speaking, consulting – all of which are happily expanding to fill my days just as work with The Recount subsides. And yes, I’m thinking about taking on or starting any number of new projects – but I’ve a new rule for them: They can’t be venture-backed companies with me as the founding CEO. That era is over.
But none of this fixes that problem above: What the hell do I say to the question about what I’m doing with myself these days? Given I have stopped doing the one thing that nearly everyone understands as “having a job,” I need a better answer. Any founder can tell you, being in charge of millions of dollars of invested capital and scores of trusting employees is exhausting. Having done it over the course of seven different startups, then stopping cold turkey earlier this year, I can tell you one thing for certain: I’ve never felt less tired than I do right now. I’m finally not tired, in fact, I’m refreshed, invigorated, and getting more gassed up each and every week that passes. Is there a word for that? If you’ve got one, please do share. For now, I think I’ll just claim I’m unretired, and see how that goes…
Welcome to year nineteen of these annual predictions, which means….holy cow, twenty years of writing at this site. Searchblog has been neglected of late, running a media startup during a pandemic will do that to thoughtful writing. I hope to change that in 2022, starting with this bout of chin stroking. If you’re an old timer here, you know I don’t really prepare to write this post. Instead I sit down, summon the muse of flow, and let it rip in one go. Let’s get to it.
Crypto blows up. 2022 will be a chaotic year for crypto – both the decentralized finance and social token/NFT/gaming portions of the industry, which will grow massively but be beset by fraud, grift, and regulatory uncertainty, as well as an explosion of new apps based on scaleable blockchains such as Solana and Avalanche. Most of these apps will fade (much as early dot com stocks did), but the overall space will be markedly larger as a result. And while 2021 was the year most of the world learned about crypto, 2022 will be the year crypto dominates the tech narrative. I’m holding off on calling a crash – ’22 feels a bit more like ’98 or ’99 than the year 2000, which is when “web1” topped out. But that first top is coming, and when it crests, look the f*ck out. Crypto is a far more integrated into the global economy than we might suspect. In fact, I’ll toss in a corollary to this first prediction: In 2022, a major story will break that exposes a major state actor has been manipulating the crypto markets in a bid to destroy US financial markets.
Oculus will be a breakout hit, but it’ll immediately be consumed in the same controversies besetting the rest of Facebook’s platforms. The company throws money and lobbyists at the problem, including enough advertising budget to mute mainstream press outrage. Apple will try to capitalize on all of this FUD as it introduces its own VR play. Regardless, the Oculus division becomes a meaningful portion of Meta’s top line, which starts the change the narrative around Facebook’s surveillance capitalism business model.
Twitter changes the game. I have no particular insight into new CEO Parag Agrawal, but the company has had a long suffering relationship with its true value in the world, and I think the table is set for an acceleration of its product in ways that will surprise and even delight its most ardent fans (I count myself somewhat reluctantly among them). How might this happen? First, look for a major announcement around how the company works with developers. Next, deeper support and integration of all things crypto, in particular crypto wallets like MetaMask. And last (and related), a play in portable identity, where your Twitter ID brings value across other apps and environments.
Climate has its worst – and best – year ever. Worst because while 2021 was simply awful (I mean, the year ends with a winter draught, then a historic fire in… Boulder?) things can always get worse, and they will. Best, because finally, the political will to do something about it will rise, thanks mainly to the voice of young people around the world, and in particular in the United States.
The return of the office. Yes, I know, everything’s changed because of the pandemic. But truth is, we work best when we work together, and by year’s end, the “new normal” will be the old normal – most of us will go back to going into work. A healthy new percentage of workers will remain remote, but look for trend stories in the Post and Times about how that portion of the workforce is feeling left out and anxious about missing out on key opportunities, connections, and promotions. One caveat to this prediction is the emergence of some awful new variant that sends us all back into our caves, but I refuse to consider such horrors. I REFUSE.
Divisions in the US reaching a boiling point. I hate even writing these words, but with the midterms in 2022 and a ’24 campaign spinning up, Trump will return to the national stage. He’ll offer a north star for Big Lie-driven tribalism, a terrifying rise in domestic terrorism and hate crimes, all fueled by torrents of racial and economic anger. I really, really hope I’m wrong here. But this feels inevitable to me.
Big Tech bulks up. Despite a doubling down in anti-trust saber rattling from the EU and the Biden administration, Big Tech companies must grow, and they’ll look toward orthogonal markets to do it. Meta and Apple will buy gaming companies, Amazon will buy enterprise software companies, and Google will buy a content library. Google’s always been a bit confused about what its entertainment strategy should be. YouTube is so damn big, and its search business so bulletproof, the company hasn’t really had to play the game the way Meta, Amazon, and Apple have. That likely changes in 22.
The streaming market takes a pause. The advertising business has yet to catch up with consumer behavior in the streaming television market, and as I’ve written elsewhere, the consumer experience is fracking awful. In 2022, those chickens will come home to roost. There’s only so much attention in the world, and with more than $100 billon to invest in content in 2022, something’s gotta give. Plus, if we get through Omicron and back out into the world, consumers might just find themselves doing something besides binging forgettable, algorithmically manufactured programming. I’m not predicting that streaming crashes, but just that the market will have a year of consolidation and, I hope, improvements in its consumer experience and advertising technology stack.
Tik Tok will fall out of favor in the US. Everyone is predicting that 2022 will be The Year Of Tik Tok, but I think they’re wrong in one big way: This won’t be a positive story. First off, the public will wake to the possibility that Tik Tok is, at its core, a massive Chinese PsyOp. Think I’m crazy? I certainly hope so! But you don’t have to wear a tin foil hat to be concerned about the fact that the world’s most powerful social algorithm is driven by a company with a member of the Chinese Communist Party on its board. And second, US-based competitors are already learning, fast, what makes Tik Tok tick. YouTube, Insta, Snap and others will take share all year long.
Trump’s social media company delivers exactly nothing. Hey, I needed one sandbag in the mix – and this one comes with a heaping side of schadenfreude. The company will become mired in legal fights, and Trump, having grifted a billion or so from favor-currying investors, will move on to ever more ruinous pursuits.
Well, that’s ten, and I wanted to keep this year’s version under a thousand words. Have a wonderful New Year’s, dear readers. I hope I see you out there in the real world, and soon.
For the past several years, I’ve led a graduate-level class studying the early history of Internet policy in the United States. It runs just seven weeks – the truth is, there’s not that much actual legislation to review. We spend a lot of the course focused on Internet business models, which, as I hope this post will illuminate, are not well understood even amongst Ivy-league grads. But this past week, one topic leapt from my syllabus onto the front pages of every major news outlet: Section 230. Comprised of just 26 words, this once-obscure but now-trending Internet policy grants technology platforms like Facebook, Google, Airbnb, Amazon, and countless others the authority to moderate content without incurring the liability of a traditional publisher.
Thanks to the events of January 6th, Section 230 has broken into the mainstream of political dialog. Slowly – and then all of a sudden – the world has woken up to the connection between the disinformation flooding online platforms and what appears to be the rapid decay of our society.
Difficult and scary narratives need a villain, and the world’s found one in Section 230, pretty much the only law on the books that can reasonably be connected to this hot mess. No matter if you’re liberal or conservative, it’s pretty easy to logic your way into blaming 230 for whatever bothers you about the events of the past ten days.
For folks on the left, the narrative goes like this: The insurrectionists were radicalized by online platforms like YouTube and Facebook. These platforms have failed to moderate disinformation-driven conspiracy theories like QAnon, or the blatant lies told by politicians like Trump. (When they finally did – two days after the coup attempt – it was far too little, far too late!). The reason Big Tech can get away with such blatant neglect is Section 230. Clearly, 230 is the problem, so we should repeal it! Unfortunately, our President-elect has endorsed this view.
The conservative view ignores any connection between political violence and 230, focusing instead on seductive but utterly wrong-headed interpretations of First Amendment law: Big Tech platforms are all run by libtards who want to crush conservative viewpoints. They’ve been censoring the speech of all true Patriots, kicking us off their platforms and deleting our posts. They’ve been granted this impunity thanks to Section 230. This is censorship, plain and simple, a violation of our First Amendment rights. We have to repeal 230! Naturally, our outgoing President has adopted this view.
The debate is frustratingly familiar and hopelessly wrong. The problem isn’t whether or not platforms should moderate what people say. The problem is in whether or not the platforms amplify what is said. And to understand that problem, we have to understand the platforms’ animating life force: Their business models.
It’s The F*cking Business Model!
Three years ago I wrote a piece arguing that Facebook could not be fixed because to do so would require abandoning its core business model. So what does that model do? It’s really not that complicated: It drives revenue for nearly every modern corporation on the planet.
Let that settle in. The platforms’ core business model isn’t engagement, enragement, confirmation bias, or trafficking in human attention. Those are outputs of their business model. Again, the model is simple: Drive sales for advertisers. And advertisers are companies – the very places where you, I, and nearly everyone else works. They might be large – Walmart, for example – or they might be small – I got an ad for weighted blankets from”Baloo Living” on Facebook just now (HOW DID THEY KNOW?!).
When advertising is the core business model of a platform, that platform’s job is to drive sales for advertisers. For Facebook, Google, Amazon, and even Apple, that means providing existential revenue to tens of millions of companies large and small. This means that “Big Tech” is fundamentally entangled with our system of modern capitalism.
Killing Section 230 does nothing to address that fact.
Let’s get back to the distinction I drew above – between moderating content (the focus of 230) and amplifying that content, a practice Section 230 never anticipated. To understand amplification, you need to understand a practice that nearly all advertising-driven platforms have adopted in the past ten years: Content feeds driven by algorithms. The Wall St. Journal has woken up to this practice, pointing out in a recent technology column that Social-Media Algorithms Rule How We See the World. Good Luck Trying to Stop Them. The piece does a fine job of pointing out what anyone paying attention for the past decade already knows: Our information diet is driven by algorithms we don’t understand, serving not the health of the public dialog, but rather the business model of social media companies and their advertising customers. The conclusion: We’ve lost all agency when it comes to what we consume.
About That Agency
But before feeds became our dominant consumption model, we happily outsourced our agency to journalistic media brands – and to the editors and journalists who worked for those media brands. Some of us still curate our news this way – but our ranks are thinning. Back before platforms became our dominant media platform (all of ten years ago!), anyone who wanted to read the news had to exert a critical, if often fleeting form of agency. We decided which media outlets we would regularly pay attention to. We chose to read The New York Times or the Post (or both), The Wall St. Journal or The Economist. Media brands stood as proxies for a vastly more complicated and utterly overwhelming corpus of information we might potentially consume. The job of the journalists at those media outlets was to curate that information into a coherent diet that conformed to whatever that media outlet’s brand promised: “All the News Fit to Print” if you’re the Times, aloof neoliberal analysis if you’re The Economist.
But that’s not how the vast majority of Americans get their news these days. If anything, Facebook has given tens of millions of people who otherwise might not seek out the news an illusion of news literacy thanks to whatever happens to show up in their feed. For those who do want to chose a news diet, we might parrot the agency of the pre-feed days by following this or that new brand on Facebook, YouTube, or Twitter. But in the feed-driven environment of those platforms, articles from The Economist, The Times, or The Journal must compete, post for post, with the viral videos of flaming Zambonis and titillating proofs of elaborate child pornography rings shared by your friends. Given the platforms’ job is to drive revenue for its advertisers, which group do you think gets more amplification? You already know the answer, of course. Hell, it turns out Facebook has known the answer for years, and has consciously chosen to show us low quality information over accurate journalism. How do we know? It has a “News Ecosystem Quality” index – a SOMA-like tuning fork for its algorithms that dials up quality information whenever things might turn a bit too ugly. Let THAT sink in.
Given all of this, it’s seductive to conclude that the best way to limit bad information on platforms is to ask the platforms to moderate it away, threatening them with repeal of 230 to get there. But that’s a terrible idea, for so many reasons I won’t burden this essay with a recitation (but please, read Mike Masnick if you want to get smart fast).
A far better idea would be to coax that critical layer of agency – the human choice of trusted media brands – back to the fore of our information diet in one way or another. And if we don’t like our choices of media brands, we should start new ones, smarter ones, more responsive ones that understand how to moderate, curate, and edit information in a way that both serves the public good and understands the information ecosystem in which it operates. (Yes, yes, that’s a self-serving reference.)
As a society we’ve at least come to admire our seemingly intractable problem: We’re not happy with who’s controlling the information we consume. The question then becomes, how can we shift control back to the edge – to the consumer of the information, and away from algorithms designed to engage, outrage, and divide?
I’m of the mind this can be done without sweeping Federal legislation – but legislation might actually be helpful here, if it contemplates the economic incentives driving all of the actors in this narrative, including the businesses who currently pay Facebook and its peers for providing them revenue.
In short, I think it’s time to hack the economic incentives which drive the platforms. Section 230 is a dodge – we’re obsessing on a 26-word law that offers nearly every contestant in the dialog a convenient way to duck a far larger truth: No one wants to threaten the profits of our largest corporations. And given I’ve been on for a while, I’m going to stop now, and get into how we might think differently in the next installment. Thanks for reading, and see you soon.
—-
This post is one of a series of “thinking out loud” on our current media ecosystem. Here are a few others:
Never in my five-plus decades has a year been so eagerly anticipated, which makes this business of prediction particularly daunting. I’m generally inclined to be optimistic, but rose-colored glasses stretch time. Good things always take longer to emerge than any of us would wish. Over 18 years of doing this I’ve learned that it’s best to not predict what I wish would happen, instead, it’s wise to go with what feels most likely in the worlds I find fascinating (for me, that’s media, technology, and business, with a dash of politics given my last two years at The Recount). As I do each year, I avoid reading other folks’ year-end predictions (though I plan on getting to them as soon as I hit publish!). Instead, I just sit down at my desk, and in one rather long session, I think out loud and see where things land.
And off we go….
1. Disinformation becomes the most important story of the year. In some ways, this is foolhardy – like predicting that the election would drive 2020, only to see it overwhelmed by COVID-19. The topic of disinformation feels a bit cerebral and hard to pin down – not as concrete as a pandemic or an election cycle. But I’m convinced 2021 will be the year we all realize that our media/information ecosystem is broken – with disinformation, propaganda, and brazen falsehood its most pernicious externality. Businesses are waking up to the threat this poses to their bottom lines (and to society at large), most scholars and policymakers are already there. In the words of former Republican strategist Steve Schmidt, speaking on a recent Recount podcast: “In a society where there is no ability to distinguish between the truth and the lie, democracy will be lost.” 2021 will be a year where we search for the root causes of our failures over the past few years, and at the center of that failure is a communication system that mindlessly manufactures disinformation. A free and open democratic economy can’t run on bullshit. I’m personally devoting 2021 to exploring how we can navigate the collision of technology platforms, unfettered capitalism, broken media models, and feckless regulatory oversight. More on that soon…
2. Facebook’s chickens come home to roost. Related to #1, yes, and it’s certainly passé to beat up on Facebook. As an OG in the space (“Facebook Can’t Be Fixed,” et al), I’m reluctant to go there once more – our troubles are bigger than one company alone. And for years the company has steamed ever forward, its fortunes unaffected by endless cycles of bad PR. But in 2021, the good ship Facebook will start taking on serious water. Incoming President Joe Biden will set the tone with his distaste for the company, and company’s tone deaf approach to communications will finally fail to deliver the company a pass. (If you missed it, you must watch this insanely scripted game of dodgeball between journalist Tamron Hall and Facebook COO Sheryl Sandberg). The company’s own employees are increasingly uncomfortable with their leadership, and its consumers and marketing partners are increasingly looking for alternatives to a platform they see as toxic and unwilling to change. Toss in policymakers’ thirst for an easy target and a media industry tired of the doubletalk, false narratives, and outright lies, and 2021 will be a dismal year for Facebook – in particular in the United States, where the company will likely admit that it has failed to grow user engagement. And that, to put a fine point on it, will tank the stock, full stop.
3. AI has a mid-life crisis. The past few years have witnessed the shining resurgence of artificial intelligence – breakthrough after breakthrough has led to justifiable optimism that AI-driven innovation will solve both the mundane (Look! It can untangle corporate supply chains!) as well as the divine (Look! It can cure every disease known to humankind!). All of this and more is likely true, but humanity has yet to fully comprehend the potential negative externalities of AI, much less mitigate them. Chastened by our last bout with externality ignorance (see Facebook, above), 2021 will be the year society takes a step back and thinks hard about where this is all going. Setting up the narrative is Google’s mishandling of its relationship with leading AI critic Timit Gebru, but by year’s end, the AI narrative will be as much about hand wringing and regulatory oversight as it is about revolutionary breakthroughs.
4. Then again, a wave of optimism around tech-driven innovation takes root. This is the counter narrative to five-plus years of a “tech as bogeyman” trope. 2021’s optimism will be driven by two major factors: First, a belief that we’re on a path to correct the worst mistakes of the past decade (see #1 – #3 above). And second, a slew of long-developing and real world proofs that technology-driven breakthroughs will bring serious benefits to society at scale. Candidates include biotech and bioinformatics (the core technologies behind the COVID vaccine), blockchain (though I’m certain bitcoin will have at least one of its several crashes this year), and lithium batteries (giving us hope on climate change and driving my otherwise random prediction on gas-powered cars, below).
5. Google does in 2021 what I predicted it would in 2020. And what was that? That Google zags. I wrote: “Saddled with increasingly negative public opinion and driven in large part by concerns over retaining its workforce, Google will make a deeply surprising and game changing move in 2020.” I think this is even more likely given Google is fighting off a terrifying array of massive regulatory actions, and desperately needs to avoid looking like Facebook in the eyes of its employees, consumers, and business partners.
6. Nothing will get done on tech regulation in the US. Blame antitrust. Whether or not Biden decides to continue Trump’s FTC and DOJ actions, he will likely start his own, and keep the focus on antitrust, rather than more thoughtful legislation around disinformation, machine readable data portability, or privacy. There will be some movement – net neutrality will probably get reaffirmed and we’ll fix Trump’s H1-B messes, for example. But by year’s end folks will realize that antitrust suits are essentially kabuki, an exercise designed to go nowhere and maintain the status quo. When Facebook is aggressively calling on Washington to regulate the Internet, you know they’ve done the math and concluded nothing is really going to change. Everyone’s talking about how it’s about time for the government to step up and do something, but I’m deeply cynical about anything changing in 2021. That doesn’t mean we won’t (or shouldn’t) make progress…just that it won’t happen in a year.
7. A “new” social platform breaks out in 2021. I’ve made versions of this prediction in the past, but my timing was off. Given the handcuffs 2021 will place on the traditional players in Big Tech, this coming year presents a perfect opportunity for a breakout player to redefine the social media category. There’s plenty of VC money ready to invest here, and both Tik Tok and Snap have had their moments in the sun. It won’t be some ripoff version of what already exists (sorry, Parler). I’d either look to something like an evolved Signal, an app that already has a growing user base, or a from-nowhere startup that gets super hot, super fast because it’s fundamentally rethought social media’s traditional, serotonin-driven models for engagement and advertising .
8. The markets take a breather, and SPACs get a bloody nose. Back in 1987 I was a cub reporter covering the technology industry. One of the first stories I ever wrote involved a software startup run by a fellow I immediately judged to be a hustler. In our initial interview, he laid out how he was going to use financial engineering to take his small company public via a shell company. It struck me as dodgy then, and it strikes me as dodgy now. I have plenty of industry pals who are involved in SPAC mania now, and as far as I can tell, they’re on the up and up. SPACs can be a healthy and innovative approach to financing companies. But alas, this SPAC trend stinks of easy money and honeytraps for unsophisticated investors and shady operators. So in 2021, SPACs will lose their luster, driven in large part by several spectacular failures (or worse). Related, overall stock markets won’t crash, but by year’s end, they’ll sputter as tech stocks fall out of favor and society begins to realize how much debt needs to be worked through before true growth can reassert itself.
9. 2021 will be prove to be the last year of growth in gas-powered automobiles. There, I did it – I wrote a prediction I wish for, rather than one I can back up with my own lived experience. That said, the aforementioned breakthroughs in lithium battery technology will lead to a wave of new options for vehicle buyers, and in the long lens of history, the early 2020s will be celebrated as the period where we finally overcame our addiction to burning fossil fuels. Please, MAKE IT SO.
10. Africa rising, China…in question. A few years ago, I predicted China was going to crash, but I now realize the world needs China to counter US hegemony. With that in mind, the breakout continent of 2021 will be Africa, home to many of the fastest growing countries in the world, and the focus of years of Chinese investment and diplomacy. After four years of US neglect, the Biden administration will realize it’s dangerously close to losing Africa altogether, and announce a massive investment in the continent. Biden’s China policy will be fascinating to watch, but I’d not wager a cent on where it lands this year.
11. Everyone loses their shit, in a good way. Because we deserve one big ass party, damnit, when this pandemic finally lifts. This is the easiest one to predict, because, well….I’ll be right there with you. Until then, folks, stay safe, wear a f*cking mask when in public, and do what you can to help others get through what is still a dark damn time in our history. See you on the other side.
An idea has been tugging at me for months now, one I’ve spent countless hours discussing and debating with leaders in marketing, media, and journalism. And as I often do, I’m turning to writing to see if I can push it into more concrete form. I’m literally thinking out loud here, but I won’t bury the lede: I believe it’s time for all major corporations – not just the companies that pushed for the #StopHateForProfit boycott – to call for a broader, more universal movement related to their marketing practices and their Corporate Social Responsibility (CSR) and Environmental, Sustainability, and Governance (ESG) efforts.This isn’t about punishing platforms, rather it’s about reimagining our relationship to them, and shifting our focus to the externalities our collective dependance upon them has created in society – and for our clients’ bottom lines. For now, I’m calling the movement “Information Equity” – a rather dry and academic moniker, to be sure. Toward the end of this post, I’ll ask for your help in pushing the idea forward. But for now, let me explain what I’m on about.
***
Some years back I helped start a company called NewCo, an effort to identify and promote companies that view business as a force for good. The idea sprang from an observation that the most successful companies often were animated by a desire to make the world better in some measurable way. This idea of business as a force for good has found broad appeal in recent years, culminating in the Business Roundtable declaring a new definition of purpose for American companies. No longer would the true north of business be the maximization of profit for shareholders. In its place would now sit a new lodestar: “Creating an economy that serves all.”
It’s easy enough to dismiss such declaratives as lipstick on the soulless pig of capitalism, but these kind of statements shift societal expectations over time, and eventually they change outcomes as well. Large corporations are increasingly being held to account by employees, customers, and the communities they impact. It’s demonstrably true that business practices have changed in recent years. And the last nine months – replete with a global pandemic and a deadly serious racial reckoning – have deeply accelerated those changes. Driven by COVID, the Black Lives Matter movement, and an impending climate disaster, “Corporate Social Responsibility” has now taken center stage.
Now that the klieg lights are on, the question rightly becomes: What will corporations do with the microphone?
It’d be tempting to claim victory by pointing to the change that’s already here. Less than a generation ago, it would have been corporate suicide to take a stance on charged issues like race, gender, or the environment. But today, the world’s largest advertiser – Proctor & Gamble – employs its marketing budgets to create and promote powerful films decrying systemic racial and gender inequality. The world’s largest money manager – BlackRock – has put climate change at the center of its investment and governance decisions. For each of these formerly third-rail issues – race, gender, climate – hundreds of major corporates have declared similar intentions.
But while race, gender, and environmental equity have become rallying cries for mainstream corporate America – and rightly so – there’s another fundamental human right I’d like to see taken up by our newly woke business leaders. This particular right – or its absence – drives society’s comprehension, education, discussion, debate and ultimately, society’s actions related to resolving historically intractable issues of human rights.
In short, if we are going to solve our largest problems, we must first solve society’s problem with the truth.
***
Over the past ten or so years, American society has lost its faith in a shared truth. We simply don’t believe the same things anymore. And in the battle to defend our particular versions of truth, we have badly weakened journalism – our historical institution of truth-telling. We’ve not simply undermined journalism’s economic models, but more importantly, we’ve marginalized its impact and primacy in helping us determine the facts upon which society determines progress. We have questioned journalism’s motives, its business models, and the social compact granting journalism the right to determine fact, establish reason, and debate course of action.
I am not arguing these questions should not be raised – journalism is imperfect at best. But in abandoning journalism, we might have forgotten a larger question: If a free and fair press is not the answer to finding our common truth then … what exactly is? Think for a moment on what might replace journalism in our society. You’ll likely find yourself in a rather dark mood.
Over centuries, we have built journalism as an institution of truth telling – in concert, in opposition, and even in cahoots with institutions of power in government, religion, and business. This truth-telling organ is commonly referred to as the Fourth Estate, and its record is both speckled and glorious. But it’s also the only private institution empowered by a Constitutional name check – in the First Amendment, at that. So as far as I’m concerned, if ever there was a purpose-driven business, it’s one built around a newsroom. The mission of a news business is to fulfill the right of the people to be informed by truth. To deliver as full and transparent an account of truth as is possible. To hold truth as a mirror to power. And to demand an accounting if, once put to power, those truths do not square with the powerful’s actions.
Without standard-bearers capable of this endless and grinding work, democracy is lost – and so are the economics dependent on democracy. Without access to high-quality news reporting, the citizens of this nation will make decisions based on rumor, bias, self-interest, and fear. If, for example, a sizeable goup of Americans fear the COVID vaccine because of a failure of our information ecosystem, the American economy will suffer for years as a result.
I’m all for Benkler’s concept of a “networked Fourth Estate” – that the rise of the Internet has added a multitude of actors – bloggers, non-profits, citizen journalists – to the category we might call “the press.” And the rise of social media has, indeed, given everyone with a voice an opportunity to find an audience. But we’ve failed to place guardrails around the institutional mechanisms which determine how these new voices are distributed in our society. At present, the inscrutable algorithms and powerful business models of our largest technology platforms determine the information diets of a growing majority of Americans. At present, these platforms have no incentive to change how they do business. That’s where corporations – and their advertising budgets – must come into play with a more long-term solution.
***
Quality journalism at scale is under extreme duress. Yes, the Times, the Post, the Atlantic, and the Wall Street Journal have all experienced a renaissance in the past few years. But all you readers of long form journalism, you devourers of words by the thousand, you are not the citizens of whom I speak. Your information equities are not in peril, your privilege is intact.
What matters here is scale. Read Charlie Warzel or listen to Kevin Roose, and ponder the citizen who can’t afford (or simply doesn’t wish) to take their news from high-quality print outlets. When more than a hundred million Americans struggle to cover a $400 medical bill, society needs an advertising-supported model that brings quality information to the masses (this of course is Zuckerberg’s favorite defense for why Facebook is ad-driven, one of many examples of how the company has adopted the cloth of journalism without accepting its responsibilities). When the most convenient free service for news is Facebook, then Facebook will become America’s answer to news. As a result, tens of millions of our fellow citizens are caught in the jaws of systemic information bias and institutionally-driven information pollution. One-quarter of Americans believe the recent election was possibly stolen, and a full third of us believe that the new administration may well enslave children for sexual favors. We’re in the grip of an information-driven disease – an information pandemic – the cancerous externality of a society which has deemed the growth of our most profitable companies more important that the dissemination of fact-based information and truth.
***
So what is business going to do about it?
Boycotts are fine, but business must make combatting the lack of quality information in our society a primary and ongoing goal. Surely if corporate America can get comfortable with activism on behalf of racial, gender, and environmental equality, it can throw its support behind every citizen’s right to quality information.
But how? How might business lead when it comes to addressing this fundamental issue?
There are scores of ideas yet to be imagined, and plenty of think tanks, non-profits, and other organizations already working on important parts of this problem, including startups like NewsGuard and media organizations like the 4As’ Advertiser Protection Bureau and the WFA’s Global Alliance for Responsible Media. But for all its skill at communication, the media industry has been far too silent in advancing solutions. It was just last month – last month!! – that the Global Alliance for Responsible Media added “Misinformation” to its long list of “harmful content.”
That’s progress, but our economy – and our democracy – can’t wait any longer. The most important step we can take now is to declare information equity an issue worthy of support by the business community. Marketers must dedicate a small but substantial portion of their budgets – which in aggregate equate to hundreds of billions of dollars each year – to supporting the creation and distribution of quality journalism at every level of society. I’ve written extensively elsewhere about how this is possible in partnership with the scale, targeting, and efficiency that platforms unquestionably bring to our industry. It will mean that platforms, marketers, and media companies will have to renegotiate their approaches to doing business. But not only is that work possible, it’s also good for business results – and society at large.
The media industry helped to create this problem of misinformation – by funding the rise of platforms, by ignoring the externalities these platforms foisted onto society, and by growing addicted to the results the platforms delivered to our bottom lines. But if we don’t renegotiate the relationships between marketers, platforms, media companies and the audiences we all serve, how can we expect anything to change?
Just as the planet can no longer tolerate the externalities of an economy driven by carbon, and just as our society can no longer tolerate the externalities of a culture driven by institutional race- and gender-based injustice, we can no longer whistle past the graveyard of truth.
If you agree, please join me in an ongoing conversation. I hope this will be the first in a series of posts “thinking out loud” about the issues we face as a media community. My email is jbat @ therecount dot com – hit me up, and I’ll add you to an engaged community of agency leaders, marketing executives, media entrepreneurs, and others who are already exploring a path forward. I look forward to the dialog, and as always, thanks for reading.
Zoom’s stock: Up and down and up and down and up and to the right.
As the coronavirus crisis built to pandemic levels in early March, a relatively unknown tech company confronted a defining opportunity. Zoom Video Communications, a fast-growing enterprise videoconferencing platform with roots in both Silicon Valley and China, had already seen its market cap grow from under $10 billion to nearly double that. As the coronavirus began dominating news reports in the western press, Zoom announced its first full fiscal year results as a public company. The company logged $622.7 million in revenue, up 88 percent from the year before. Zoom’s high growth rate and “software as a service” business model guaranteed fantastic future profits, and investors rewarded the company by driving its stock up even further. On March 5th, the day after Zoom announced its earnings, the company’s stock jumped to $125, more than double its price on the day of its public offering eleven months before. Market analysts began issuing bullish guidance, and company executives noted that as the coronavirus spread, more and more customers were flocking to Zoom’s easy-to-use video conferencing platform.
But as anyone paying attention to business news for the past month knows, it’s been a tumultuous ride for Zoom ever since. As the virus forced the world inside, demand for Zoom’s services skyrocketed, and the company became a household name nearly overnight. Zoom’s “freemium” model – which offers a basic version of its platform for free, with more robust features available for a modest monthly subscription fee – allowed tens of millions of new users to sample the company’s wares. Initially, Zoom was a hit with this new user base – stories of Zoom seders, Zoom cocktail parties, and even Zoom weddings gave the company a consumer-friendly vibe. Just like Google or Facebook before it, here was the story of a scrappy Valley startup with just the right product at just the right time. According to the company, Zoom’s monthly users leapt from 10 million to more than 200 million – an unimaginable increase of 2,000 percent in just one month.
Just as quickly, however, Zoom became the subject of controversy. Like Google and Facebook before it, Zoom’s success as a product comes from its unwavering focus on convenience. Zoom makes it as easy as possible to use its platform. Employing invisible technical tricks, Zoom engineers made the platform easy to install, easy to share, and … easy to hack. Press reports about “Zoom bombing” began dominating the headlines, and as reporters dug in, so did reports of significant (and long ignored) security failings. Large corporations, state governments, and school districts banned the company’s products. Media outlets began to investigate the company’s Chinese roots – only to discover that the young firm had mistakenly routed user sessions through its servers in mainland China. Zoom responded quickly, freezing product development and focusing entirely on fixing critical security issues. The company then updated its privacy policies, bowing to criticism that it might leverage user data in a manner similar to Google and Facebook (more on that below).
But with China and the United States entering a third year of an increasingly heated trade war, and blaming each other for the origin of the novel coronavirus, Zoom finds itself in an extraordinary position that no amount of crisis communications can overcome. Zoom’s founder and CEO, Eric Yuan, is a Chinese ex-pat and naturalized American citizen. More than 700 of his 2,500+ employees live and work in China. Until March of this year, Yuan was held up as an example of the best that global capitalism can offer – an ingenious immigrant who bootstrapped his way to America and leveraged hard work, smarts, and venture financing into a multi-billion dollar fortune.
Now Zoom’s brand – and its future – live under storm clouds of suspicion. In just four weeks, the company has inherited the full force of the American “techlash.” And the companies previously at the center of that storm – in particular the “Big Four” of Apple, Facebook, Google and Amazon – are happy to pass along that unpleasant mantle.
So what might Zoom do next?
* * *
As some readers know, I’ve been a student of the “Big Four” for more than two decades. For the past 18 months, that study has focused on the terms of service and privacy policies of the Big Four. Thanks to the work of researchers and faculty at Columbia’s School of International Public Affairs and Graduate School of Journalism, we’ve published a study of the underlying architecture of the Big Four’s core policies, a visualization we call “Mapping Data Flows.” This tool breaks down and compares each company’s privacy and data use policies, with a goal of giving both ordinary consumers and academic researchers insight into the architecture of control currently dominating our economy’s relationship to data.
Given its very recent and extraordinary rise as a consumer tool, we decided to apply this approach to Zoom’s terms of service and privacy policy as well. You can find our initial findings here.
As with every research project, our study of Zoom’s policies began with a working hypothesis. One of the most interesting findings from our initial study of the Big Four was how similar their policies were – they all collect vast sums of data, and their terms of service allow them nearly unlimited usage of that data. And of course, all four granted themselves the right to collect, process, and employ user data for the purpose of pursuing advertising businesses – a multi-hundred billion dollar industry driving what Harvard scholar Shoshana Zuboff calls “surveillance capitalism.” We therefore asked ourselves two questions: First, would Zoom’s current terms of service and privacy policies allow them to join the Big Four in the pursuit of an advertising business? And second, given Zoom is (or was) a business facing, as opposed to a consumer-facing platform, would its privacy policies and terms of use be markedly different from the Big Four?
The short answer to that first question is yes. And for the second? That’d be a no. As the first image below demonstrates, Zoom collects a ton of data, and its policies are quite similar to those of its Big Four cousins.
Figure 1 – Zoom’s Data Collection visualized
But exploring that first question – whether Zoom might become an advertising-driven business – yielded even more interesting insights:
Figure 2 – Zoom’s data collection for purposes of Advertising.
As the above illustration from our new visualization demonstrates, our research shows that nearly all data collected from Zoom user sessions may be used for the purpose of advertising. Despite the clarification of Zoom’s privacy policies posted on March 29th around usage of data from user sessions, nothing material changed in its actual policies. Indeed, the company writes that “We are not changing any of our practices. We are updating our privacy policy to be more clear, explicit, and transparent.”
To be clear, Zoom does not currently run an advertising business along the lines of Facebook, Google, Apple, or Amazon’s (and yes, both Apple and Amazon have significant data-driven advertising businesses, they just don’t like to talk about them). So why, in its own policies, does Zoom reserve the right to use all collected data for the purpose of “advertising”?
As any lawyer will tell you, words are slippery things. Certainly in the context of Zoom’s current business, the word “advertising” covers the company’s role as an advertiser – as a brand that uses data to market to current and potential customers using platforms like Google or Facebook. But a careful reading of the company’s policies reveal how easily the same words could allow the company to pivot from advertiser on other platforms to provider of platform advertising, should the company wish to. In other words, there’s nothing stopping Zoom from joining the Big Four as a major player in the provision of advertising services, should it wish.
How might Zoom do such a thing? And given its current privacy backlash, why would Zoom ever consider such a move?
Let’s start with the How, then we’ll cover the Why.
As I mentioned at the start of this piece, Zoom’s current business is based on what folks in the tech industry call a freemium SaaS (software as a service) model. The company makes a version of its platform available to anyone for free, and then “upsells” those free users to a paid version that has more bells and whistles, like the ability to record conferences, larger numbers of participants on a videoconference, and so on. Pricing starts at $15/month, scaling up to thousands a month for large customers. This model is most often employed for enterprise customers (Slack is a good example), but it’s also found success in consumer-facing applications, where more often than not users pay to avoid advertising (think YouTube or Hulu). Regardless of whether the service is enterprise or consumer focused, free users always outnumber paying ones by an order of magnitude or more.
One of the most difficult elements of a freemium SaaS model is luring those free users “down the funnel” into paying for a monthly subscription. So how might Zoom convince its bumper crop of roughly 190 million new consumers to start paying up?
By now you’ve probably figured out where I’m going with all this. Zoom could implement a free service that’s supported by advertising, then encourage users to pay for a version that’s ad free. Doing so would be ridiculously simple: Just as with YouTube, Zoom could force its users to watch a “skippable” pre-roll video ad before the start of each videoconference (and it could use its data trove to make those ads extremely targeted). Well aware that such an interruption would be an annoyance at best, Zoom could then offer to strip the ads out for customers who paid a small subscription service of, say, $5 a month. If just one quarter of its customer base decided to do so, Zoom’s revenues would jump by $250 million a month – adding a cool $3 billion a year to its top line revenue, nearly all of which would be pure profit. The resulting advertising business could easily add hundreds of millions, if not billions more. That’s five times more revenue than the company reported in its last fiscal year.
Which brings us to the “Why” of this admittedly speculative (but nevertheless quite reasonable) exercise. And that why comes down to capitalism. Zoom is a public company with a massive valuation – more than $40 billion at the time of this writing. That gives it an unsustainable price to earnings ratio of roughly 1,750 – 76 times larger than the S&P average. The pressure to “grow into” those outsized expectations is enormous. Zoom is staring at a multi-billion dollar business model just begging to be implemented. For its shareholders, board, and senior executives, the question isn’t why it should be adopting the business model that made Facebook, Google, Apple, and Amazon the most valuable companies in the world. Instead, the question is simply this: Why shouldn’t it?
In another post, we’ll explore answers to that question (and how Zoom, if it’s thoughtful, could help reimagine the core architecture of surveillance capitalism). For now, take a spin around our newest visualization, and give us input in the comments below. Thanks for reading, and take care of yourself – and others – out there.
###
The Mapping Data Flows project is seated at Columbia SIPA – we are grateful for the support of Dean Merit Janow, as well as the support of the Brown Institute at Columbia’s Graduate School of Journalism, the Omidyar Network, and faculty and staff including Mark Hansen, Juan Francisco Saldarriaga, Zoe Martin, Matthew Albasi, Natasha Bhuta, and Veronica Penney. Hat tip as well to Doc, who’s been focused on these issues for decades.
