Lilliputians in Gulliver land: Taming the Information giants

The Digital Alarmist

Of the top five companies in the IT industry – Apple, Microsoft, Amazon, Google and Facebook – only the first two create any real products of consequence. Phones and computers by Apple and office software by Microsoft. The other three companies do not create anything substantial yet have managed to become immensely wealthy and powerful by tracking, mining and selling data freely provided by the user. Two relatively newcomers -- Uber and Airbnb -- also belong in this category.

The fact that companies have taken enormous advantage of the user by offering ‘free’ software is incontrovertible. By hiding behind highly obscure legalistic jargon in their ‘terms of service’, which includes bypassing state court systems through industry-appointed arbitration boards, IT companies have routinely succeeded in deflecting lawsuits brought by users concerning privacy violations. Despite billions of dollars being imposed as fines, the companies have not significantly altered their modes of operation. To level the playing field in this very one-sided battle against the user, three possible solutions are proposed, none of which entail censorship or shredding of the web. The first option is a libertarian-socialist model, the second is a capitalist-democracy model, based on laws governing intellectual property (IP), and the third is the democratic-capitalism model.

In the libertarian-socialist model, users design terms of service agreements stipulating the conditions under which a company can use, share or mine user data, directly or indirectly, and how violations are to be handled. The company will need to consent to this agreement before any transactions involving user data take place. Note that this approach is tailored to fit individual user preferences and quite different from the ‘one size fits all’ approach adopted by companies whose ‘terms of service and privacy policy’ documents have been formulated by high-priced lawyers well versed in contract law. Since the typical user cannot afford to hire lawyers, perhaps templates of service and privacy terms to satisfy a community of users can be drawn up and made available on the web.

The second option would require companies to treat data provided to them by the user, directly or indirectly, as intellectual property data owned by the user and therefore subject to laws governing intellectual property. After all, companies go out of their way to prosecute any infringements of their intellectual property. Why shouldn’t users have the same rights?

There have been several instances where health insurance companies obtained free data from the users and packaged it as intellectual property for licensing or sale to drug companies and medical device manufacturers. Treating user data as intellectual property gives the user considerable flexibility in negotiating with companies on how exactly their data is to be handled. This includes one-time sale, type and duration of licensing options, the role of third parties are dealt, etc.

Companies in the US have been quite strict in enforcing their IP rights, either through their government or the World Trade Organization, especially in the pharmaceutical, agricultural and technology industries. If the second option were to be followed, it remains to be seen whether IT companies would be equally be strict in safeguarding the IP rights of their subscribers since this would have an enormous impact on their profits and their subscriber base.

The third option, which is the democratic-capitalism or ‘capitalism for all’ model, treats user data as equivalent to shares purchased by the user from the company with whom the user has established a relationship. This would entail the company to share their profits with their users in the form of periodic dividends. Also, when the user decides to terminate the relationship with the company, it should be considered equivalent to the user selling their shares which, in turn, would require the company to delete all data associated with the user. This option is best suited to curbing the crass exploitation of subscribers by social media companies such as Facebook and networked transportation and accommodation service companies such as Uber, Lyft and Airbnb.

Friedrich Hayek who, along with Gunnar Myrdal, won the 1974 Nobel Prize in Economics for his study of the interconnected nature of economic, social and institutional phenomena remarked that in a totalitarian state, the goals of the planner become the goals of the governed as do the means needed to achieve the said goals. The encroachment of Facebook into the financial world by its recently announced ‘Libra’ currency is a case in point.

One world, one government run by the IT behemoths? No, thank you.