Facebook Pivots to Privacy. Why?

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Hint: Because Facebook wants to eat the Internet, and WeChat shows the way. 

(cross posted from Searchblog)

Man behind the curtainI’ll never forget a meal I had with a senior executive at Facebook many years ago, back when I was just starting to question the motives of the burgeoning startup’s ambition. I asked whether the company would ever support publishers across the “rest of the web” – perhaps through an advertising system competitive with Google’s AdSense. The executive’s response was startling and immediate. Everything anyone ever needs to do – including publishing – can and should be done on Facebook. The rest of the Internet was a sideshow. It’s just easier if everything is on one platform, I was told. And Facebook’s goal was to be that platform.

 

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The Internet Must Change. To Get There, Start With the Data.

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Copy of ArchitectureOfControl

This is an edited version of a series of talks I first gave in New York over the past week, outlining my work at Columbia. Many thanks to Reinvent, Pete Leyden, Cap Gemini, Columbia University, Cossette/Vision7, and the New York Times for hosting and helping me. Cross posted from Searchblog

Prelude. 

I have spent 30-plus years in the tech and media industries, mainly as a journalist, observer, and founder of companies that either make or support journalism and storytelling. When it comes to many of the things I am going to talk about here, I am not an expert. If I am expert at anything at all, it’s asking questions of technology, and of the media and marketing platforms created by technology. In that spirit I offer the questions I am currently pursuing, in the hope of sparking a dialog with this esteemed audience to further better answers.

Some context: Since 1986, I’ve spent my life chasing one story: The impact of technology on society. For whatever reason, I did this by founding or co-founding companies. Wired was kind of a first album, as it were, and it focused on the story broadly told. The Industry Standardfocused on the business of the Internet, as did my conference Web 2.  Federated Media was a tech and advertising platform for high quality “conversational” publishers, built with the idea that our social discourse was undergoing a fundamental shift, and that publishers and their audiences needed to be empowered to have a new kind of conversation. Sovrn, a company I still chair, has a similar mission, but with a serious data and tech focus. NewCo, my last company (well, I’ve got another one in the works, perhaps we can talk about that during Q&A) seeks to illuminate the impact of companies on society.

It’s Broke. Let’s Fix It.

And it is that impact that has led me to the work I am doing now, here in New York. I moved here just last Fall, seeking a change in the conversation. To be honest, the Valley was starting to feel a bit…cloistered.

A huge story – the very same story, just expanded – is once again rising. Only it’s just … more urgent. 25 years after the launch of Wired, the wildest dreams of its pages have come true. Back in 1992 we asked ourselves: What would happen to the world when technology becomes the most fundamental driver of our society? Today, we are living in the answer. Turns out, we don’t always like the result.

Most of my career has been spent evangelizing the power of technology to positively transform business, education, and politics. But five or so years ago, that job started to get harder. The externalities of technology’s grip on society were showing through the shiny optimism of the Wired era. Two years ago, in the aftermath of an election that I believe will prove to be the political equivalent of the Black Sox scandal, the world began to wake up to the same thing.

So it’s time to ask ourselves a simple question: What can we do to fix this?

Let’s start with some context. My current work is split between two projects: One has to do with data governance, the other political media. How might they be connected? I hope by the end of this talk, it’ll make sense.

So let’s go. In my work at Columbia, I’m currently obsessed with two things. First,

Data.

How much have you thought about that word in the past two years?

Given how much it’s been in the news lately, likely quite a lot. Big data, data breaches, data mining, data science…Today, we’re all about the data.

And second….

Governance.

When was the last time you thought about that word?

Government – well for sure, I’d wager that’s increased given who’s been running the country these past two years. But Governance? Maybe not as much.

But how often have you put the two words together?

Data Governance.

Likely not quite as much.

It’s time to fix that.

Why?

Because we have slouched our way into an architecture of data governance that is broken, that severely retards economic and cultural innovation, and that harms society as a whole.

Let’s unpack that and define our terms. We’ll start with Governance.

What is governance? It’s an …

Architecture of control

A regulatory framework that manages how a system works. The word is most often used in relation to political governance – which we care about a lot for the purposes of this talk – but the word applies to all systems, and in particular to corporations, which is also a key point in the research we’re doing.

Governance in corporate context is “the system of rules, practices and processes by which a firm is directed and controlled.

But in my work, when I refer to governance, I am referring to the “the system of rules, practices and processes by which a firm controls its relationship to its community.” Who’s that community? You, me, developers and partners in the ecosystem, for the most part. More on that soon.

Now, what is data? I like to think of it as…

Unrefined Information.

I’m not in love with this phrase, but again, this is a first draft of what I hope will grow to more refined (ha) work. Data is the core commodity from which information is created, or processed. Data has many attributes, not all of which are agreed upon. But I think it’s inarguable that the difference between data and information is …

Human meaning.

That’s Socrates, who thought about this shit, a lot. Information is data that means something to us (and possibly the entire universe, as it relates to the second law of thermodynamics. But physics is not the focus of this talk, nor is a possible fourth law of thermodynamics….).

As we’ve learned – the hard way – over the past decade, there are a few very large companies which have purview over a massive catalog of meaningful data, meaningful not only to us, but to society at large. And it’s this societal aspect that, until recently, we’ve actively overlooked.  We’re in the midst of a grand data renaissance, which if history remotely echoes, I fervently hope will give rise to …

A (Data) Enlightenment

That’s John Locke, an Enlightenment philosopher. Allow me to pull back for second and attempt to lay some context for the work I hope to advance in the next few years. It starts with the Enlightenment, a great leap forward in human history (and the subject of a robust defense by Steven Pinker last year).

Arguably the crowning document of the Enlightenment is…

The United States Constitution

This declaration of the rights of humankind (well mankind for the first couple of centuries) itself took more than three centuries to emerge (and cribbed generously from the French and English, channeling Locke and Hume). Our current political and economic culture is, of course, a direct descendant of this living document. American democracy was founded upon Enlightenment principles. And the cornerstone of Enlightenment ideas is …

The Scientific Method

That’s Aristotle, often credited with originating the scientific method, which is based on considered thesis formation, rigorous observation, comprehensive data collection, healthy skepticism, and sharing/transparency. The scientific method is our best tool, so far, for advancing human progress and problem solving.

And the scientific method – the pursuit of truth and progress – all that turns on the data. Prompting the question….

Who Has the Most (and Best) Data?

This is the question we are finally asking ourselves, the answer to which is sounding alarms.  As we all know, we are in a renaissance, a deluge, an orgy of data creation. We have invented sophisticated new data sensing organs  –  digital technologies – that have delivered us superhuman powers for the discovery, classification, and sense-making of data.

Not surprisingly, it is technology companies, driven as they are by the raw economics of profit-seeking capital and armed with these self-fulfilling tools of digital exploration and capture – that have initially taken ownership of this emerging resource. And that is a problem, one we’ve only begun to understand and respond to as a society. Which leads to an important question:

Who Is Governing Data?

In the US, anyway, the truth is, we don’t have a clear answer to this question. Our light touch regulatory framework created a tech-driven frenzy of company building, but it failed to anticipate massive externalities, now that these companies have come to dominate our capital markets. Clearly, the Tech Platform Companies have the most valuable data – at least if the capital markets are to be believed. Companies like Google. Facebook. Amazon. Apple.

All of these companies have very strong governance structures in place for the data they control. These structures are set internally, and are not subject to much (if any) government regulation. And by extension, nearly all companies that manage data, no matter their size, have similar governance models because they are all drafting off those companies’ work (and success). This has created a phenomenon in our society, one I’ve recently come to call …

The Default Internet Constitution

Without really thinking critically about it, the technology and finance industries have delivered us a new Constitution, a fundamental governance document controlling how information flows through the Internet. It was never ratified by anyone, never debated publicly, never published with a flourish of the pen, and it’s damn hard to read. But, it is based on a discoverable corpus. That corpus, at its core, is based on …

Terms of Service and EULAs

Like it or not, there is a governance model for the US Internet and the data which flows across it: Terms of Service and End User Licensing Agreements. Of course, we actively ignore them – who on earth would ever read them? One researcher did the math, and figured it’d take 76 work days for the average American to read all of the policies she clicks past (and that was six years ago!).

Of course, ignoring begets ignorance, and we’ve ignored Terms of Service at our peril. No one understands them, but we certainly should – because if we’re going to make change, we’ll want to change these Terms of Service, dramatically. They create the architecture that determines how data, and therefore societal innovation and value, flow around the Internet.

And let’s be clear, these terms of service have hemmed data into silos. They’re built by lawyers, based on the desires of engineers who are – for the most part – far more interested in the product they are creating than any externalities those products might create.

And what are the lawyers concerned with? Well, they have one True North: Protect the core business model of their companies.

And what is that business model? Engagement. Attention. And for most, data-driven personalized advertising. (Don’t get me started about Apple being different. The company is utterly dependent on those apps animating that otherwise black slate of glass they call an iPhone).

So what insures engagement and attention? Information refined from data.

So let’s take a look at a rough map of what this Terms of Service-driven architecture looks like:

The Mainframe Architecture

Does this look familiar? If you’re a student of technology industry history, it should, because this is how mainframes worked in the early days of computing. Data compute, data storage, and data transport is handled by the big processor in the sky. The “dumb terminal” lives at the edge of the system, a ‘thin client’ for data input and application output. Intelligence, control, and value exchange lives in the center. The center determines all that occurs at the edge.

Remind you of any apps you’ve used lately?

But it wasn’t always this way. The Internet used to look like this:

The Internet 1.0 Architecture

I’m one of the early true believers in the open Internet. Do you remember that world? It’s mostly gone now, but there was a time, from about 1994 to 2012, when the Internet ran on a different architecture, one based on the idea that the intelligence should reside in the nodes – the site – not at the center. Data was shared laterally between sites. Of course, back then the tech was not that great, and there was a lot of work to be done. But we all knew we’d get there….

…Till the platforms got there first. And they got there very, very well – their stuff was both elegant and addictive.

But could we learn from Internet 1.0, and imagine a scenario inspired by its core lessons? Technologically, the answer is “of course.” This is why so many folks are excited by blockchain, after all (well that, and ICO ponzi schemes…).

But it might be too late, because we’ve already ceded massive value to a broken model. The top five technology firms dominate our capital markets. We’re seriously (over)invested in the current architecture of data control. Changing it would be a massive disruption. But what if we can imagine how such change might occur?

This is the question of my work.

So…what is my work?

A New Architecture

If we’re stuck in an architecture that limits the potential of data in our society, we must envision a world under a different kind of architecture, one that pushes control, agency, and value exchange back out to the node.

Those of us old enough to remember the heady days of Web 1.0 foolishly assumed such a world would emerge unimpeded. But as Tim Wu has pointed out, media and technology run in cycles, ultimately consolidating into a handful of companies with their hands on the Master Switch – we live in a system that rewards the Curse of Bigness. If we are going to change that system, we have to think hard about what we want in its place.

I’ve given this some thought, and I know what I want.

Let The Data Flow

Imagine a scenario where you can securely share your Amazon purchase data with Walmart, and receive significant economic value for doing so (I’ve written this idea up at length here). Of course, this idea is entirely impossible today. This represents a major economic innovation blocked.

Or imagine a free marketplace for data that allows a would-be restaurant owner to model her customer base’s preferences and unique taste? (I’ve written this idea up at length here). Of course, this is also impossible today, representing a major cultural and small business innovation is impeded.

Neither of these kinds of ideas are even remotely possible – nor are the products of thousands of similar questions entrepreneurs might ask of the data rotting in plain sight across our poorly architected data economy.

We all lose when the data can’t flow. We lose collectively, and we lose individually.

But imagine if it was possible?!

How might such scenarios become reality?

We’re at a key inflection point in answering that question.

2019 is the year of data regulation. I don’t believe any meaningful regulation will pass here in the US, but it’ll be the year everyone talks about it. It started with the CA/Facebook hearings, and now every self-respecting committee chair wants a tech CEO in their hot seat. Congress and the American people have woken up to the problem, and any number of regulatory fixes are being debated. Beyond the privacy shitstorm and its associated regulatory response, which I’d love to toss around during Q&A, the most discussed regulatory relief is anti-trust – the curse of bigness is best fixed by breaking up the big guys. I understand the goal, and might even support it, but I don’t think we need to even do that. Instead, I submit for your consideration one improbable, crazy, and possibly elegant solution.

The Token Act

I’m calling it the Token Act.

It requires one thing: Every data processing service at a certain scale must deliver back to its customers any co-created data in machine readable format, easily portable to any other data processing service.

Imagine the economic value unlocked, the exponential impact on innovation such a simple rule would have. Of course we must acknowledge the negative short term impact such a policy would have on the big guys. But it also creates an unparalleled opportunity for them – the token of course can include a vig – a percentage of all future revenue associated with that data, for the value the platform helped to create. This model could drive a far bigger business in the long run, and a far healthier one for all parties concerned.

I can’t prove it yet, but I sense this approach could 10 to 100X our economy. We’ve got some work to do on proving that, but I think we can.

Imagine what would occur if the data was allowed to flow freely. Imagine the upleveling of how firms would have to compete. They’d have to move beyond mere data hoarding, beyond the tending of miniature walled gardens (most app makers) and massive walled agribusinesses (in the case of the platforms – and ADM and Monsanto, but that’s another chapter in the book, one of many).

Instead, firms would have to compete on creating more valuable tokens  – more valuable units of human meaning. And they’d encourage sharing those tokens widely – with the fundamental check of user agency and control governing the entire system.

The bit has flipped, and the intelligence would once again be driven to the nodes.

To us!

But the Token Act is just an exercise in envisioning a society governed by a different kind of data architecture. There are certainly better or more refined ideas.

And to get to them, we really need to understand how we’re governed today. And now that I’ve gotten nearly to the end of my prepared remarks, I’ll tell you what I’m working on at Columbia with several super smart grad students:

Mapping Data Flows

If we are going to understand how to change our broken architecture of data flows, we need to deeply understand where we are today. And that means visualizing a complex mess. I’m working with a small team of researchers at Columbia, and together we are turning the Terms of Service at Amazon, Apple, Facebook and Google into a database that will drive an interactive visualization – a blueprint of sorts for how data is governed across the US internet. We’re focusing on the advertising market, for obvious reasons, but it’s my hope we might create a model that can be applied to nearly any information rich market. It’s early stages, but our goal is to have something published by the end of May.

Finally, Advertising

I’ve not spoken much about advertising during this talk, and that was purposeful. I’ve written at length about how we came to the place we now inhabit, and the role of programmatic advertising in getting us there.

Truth is, I don’t see advertising as the cause of this problem, but rather an outgrowth of it. If you offer any company a deal that puts new customers on a platter, as Google did with AdWords, or Facebook has with NewsFeed, well, there’s no way those companies will refuse. Every major advertiser has embraced search and social, as have millions of smaller ones.

Our problem is simply this: The people who run technology platforms don’t actually understand the power and limitations of their systems, and let’s be honest, nor do we. Renee Di Resta has pointed this out in recent work around Russian interference in our national dialog and elections: Any system that allows for automated processing of messages is subject to directed, sophisticated abuse. The place for regulation is not in advertising (even though that’s where it’s begun with the Honest Ads Act), it’s in how the system works architecturally.

But advertisers must be highly aware of this transitional phase in the architecture of a system that has been a major source of revenue and business results. We must imagine what comes next, we must prepare for it, and perhaps, just perhaps, we should invent it, or at the very least play a far more active role than we’re playing currently.

I believe that if together – industry, government, media and consumers collectively – if we unite to address the core architectural issues inherent to how we manage data, in the process giving consumers economic, creative, and personal agency over the data they co create with platforms, the question of toxic advertising will disappear faster than it arose.

But I’ve talked (or written) long enough. Thank you so much for coming (for reading), and for being part of this conversation. Now, let’s start it.

Don’t Blame Facebook.

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Screen Shot 2018-12-26 at 2.13.44 PM

We got ourselves into this mess. Facebook was just happy to take our money – and our data – as we did. 2019 is the year we starting digging ourselves back out.

(Cross posted from Searchblog)

Those of us fortunate enough to have lived through the birth of the web have a habit of stewing in our own nostalgia. We’ll recall some cool site from ten or more years back, then think to ourselves (or sometimes out loud on Twitter): “Well damn, things were way better back then.”

Then we shut up. After all, we’re likely out of touch, given most of us have never hung out on Twitch. But I’m seeing more and more of this kind of oldster wistfulness, what with Facebook’s current unraveling and the overall implosion of the tech-as-savior narrative in our society.

Hence the chuckle many of us had when we saw this trending piece  suggesting that perhaps it was time for us to finally unhook from Facebook and – wait for it -get our own personal webpage, one we updated for any and all to peruse. You know, like a blog, only for now. I don’t know the author – the editor of the tech-site Motherboard – but it’s kind of fun to watch someone join the Old Timers Web Club in real time. Hey Facebook, get off my lawn!!!

That Golden Age

So as to not bury the lead, let me state something upfront: Of course the architecture of our current Internet is borked. It’s dumb. It’s a goddamn desert. It’s soil where seed don’t sprout. Innovation? On the web, that dog stopped hunting years ago.

And who or what’s to blame? No, no. It’s not Facebook. Facebook is merely a symptom. A convenient and easy stand in  – an artifact of a larger failure of our cultural commons. Somewhere in the past decade we got something wrong, we lost our narrative – we allowed Facebook and its kin to run away with our culture.

Instead of focusing on Facebook, which is structurally borked and hurtling toward Yahoo-like irrelevance, it’s time to focus on that mistake we made, and how we might address it.

Just 10-15 years ago, things weren’t heading toward the our currently crippled version of the Internet. Back in the heady days of 2004 to 2010 – not very long ago – a riot of innovation had overtaken the technology and Internet world. We called this era “Web 2.0” – the Internet was becoming an open, distributed platform, in every meaning of the word. It was generative, it was Gates Line-compliant, and its increasingly muscular technical infrastructure promised wonder and magic and endless buckets of new. Bandwidth, responsive design, data storage, processing on demand, generously instrumented APIs; it was all coming together. Thousands of new projects and companies and ideas and hacks and services bloomed.

Sure, back then the giants were still giants – but they seemed genuinely friendly and aligned with an open, distributed philosophy. Google united the Internet, codifying (and sharing) a data structure that everyone could build upon. Amazon Web Services launched in 2006, and with the problem of storage and processing solved, tens of thousands of new services were launched in a matter of just a few years. Hell, even Facebook launched an open platform, though it quickly realized it had no business doing so. AJAX broke out, allowing for multi-state data-driven user interfaces, and just like that, the web broke out of flatland. Anyone with passable scripting skills could make interesting shit! The promise of Internet 1.0 – that open, connected, intelligence-at-the-node vision we all bought into back before any of it was really possible – by 2008 or so, that promise was damn near realized. Remember LivePlasma? Yeah, that was an amazing mashup. Too bad it’s been dormant for over a decade.

After 2010 or so, things went sideways. And then they got worse. I think in the end, our failure wasn’t that we let Facebook, Google, Apple and Amazon get too big, or too powerful. No, I think instead we failed to consider the impact of the technologies and the companies we were building. We failed to play our hand forward, we failed to realize that these nascent technologies were fragile and ungoverned and liable to be exploited by people less idealistic than we were.

Our Shadow Constitution

Our lack of consideration deliberately aided and abetted the creation of a unratified shadow Constitution for the Internet – a governance architecture built on assumptions we have accepted, but are actively ignoring. All those Terms of Service that we clicked past, the EULAs we mocked but failed to challenge, those policies have built walls around our data and how it may be used. Massive platform companies have used those walls to create impenetrable business models. Their IPO filings explain in full how the monopolization and exploitation of data were central to their success – but we bought the stock  anyway.

We failed to imagine that these new companies – these Facebooks, Ubers, Amazons and Googles – might one day become exactly what they were destined to become, should we leave them ungoverned and in the thrall of unbridled capitalism.  We never imagined that should they win, the vision we had of a democratic Internet would end up losing.

It’s not that, at the very start at least, that tech companies were run by evil people in any larger sense. These were smart kids, almost always male, testing the limits of adolescence in their first years after high school or college. Timing mattered most: In the mid to late oughts, with the winds of Web 2 at their back, these companies had the right ideas at the right time, with an eager nexus of opportunistic capital urging them forward.

They built extraordinary companies. But again, they built a new architecture of governance over our economy and our culture – a brutalist ecosystem that repels innovation. Not on purpose – not at first. But protected by the walls of the Internet’s newly established shadow constitution and in the thrall of a new kind of technology-fused capitalism, they certainly got good at exploiting their data-driven leverage.

So here we are, at the end of 2018, with all our darlings, the leaders not only of the tech sector, but of our entire economy, bloodied by doubt, staggering from the weight of unconsidered externalities. What comes next?

2019: The Year of Internet Policy

Whether we like it or not, Policy with a capital P is coming to the Internet world next year. Our newly emboldened Congress is scrambling to introduce multiple pieces of legislation, from an Internet Bill of Rights  to a federal privacy law modeled on – shudder – the EU’s GDPR. In the past month, I’ve read draft policy papers suggesting we tax the Internet’s advertising model, that we break up Google, Facebook, and Amazon, or that we back off and just let the market “do its work.”

And that’s a good thing, to my mind – it seems we’re finally coming to terms with the power of the companies we’ve created, and we’re ready to have a national dialog about a path forward. To that end, a spot of personal news: I’ve joined the School of International and Public Affairs at Columbia University, and I’m working on a research project studying how data flows in US markets, with an emphasis on the major tech platforms. I’m also teaching a course on Internet business models and policy. In short, I’m leaning into this conversation, and you’ll likely be seeing a lot more writing on these topics here over the course of the next year or so.

Oh, and yeah, I’m also working on a new project, which remains in stealth for the time being. Yep, has to do with media and tech, but with a new focus: Our political dialog. More on that later in the year.

I know I’ve been a bit quiet this past month, but starting up new things requires a lot of work, and my writing has suffered as a result. But I’ve got quite a few pieces in the queue, starting with my annual roundup of how I did in my predictions for the year, and then of course my predictions for 2019. But I’ll spoil at least one of them now and just summarize the point of this post from the start: It’s time we figure out how to build a better Internet, and 2019 will be the year policymakers get deeply  involved in this overdue and essential conversation.

This Is How Amazon Loses

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Algorithmic merchandising leaves a bad taste in my mouth. Slowly but surely, it will erode trust for all the tech giants.

Yesterday, I lost it over a hangnail and a two-dollar bottle of hydrogen peroxide.

You know when a hangnail gets angry, and a tiny red ball of pain settles in for a party on the side of your finger? Well, yeah. That was me last night. My usual solution is to stick said finger into a bottle of peroxide for a good long soak. But we were out of the stuff, so, as has become my habit, I turned to Amazon. And that’s when things not only got weird, they got manipulative. Sure, I’ve been ambiently aware of Amazon’s algorithmic pricing and merchandising practices, but last night, the raw power of the company’s control over my routine purchases was on full display.

There’s literally no company in the world with better data about online purchasing than Amazon. So studying how and where it lures a shopper through a purchase process is a worthy exercise. This particular one left a terrible taste in my mouth – one I don’t think I’ll ever shake.

First the detail. Take a look at my search results for “Hydrogen Peroxide” on Amazon. I’ve annotated them with red text and arrows:

Amazon Hydrogen P.png

As you can see, the most eye catching suggestions – the four featured panels with large images – are all Amazon brands. Big red flag. But Amazon knows sophisticated shoppers like me are suspicious of those in house suggestions, so it’s included a similar product in the space below its own brands (we’ll get to that in a minute).

Above the featured items are ads: sponsored listings that are not Amazon brands, which means the advertiser (a small player named “Blubonic Industries”) is paying Amazon to get ahead of the company’s own promotional power. Either way, Amazon makes money. Second red flag.

By now, I’ve decided I’m not interested in either the sponsored brands at the top, or Amazon’s four featured brands, because, well, I don’t like to be so baldly steered into buying Amazon’s own products. Then again, before I move down to the results below, I do notice something rather amazing – Amazon’s familiar brown bottle of peroxide is really, really cheap – as in, $1.29 cheap. There’s even a helpful per oz. calculation next to the price, screaming: this shit is eight pennies an ounce cheap!

Well, I’m almost sold, but because I hate to be directed into purchases,  I’m still going to consider that similar brown bottle below, the one with the red label. Amazon knows this, of course. It’s merchandising 101 – make sure you give the consumer choices, but also, make sure the most profitable choice is presented in such a way as to win the day.

So my eye moves down the page to check out the second bottle. It’s from Swan, a brand I’ve vaguely heard of. Then I check its price.

Nine dollars and sixty nine cents.

Which would you buy? After all, this is a staple, a basic, a chemical compound. And you trust Amazon to get shit right, don’t you? I mean, a buck and change – nearly nine times cheaper? What a deal!

So…my eyes revert to Amazon’s blue labeled bottle. It wouldn’t have a four-star plus review if it burned your skin, right? And that’s when I notice the tiny icon next to it, which looks like this:

What’s this? Is this yet another annoying subscription service?  Ever since we moved to New York, my wife and I have tried to figure out Amazon’s subscription services (Fresh? Pantry? Prime Now? Whole Foods Delivery? Who knows?!). I’m already deeply suspicious of any attempt by Amazon to lure me into paying them monthly for a service that I don’t understand.

But…a buck twenty nine! So I click on the bottle, and the landing page is super clean, and there’s no obvious Prime Pantry mention. Plus, it turns out, that bottle from Amazon is the Whole Foods generic brand, which for whatever reason seems a bit better than a generic Amazon brand.  Did I just get lucky? Maybe  I can just get some super cheap chemicals delivered in a day to my door, and my annoying hangnail will be a thing of the past soon enough….Right?

Here’s the landing page:

Screen Shot 2018-10-10 at 8.34.10 AM.png

Looks great, the price is amazing, but…Uh oh. I can’t get this bottle of peroxide until Sunday. By then, I’ve likely lost my finger to a flesh eating bacteria. As I feared, this bottle is nothing more than a baited fish hook for one of Amazon’s subscription offers – which I find out, will cost somewhere between five and thirteen bucks a month. I’ve signed up for Prime Pantry by mistake in the past, and it wasn’t a smooth or enjoyable experience. No thanks. I click back to the original search results. Seems to me Amazon is gaming the shipping deals.

Well of course it is. I’m no longer a happy Amazon customer at this point. Now I’m just annoyed.

But what’s this? If I scroll down below the $9.69 bottle, there’s another choice, also from Swan, and, it seems, exactly the same, if one is to judge just by the image (and we do judge just from the images, let’s just admit it). This one costs almost half as much as the one above it. What’s going on?! Here’s an annotated screen shot:

Prime Peroxide.png

As you can see, there’s a lot going on. I’ve narrowed my choice down to two non-Amazon brands. They look nearly identical. The most significant difference, at least in terms of the information provided to me by Amazon, is the price – the top bottle is nearly twice as expensive as the bottom one. But the top bottle has a major benefit: I can get it nearly immediately! The bottom one makes me wait a day. Is the wait worth four or five bucks? Hmm.

Also confounding: The bottom bottle has its price broken out on a per ounce basis – 32 cents, exactly four times more than the 8 cents-an-ounce bottle I just looked at from Amazon’s Prime Pantry. Ouch! Now I’m really annoyed, and confused. My eyes dart back up to the $9.69 bottle. As I’ve shown with the empty red circle, there’s….no per-ounce breakdown shown by Amazon. It does tell me that this particular bottle is 32 ounces, whereas the bottom one is 16 ounces.

But why not do the math for me? A quick calculation shows that the top bottle comes out to about 30 cents an ounce – two cents less than the bottom bottle. Why not show that fact?

This, folks, this is algorithmic merchandising at its finest.

Amazon knows exactly how many clicks it’s going to take for me to reach shopping fatigue. Not “on average for all shoppers,” or even “on average for each shopper who’s ever considered a bottle of hydrogen peroxide.” Amazon knows all of that, of course, but it also knows exactly how long it takes ME to get fatigued, to enter what I like to call “fuck it” mode. As in, “fuck it, I’m tired of this bullshit, I want to get back to the rest of my life. I’m going to buy one of these bottles.”

And because there’s no per-ounce breakdown of the 32-ounce bottle, and because that makes me suspicious of it, and because hell, who ever needs 32 ounces of hydrogen peroxide anyway, well, I’m just going to buy the $5 one.

Ca-ching! Amazon just made a nearly seven percent markup on my purchase. It took five clicks, 15 seconds, and a vast architecture of data and algorithmic mastery to make that profit. Each and every time we purchase something on Amazon, that machinery is engaged in the background, guiding us through choices which insure the company remains the trillion dollar behemoth we know and…

Love?

***

Do you love Amazon anymore? For that matter, do you love Facebook, Google, or Twitter? Interactions like the one I’ve detailed above are starting to chip away at that presumption. Personally, I’ve gone from cheerleader to skeptic over the past few years, and I’m broken out into full-blown critic over the last twelve months. I no longer trust Amazon to have my best interests at heart. I’ve lost any trust that Facebook or Twitter can deliver me a public square representative of my democracy. I’ve given up on Google delivering me search results that are truly “organic.” And YouTube? Point solution, at best. I can’t possibly trust the autoplay feature to do much more than waste my time.

What’s happened to our beloved tech icons, and what are the implications of this lost trust? In future posts, I plan on thinking out loud on that topic. I hope you’ll join me. In the meantime, I think I’ll stroll down to CVS and buy myself another bottle of hydrogen peroxide. By the time Amazon’s comes, I’m sure my hangnail will be a distant memory. But that taste in my mouth? That’s going to remain.

***

Update: Many readers have pointed out that I missed the fact that the top package of peroxide was, in fact, a two-pack. True that, and it would have changed my on-the-fly calculation around which to buy, given the per ounce comparison. However, it would not change the fact that the act of not adding the per ounce calculation directly on the page somehow discolored that choice. 

Also, a rather rich post note: The bottle I did buy never came. It was “lost” – and Amazon offered me a refund. Sometimes it pays to just hit CVS. 

(cross posted from Searchblog)

Because It Can: Cloudflare’s Mission to Make the Internet Work Like It Should

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matthew-michelle-lean-on-is-the-new-lean-in-sxsw-2015-1-638

Cloudflare founders Matthew Prince and Michele Zatlyn (image)

The company could seek rent. Instead, it finds false market moats and merrily breaches them.

We don’t usually cover news here at NewCo Shift, this is more of a place for analysis and Thinking Out Loud. And it’s rare that one company appears more than once here in any given year. But today – again – Cloudflare has upended an important piece of Internet’s real estate, and it’s just too rich to not note the why of it.

So first the news. To celebrate the company’s eight birthday, Cloudflare is announcing the launch of a domain registrar. And because the company operates at massive scale, and can afford to do things most companies simply can’t (or won’t – looking at you, Google, Amazon, Facebook) – the company is offering domains *at cost.* In other words, Cloudflare isn’t making one red cent when you register a domain with them. What they pay to register a domain (and yes, that number is fixed, and the same for all domain registrars), is what you pay to register a domain.

Go ahead, go sell (or short) your GoDaddy stock. I’ll wait.

OK, you back? Look, I’m not writing this post because I think the news is *that* exciting, though I’ll tell you, I’ve not found many folks who love their domain registrar. I certainly don’t. Most of them are experts at confusing you, at upcharging you, and at scaring you that you’re about to either lose your domain or miss some important feature you didn’t know you want or need. I pay an average of about 15-20 bucks for each of the domains I own each year. Cloudflare’s price is about eight dollars.

I own close to 50 domains. That means I’ll save nearly $400 a year when I move all my domains to Cloudflare. That’s real cheddar.

But the real reason I’m writing this post is to point out what a merry market discombobulator Cloudflare has become. This is a company that operates at Google scale, is independent (it’s on a path to an IPO and has raised hundreds of millions of dollars), has a core business model that drives profitable growth (it’s a content distribution network and secure infrastructure vendor), and most importantly, a philosophy which is utterly unique in today’s venal, steroidal capital markets (more on that in a second).

Cloudflare’s scale and financial power (it’s privately valued at what I am told is well past $5 billion) allow it to do things most companies simply can’t. Things like…rolling out a Domain Name System that protects your data from prying ISP eyes, for free, because it can. Or leading an alliance of bandwidth providers dedicated to eliminate markups on peering (it’s complicated, but net net, it means less costs for everyone).  Or totally upending the sclerotic economics of Over the Top (OTT) streaming.

With every one of these steps, Cloudflare is doing two things: First, it’s refusing to view the Internet as property to be cornered, as real estate where infrastructure owners can camp out and collect rent. That’s utterly unheard of in a world where Amazon has cornered commerce and hosting, Facebook has cornered social attention, Google has cornered search, and AT&T, Comcast and Verizon are competing to be as walled as a garden can possibly be. Secondly, Cloudflare is actively exercising a core philosophy which can be honestly described as embracing the best (and most earnest) values of Internet 1.0: The web should be open, freely accessible, and an equal playing field upon which anyone can frolic.

Companies like this are very, very hard to find at scale. At some point, most firms with a “make the world a better place” philosophy succumb to the reality of Peter Theil’s maxim: Every world-beating company must be a rent-extracting monopoly.   Maybe I’m missing something, so please, name me one (in the tech space anyway) that isn’t operating under this assumption?

Cloudflare is proof that great companies can also be forces for good, down to the molecules of their DNA. This is a company that defines what I mean when I use the word “NewCo.” I can’t wait to see what they do next. And, of course, they’re not perfect, and sure, this post might look naive in a few years.

But gosh, I sure hope it won’t. The world needs more Cloudflares, if only to remind us that it’s possible to move past the exhaustingly brutalist architecture we’ve managed to build around ourselves. Perhaps in fact we can trust ourselves to do what’s right for more than just us, more than just our company, more than just our shareholders. Perhaps our industry can dream to reach just a bit further, and imagine we are agents of larger purpose; and that, if we practice enough, we might earn the right to become what we’ve always imagined we could be, over these so many years: A force for good.

Lord knows it’s been a while since that’s been true. Right?

It’s Not the Platforms that Need Regulation.

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Money Quote March 14 2018

Platforms are simply acting the way you’d expect given the norms of financialized capitalism. That’s where reform must focus.

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Every few days my browser tabs overflow, and I feel the need to summarize why I’ve kept those stories lingering in my digital consciousness. Here are stories I’ve been reading and thinking about for the past few days.

Tim Berners-Lee: we must regulate tech firms to prevent ‘weaponised’ web

Look, I agree with the premise — the web has become weaponized and some kind of regulation is needed. But I disagree that these platforms — Facebook, Google, Twitter, et al — have any desire to “control” the dialog of the world. As I’ve said over and over again, the issue is not that the engineers and brohans of the tech world want domination. The issue is they’ve created a public square that is quite literally out of their control, and under the spell of a business model in the thrall of a financialized, steroidal version of capitalism that needs serious reform. If we want to reform anything, we should reform that. The rest (including the platforms) will follow. MQ: “Berners-Lee warned of “two myths” that “limit our collective imagination” when looking for solutions to the problems facing the web: “The myth that advertising is the only possible business model for online companies, and the myth that it’s too late to change the way platforms operate. On both points we need to be a little more creative,” he said.”

Apple pushes deeper into news

and…

Scoop: Facebook aiming to launch News for Watch this summer
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Barlow’s Turn of Phrase

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JPB was a conjurer, a convener, a cipher and an empath

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Barlow died this week and since hearing of it, 24 hours ago, I’ve struggled with what to do. Then I got a note this morning from the fellow managing his “BarlowFriendz” email list, informing thousands of us of Barlow’s death. Of course, most of us already knew, but getting a missive from that listserv was like a bolt from the grave — I half expected a post-mortem manifesto from the man, and god knows our world needs one. Instead it was a sad and perfunctory announcement of his passing from the fellow JPB had entrusted to manage his email list.

But you know how you think you’ve gotten over someone, but then something reminds you of how deep that person is entangled with your own sense of self, and you fall apart? Seeing a note from BarlowFriendz was like that for me. I realized a few things: First, I hadn’t gotten a note from Barlow in a while, I knew he’d been sick, but most of the news I had heard was pretty good, all things considered (he called his situation late in life “medical incarceration.”) He had taken on the American way of death, and so far, he seemed to be winning. Till now. Second, I realized how much I loved his occasional missives, filled as they were with Cassady-like calls to action (Dancemobs! BarlowFrenzys! Bikemobs!) and lucid outbursts of pure poetry. And third, I wondered if we’d lose all that wonderful prose (we won’t, I’m assured).

Conjured from pure ASCII and links, BarlowFriendz was a mainline into Barlow’s headspace, always with the same opening caveat, always with peripatetic list of where the man would be in “meatspace” at any given time, always with a link or two and a perfectly chosen quote at the end. More often than not they were a call to action, and that action usually involved parties, but parties with a purpose. Wherever JPB would show up, well, that was an occasion for revelry, and I attended as many as I could —they’d blossom overnight in places like Marin County, or New York, or LA — or Australia, France, Asia. The saddest one was at the Sweetwater in Mill Valley, California just a year and a half ago, where pals celebrated his life at a benefit to pay for his medical bills.

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The FCC and Net Neutrality: Once Again, We Must Raise Our Voices.

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Money Quote Tuesday Nov. 21 2017

We’re all tired of this endless battle. But if you make your living in any way through the Internet, you have to strap it on once more.

I’m tired. Worn down. In need of a Thanksgiving break. For more than a year the news has been relentless, and relentlessly bad. Are you worn down as well? Are you numb? Inured?

I bet you are.

But we must rouse ourselves, all over again, to have yet another fight we thought we already won. For this Thanksgiving, as most of us take a long-deserved rest to count our diminishing blessings, the FCC plans to gut net neutrality. And we simply can’t take this one lying down.

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Elon Musk Is Not A Robot

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Money Quote November 16 2017

Robots don’t cry. Or do they?

Elon Musk: The Architect of Tomorrow

Holy moly. Elon Musk is really a human being! This in depth profile by Neil Strauss is either an incredible scoop, or a deft bit of PR by Musk himself, who certainly is a master of the public reveal. Either way, it comes off as genuine, and it paints Musk in a very soft light. Money Quote: “There is clearly something Musk wants to share, but he can’t bring himself to utter the words, at least not on the record. “It’s so terrible, you can’t believe it.” The tears run silently down his face. “I can’t remember the last time I cried.” He turns to Teller to confirm this. “You’ve never seen me cry.”

“No,” Teller says. “I’ve never seen you cry.”

Remove the legend to become one

This is a very long read, but if you want to understand Amazon, you must read it. The author, Valley vet Eugene Wei, set out to help all of us make better charts. But along the way he teaches us why Amazon is Amazon. An early employee of the company, Wei lifts the veil on Amazon’s formative years. This is riveting stuff. Money quote: “To this day, people still commonly talk about Amazon not being able to turn a profit for so many years as if it is some Ponzi scheme. Late one night in 1997, a few days after I had started, and about my third or fourth time reading the most recent edition of the Analytics Package cover to back, I knew our hidden truth: all the naysaying about Amazon’s profitless business model was a lie. Every dollar of our profit we didn’t reinvest into the business, and every dollar we didn’t raise from investors to add to that investment, would be just kneecapping ourselves. The only governor of our potential was the breadth of our ambition.”

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Alien, Dismissible, Dangerous, Greedy, True

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Here We Go Again

Bitcoin prices are on a tear, and so is blockchain and ICO hype. Are you as confused as I am? Let’s figure out why.


“This is the Internet in 1993!”

I heard this statement several times at an industry conference I attended earlier this month, and it had been ringing in my ears for any number of reasons well before then. It all feels so familiar, and yet this time, it also feels utterly foreign.

Here’s the thing about “the Internet in 1993.” I was there. As a matter of fact, many of the people at the conference were also there. The conference, which operates under a collegial “don’t talk about it” rule, is more than a decade old, and features founders and VCs who made their names in the Web 2 era — post dot com crash, back when Facebook, Twitter, and WordPress were breaking out. This was the Web’s heady coming of age — 2003 to 2010 — when us “oldsters” were proven right: This Internet thing really was a revolution, and here’s proof!

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