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Do We Want A Society Built On The Architecture of Dumb Terminals?

2 June, by jbat[ —]

The post Do We Want A Society Built On The Architecture of Dumb Terminals? appeared first on John Battelles Search Blog.

God, “innovation.” First banalized by undereducated entrepreneurs in the oughts, then ground to pablum by corporate grammarians over the past decade, “innovation” – at least when applied to business – deserves an unheralded etymological death.

But.

This will be a post about innovation. However, whenever I feel the need to peck that insipid word into my keyboard, I’m going to use some variant of the verb “to flourish” instead. Blame Nobel laureate Edmund Phelps for this: I recently read his Mass Flourishing, which outlines the decline of western capitalism, and I find its titular terminology far less annoying.

So flourishing it will be.

In his 2013 work, Phelps (who received the 2006 Nobel in economics) credits mass participation in a process of innovation (sorry, there’s that word again) as central to mass flourishing, and further argues – with plenty of economic statistics to back him up – that it’s been more than a full generation since we’ve seen mass flourishing in any society. He writes:

…prosperity on a national scale—mass flourishing—comes from broad involvement of people in the processes of innovation: the conception, development, and spread of new methods and products—indigenous innovation down to the grassroots. This dynamism may be narrowed or weakened by institutions arising from imperfect understanding or competing objectives. But institutions alone cannot create it. Broad dynamism must be fueled by the right values and not too diluted by other values.

Phelps argues the last “mass flourishing” economy was the 1960s in the United States (with a brief but doomed resurgence during the first years of the open web…but that promise went unfulfilled). And he warns that “nations unaware of how their prosperity is generated may take steps that cost them much of their dynamism.” Phelps further warns of a new kind of corporatism, a “techno nationalism” that blends state actors with corporate interests eager to collude with the state to cement market advantage (think Double Irish with a Dutch Sandwich).

These warnings were proffered largely before our current debate about the role of the tech giants now so dominant in our society. But it sets an interesting context and raises important questions. What happens, for instance, when large corporations capture the regulatory framework of a nation and lock in their current market dominance (and, in the case of Big Tech, their policies around data use?).

I began this post with Phelps to make a point: The rise of massive data monopolies in nearly every aspect of our society is not only choking off shared prosperity, it’s also blinkered our shared vision for the kind of future we could possibly inhabit, if only we architect our society to enable it. But to imagine a different kind of future, we first have to examine the present we inhabit.

The Social Architecture of Data 

I use the term “architecture” intentionally, it’s been front of mind for several reasons. Perhaps the most difficult thing for any society to do is to share a vision of the future, one that a majority might agree upon. Envisioning the future of a complex living system – a city, a corporation, a nation – is challenging work, work we usually outsource to trusted institutions like government, religions, or McKinsey (half joking…).

But in the past few decades, something has changed when it comes to society’s future vision. Digital technology became synonymous with “the future,” and along the way, we outsourced that future to the most successful corporations creating digital technology. Everything of value in our society is being transformed into data, and extraordinary corporations have risen which refine that data into insight, knowledge, and ultimately economic power. Driven as they are by this core commodity of data, these companies have acted to cement their control over it.

This is not unusual economic behavior, in fact, it’s quite predictable. So predictable, in fact, that it’s developed its own structure – an architecture, if you will, of how data is managed in today’s information society. I’ve a hypothesis about this architecture – unproven at this point (as all are) – but one I strongly suspect is accurate. Here’s how it might look on a whiteboard:

We “users” deliver raw data to a service provider, like Facebook or Google, which then captures, refines, processes, and delivers that data back as services to us. The social contract we make is captured in these services’ Terms of Services – we may “own” the data, but for all intents and purposes, the power over that information rests with the platform. The user doesn’t have a lot of creative license to do much with that data he or she “owns” – it lives on the platform, and the platform controls what can be done with it.

Now, if this sounds familiar, you’re likely a student of early computing architectures. Back before the PC revolution, most data, refined or not, lived on a centralized platform known as a mainframe. Nearly all data storage and compute processing occurred on the mainframe. Applications and services were broadcast from the mainframe back to “dumb terminals,” in front of which early knowledge workers toiled. Here’s a graph of that early mainframe architecture:

 

This mainframe architecture had many drawbacks – a central point of failure chief among them, but perhaps its most damning characteristic was its hierarchical, top down architecture. From an user’s point of view, all the power resided at the center. This was great if you ran IT at a large corporation, but suffice to say the mainframe architecture didn’t encourage creativity or a flourishing culture.

The mainframe architecture was supplanted over time with a “client server” architecture, where processing power migrated from the center to the edge, or node. This was due in large part to the rise the networked personal computer (servers were used  for storing services or databases of information too large to fit on PCs). Because they put processing power and data storage into the hands of the user, PCs became synonymous with a massive increase in productivity and creativity (Steve Jobs called them “bicycles for the mind.”) With the PC revolution power transferred from the “platform” to the user – a major architectural shift.

The rise of networked personal computers became the seedbed for the world wide web, which had its own revolutionary architecture. I won’t trace it here (many good books exist on the topic), but suffice to say the core principle of the early web’s architecture was its distributed nature. Data was packetized and distributed independent of where (or how) it might be processed. As more and more “web servers” came online, each capable of processing data as well as distributing it, the web became a tangled, hot mess of interoperable computing resources. What mattered wasn’t the pipes or the journey of the data, but the service created or experienced by the user at the point of that service delivery, which in the early days was of course a browser window (later on, those points of delivery became smartphone apps and more).

If you were to attempt to map the social architecture of data in the early web, your map would look a lot like the night sky – hundreds of millions of dots scattered in various constellations across the sky, each representing a node where data might be shared, processed, and distributed. In those early days the ethos of the web was that data should be widely shared between consenting parties so it might be “mixed and mashed” so as to create new products and services. There was no “mainframe in the sky” anymore – it seemed everyone on the web had equal and open opportunities to create and exchange value.

This is why the late 1990s through mid oughts were a heady time in the web world – nearly any idea could be tried out, and as the web evolved into a more robust set of standards, one could be forgiven for presuming that the open, distributed nature of the web would inform its essential social architecture.

But as web-based companies began to understand the true value of controlling vast amounts of data, that dream began to fade. As we grew addicted to some of the most revelatory web services – first Google search, then Amazon commerce, then Facebook’s social dopamine – those companies began to centralize their data and processing policies, to the point where we are now: Fearing these giants’ power over us, even as we love their products and services.

An Argument for Mass Flourishing

So where does that leave us if we wish to heed the concerns of Professor Phelps? Well, let’s not forget his admonition: “nations unaware of how their prosperity is generated may take steps that cost them much of their dynamism.” My hypothesis is simply this: Adopting a mainframe architecture for our most important data – our intentions (Google), our purchases (Amazon), our communications and social relationships (Facebook) – is not only insane, it’s also massively deprecative of future innovation (damn, sorry, but sometimes the word fits). In Facebook, Tear Down This Wall, I argued:

… it’s impossible for one company to fabricate reality for billions of individuals independent of the interconnected experiences and relationships that exist outside of that fabricated reality. It’s an utterly brittle product model, and it’s doomed to fail. Banning third party agents from engaging with Facebook’s platform insures that the only information that will inform Facebook will be derived from and/or controlled by Facebook itself. That kind of ecosystem will ultimately collapse on itself. No single entity can manage such complexity. It presumes a God complex.

So what might be a better architecture? I hinted at it in the same post:

Facebook should commit itself to being an open and neutral platform for the exchange of value across not only its own services, but every service in the world.

In other words, free the data, and let the user decide what do to with it. I know how utterly ridiculous this sounds, in particular to anyone reading from Facebook proper, but I am convinced that this is the only architecture for data that will allow a massively flourishing society.

Now this concept has its own terminology: Data portability.  And this very concept is enshrined in the EU’s GDPR legislation, which took effect one week ago. However, there’s data portability, and then there’s flourishing data portability – and the difference between the two really matters. The GDPR applies only to data that a user *gives* to a service, not data *co-created* with that service. You also can’t gather any insights the service may have inferred about you based on the data you either gave or co-created with it. Not to mention, none of that data is exported in a machine readable fashion, essentially limiting its utility.

But imagine if that weren’t the case. Imagine instead you can download your own Facebook or Amazon “token,” a magic data coin containing not only all the useful data and insights about you, but a control panel that allows you to set and revoke permissions around that data for any context. You might pass your Amazon token to Walmart, set its permissions to “view purchase history” and ask Walmart to determine how much money it might have saved you had you purchased those items on Walmart’s service instead of Amazon. You might pass your Facebook token to Google, set the permissions to compare your social graph with others across Google’s network, and then ask Google to show you search results based on your social relationships. You might pass your Google token to a startup that already has your genome and your health history, and ask it to munge the two in case your 20-year history of searching might infer some insights into your health outcomes.

This might seem like a parlor game, but this is the kind of parlor game that could unleash an explosion of new use cases for data, new startups, new jobs, and new economic value. Tokens would (and must) have privacy, auditing, trust, value exchange, and the like built in (I tried to write this entire post without mentioned blockchain, but there, I just did it), but presuming they did, imagine what might be built if we truly set the data free, and instead of outsourcing its power and control to massive platforms, we took that power and control and, just like we did with the PC and the web, pushed it to the edge, to the node…to ourselves?

I rather like the sound of that, and I suspect Mssr. Phelps would as well. Now, how might we get there? I’ve no idea, but exploring possible paths certainly sounds like an interesting project…

The post Do We Want A Society Built On The Architecture of Dumb Terminals? appeared first on John Battelles Search Blog.


GDPR Ain’t Helping Anyone In The Innovation Economy

25 May, by jbat[ —]

The post GDPR Ain’t Helping Anyone In The Innovation Economy appeared first on John Battelles Search Blog.

(image)

It’s somehow fitting that today, May 25th, marks my return to writing here on Searchblog, after a long absence driven in large part by the launch of NewCo Shift as a publication on Medium more than two years ago. Since then Medium has deprecated its support for publications (and abandoned its original advertising model), and I’ve soured even more than usual on “platforms,” whether they be well intentioned (as I believe Medium is) or indifferent and fundamentally bad for publishing (as I believe Facebook to be).

So when I finally sat down to write something today, an ingrained but rusty habit re-emerged. For the past two years I’ve opened a clean, white page in Medium to write an essay, but today I find myself once again coding sentences into the backend of my WordPress site.

Searchblog has been active for 15 years – nearly forever in Internet time. It looks weary and crusty and overgrown, but it still stands upright, and soon it’ll be getting a total rebuild, thanks to the folks at WordPress. I’ll also be moving NewCo Shift to a WordPress site – we’ll keep our presence on Medium mainly as a distribution point, which is pretty much all “platforms” are good for as it relates to publishers, in my opinion.

So why is today a fitting day to return to the open web as my main writing outlet? Well, May 25th is the day the European Union’s General Data Protection Regulation (GDPR) goes into effect. It’s more likely than not that any reader of mine already knows all about GDPR, but for those who don’t, it’s the most significant new framework for data regulation in recent history. Not only does every company that does business with an EU citizen have to comply with GDPR, but most major Internet companies (like Google, Facebook, etc) have already announced they intend to export the “spirit” of GDPR to all of their customers, regardless of their physical location. Given that most governments still don’t know how to think about data as a social or legal asset, GDPR is likely the most important new social contract between consumers, business, and government in the Internet’s history. And to avoid burying the lead, I think it stinks for nearly all Internet companies, save the biggest ones.

That’s a pretty sweeping statement, and I’m not prepared to entirely defend it today, but I do want to explain why I’ve come to this conclusion. Before I do, however, it’s worth laying out the fundamental principles driving GDPR.

First and foremost, the legislation is a response to what many call “surveillance capitalism,” a business model driven in large part (but not entirely) by the rise of digital marketing. The grievance is familiar: Corporations and governments are collecting too much data about consumers and citizens, often without our express consent.  Our privacy and our “right to be left alone” are in peril. While we’ve collectively wrung our hands about this for years (I started thinking about “the Database of Intentions” back in 2001, and I offered a “Data Bill of Rights” back in 2007), it was Europe, with its particular history and sensitivities, which finally took significant and definitive action.

While surveillance capitalism is best understood as a living system – an ecosystem made up of many different actors – there are essentially three main players when it comes to collecting and leveraging personal data. First are the Internet giants – companies like Amazon, Google, Netflix and Facebook. These companies are beloved by most consumers, and are driven almost entirely by their ability to turn the actions of their customers into data that they leverage at scale to feed their business models. These companies are best understood as “At Scale First Parties” – they have a direct relationship with their customers, and because we depend on their services, they can easily acquire consent from us to exploit our data. Ben Thompson calls these players “aggregators” – they’ve aggregated powerful first-party relationships with hundreds of millions or even billions of consumers.

The second group are the thousands of adtech players, most notably visualized in the various Lumascapes. These are companies that have grown up in the tangled, mostly open mess of the World Wide Web, mainly in the service of the digital advertising business. They collect data on consumers’ behaviors across the Internet and sell that data to marketers in an astonishingly varied and complex ways. Most of these companies have no “first party” relationship to consumers, instead they are “third parties” – they collect their data by securing relationships with sub-scale first parties like publishers and app makers. This entire ecosystem lives in an uneasy and increasingly weak position relative to the At Scale First Parties like Google and Facebook, who have inarguably consolidated power over the digital advertising marketplace.

Now, some say that companies such as Netflix, Amazon and Apple are not driven by an advertising model, and therefore are free of the negative externalities incumbent to players like Facebook and Google. To this argument I gently remind the reader: All at scale “first party” companies leverage personal data to drive their business, regardless of whether they have “advertising” as their core revenue stream. And there are plenty of externalities, whether positive or negative, that arise when companies use data, processing power, and algorithms to determine what you might and might not experience through their services.

The third major player in all of this, of course, are governments. Governments collect a shit ton of data about their citizens, but despite our fantasies about the US intelligence apparatus, they’re not nearly as good at exploiting that data as are the first and third party corporate players. In fact, most governments rely heavily on corporate players to make sense of the data they control. That interplay is a story into itself, and I’m sure I’ll get into it at a later date. Suffice to say that governments, particularly democratic governments, operate in a highly regulated environment when it comes to how they can use their citizens’ data.

But until recently, first and third party corporate entities have had pretty much free reign to do whatever they want with our data. Driven in large part by the United States’ philosophy of “hands off the Internet” – a philosophy I wholeheartedly agreed with prior to the consolidation of the Internet by massive oligarchs – corporations have been regulated mainly by Terms of Services and End User License Agreements, rarely read legal contracts which give corporations sweeping control over how customer data is used.

This all changed with GDPR, which went into effect today. There are seven principles as laid out by the regulatory body responsible for enforcement, covering fairness, usage, storage, accuracy, accountability, and so on. All of these are important, but I’m not going to get into the details in this post (it’s already getting long, after all). What really matters is this: The intent of GDPR is to protect the privacy and rights of consumers against Surveillance Capitalism. But the reality of GDPR, as with nearly all sweeping regulation, is that it favors the At Scale First Parties, who can easily gain “consent” from the billions of consumers who use their services, and it significantly threatens the sub-scale first and third party ecosystem, who have tenuous or fleeting relationships with the consumers they indirectly serve.

Put another way: You’re quite likely to click “I Consent” or “Yes” when a GDPR form is put in between you and your next hit of Facebook dopamine. You’re utterly unlikely to do the same when a small publisher asks for your consent via what feels like a spammy email.

An excellent example of this power imbalance in action: Facebook kicking third-party data providers off its platform in the wake of the Cambridge Analytica scandal, conveniently using GDPR as an excuse to consolidate its power as an At Scale First Party (I wrote about this at length here).  In short: because they have the scale, resources, and first party relationships in place, At Scale First Party companies can leverage GDPR to increase their power and further protect their businesses from smaller competitors. The innovation ecosystem loses, and the tech oligarchy is strengthened.

I’ve long held that closed, walled-garden aggregators are terrible for innovation. They starve the open web of the currencies most crucial to growth: data, attention, and revenue. In fact, nearly all “innovators” on the open web are in thrall to Amazon, Facebook, Apple, and/or Google in some way or another – they depend on them for advertising services, for ecommerce, for data processing, for distribution, and/or for actual revenue.

In another series of posts I intend to dig into what we might do about it. But now that the early returns are in, it’s clear that GDPR, while well intentioned, has already delivered a massive and unexpected externality: Instead of limiting the reach of the most powerful players operating in the world of data, it has in fact achieved the opposite effect.

The post GDPR Ain’t Helping Anyone In The Innovation Economy appeared first on John Battelles Search Blog.


My Predictions for 2018

4 January, by jbat[ —]

The post My Predictions for 2018 appeared first on John Battelles Search Blog.

(cross posted from NewCo Shift)

So many predictions from so many smart people these days. When I started doing these posts fifteen years ago, prognostication wasn’t much in the air. But a host of way-smarter-than-me folks are doing it now, and I have to admit I read them all before I sat down to do my own. So in advance, thanks to Fred, to Azeem, to Scott, and Alexis, among many others.

So let’s get into it. Regular readers know that while I think about these predictions in the back of my mind for months, I usually just sit down and write them at one sitting. That’s what happened a year ago, when I predicted that 2017 would see the tech industry lose its charmed status. It certainly did, and nearly everyone is predicting more of the same for 2018. So I won’t focus on the entire industry this year, as much as on specific companies and trends. Here we go….

  1. Crypto/blockchain dies as a major story this year. I know, this is a silly thing to say given all the hype right now. But the Silicon Valley hype cycle is a pretty predictable thing, and while new currencies will continue to rise, fall, and make and lose tons of money, the overall narrative thrives on the new, and there’s simply too much real-but-boring work to be done right now in the space. Does anyone remember 1994? Sure, it’s the year the Mozilla team decamped from Illinois to the Valley, but it’s not the year the Web broke out as a mainstream story. That came a few years later. 2018 is a year of hard work on the problems that have kept blockchain from becoming what most of us believe it can truly become. And that kind of work doesn’t keep the public engaged all year long. Besides, everyone will be focused on much larger issues like…
  2. Donald Trump blows up. 2018 is the year it all goes down, and when it does, it will happen quickly (in terms of its inevitability) and painfully slowly (in terms of it actually resolving). This of course is a terrible thing to predict for our country, but we got ourselves into this mess, and we’ll have to get ourselves out of it. It will be the defining story of the year.
  3. Facts make a comeback. This has something to do with Trump’s failure, of course, but I think 2018 is the year the Enlightenment makes a robust return to the national conversation. Liberals will finally figure out that it’s utterly stupid to blame the “other side” for our nation’s troubles. Several viral memes will break out throughout the year focused on a core narrative of truth and fact. The 2018 elections will prove that our public is not rotten or corrupt, but merely susceptible to the same fever dreams we’ve always been susceptible to, and the fever always breaks. A rising tide of technology-driven engagement will help drive all of this. Yes, this is utterly optimistic. And yes, I can’t help being that way.
  4. Tech stocks overall have a sideways year. That doesn’t meant they don’t rise like crazy early (already happening!), but that by year’s end, all the year in review stock pieces will note that tech didn’t drive the markets in the way they have over the past few years. This is because the Big Four have some troubles this coming year….
  5. Amazon becomes a target. Amazon is the most overscrutinized yet still misunderstood company in all of tech. For years it’s built a muscular and opaque platform, and in 2017 it benefitted from the fact that, so far anyway, Russians haven’t found a way to use e-commerce to disrupt western democracy. Yes, Trump seems to have a bug up his bum about the company, but his tweets last year seemed to only increase Amazon’s teflon reputation with the rest of society. In 2018, however, things will change for the worse. The company is smart enough to keep hiding its power — it hasn’t accumulated the cash of its GAFA rivals, nor does it play (as much) in the high profile worlds of media and politics. But by 2018, the company will find itself painted into something of a box. Last year I thought the fear of automation and job losses would dominate the political discussion, but Russia managed to eclipse those concerns. This is the year Amazon becomes the poster child for future shock. In particular, I expect the company’s “Flex” business to come under serious scrutiny. And what it’s doing with in house brands is the equivalent of Google giving preference to its own products in search results (that hasn’t worked out so well in Europe). Further tarnishing its image will be its lack of leadership on social issues — Jeff Bezos is no Tim Cook when it comes to empathy. By year’s end, Amazon’s reputation will be in jeopardy. Then again, I do think the company will be nimbler than most in responding to that threat.
  6. Google/Alphabet will have a terrible first half (reputation wise), but recover after that. Why a terrible first half? Well, I agree with Scott, there’s another shoe to drop in the whole Schmidt story, not to mention more EU fines and fake news fallout, and that will kick off a soul-searching first half for the search giant. The company will find itself flat-footed and in need of some traditional corporate revival tactics — ever since Page stepped back into the obscurity of Alphabet, the company has lacked a compelling overarching narrative. I’m not sure how the company recovers its mojo, but it could be by pushing deeper into a strategy of letting its children grow up outside the Alphabet conglomerate structure. Perhaps not a government driven breakup, per se, but a series of spin outs, led by Sundar Pichai (Google), Susan Wojcicki (YouTube), and perhaps a new spinout around Doubleclick/Adtech, possibly run by Neal Mohan. Alphabet will remain as a holding company with stakes in all these newly (or soon to be newly) public companies, as well as a place that incubates new ventures and figures out what the hell to do with Nest.
  7. Facebook. Ah, what to say about Facebook. Well, let’s just say the company muddles through a slog of a year, with a lot of rearguard work politically, even as it starts to dawn on the world that maybe, just maybe, every advertiser in the world doesn’t want to be handcuffed to the company’s toxic engagement model. Of course, with YouTube in particular, Google has this issue as well, so here’s my Facebook prediction, which is more of an ad industry prediction: The Duopoly falls out of favor. No, this doesn’t mean year-on-year declines in revenue, but it does mean a falloff in year-on-year growth, and by the end of 2018, a increasingly vocal contingent of influencers inside the advertising world will speak out against the companies (they’re already speaking to me privately about it). One or two of them will publicly cut their spending and move it to other places, like programmatic (which will have a sideways year more than likely) and places like….
  8. Pinterest breaks out. This one might prove my biggest whiff, or my biggest “nailed it,” hard to say. But for more, see my piece from earlier in the weekAdvertisers will find comfort in Pinterest’s relatively uncontroversial model, and its increasingly good results. The big question is whether Pinterest can both scale its inventory in a predictable and contextual way, and whether it can make its self service/API-based platform super simple to use. Oh, and of course continue to attract a growing user base. Early signs are that it’s doing all three.
  9. Autonomous vehicles do not become mainstream. I’ve said it before, I’m saying it again: This shit is complicated, and we’re not even close to ready. We’ll see a lot of cool pilots, and maybe even one (probably small) city will vote to let them run amuck. But I just don’t see it happening this year. However, I do think 2018 will be the year that electric vehicles are accepted as inevitable.
  10. Business leads. Business doesn’t change by fiat, it changes through the slow uptake of new social norms. And a crucial new norm in business poised to have a breakout year is the expectation that companies take their responsibilities to all stakeholders as seriously as they take their duty to shareholders“All stakeholders” means more than customers and employees, it means actually adding value to society beyond just their product or service. 2018 will be the year of “positive externalities” in business, and yes, NewCo will be there to take notes on those companies who manage to live up to this new normal. A good place to start, of course, is the Shift Forum in less than two months. I hope to see you there, and have a great 2018!

The post My Predictions for 2018 appeared first on John Battelles Search Blog.











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