“The Effects of the Internet on the Economy, from Working to Shopping to Finding Information”

This past week, the Equifax breach has risen up in the public consciousness as the latest example of corporations failing to properly secure consumer data. Leaks like this are becoming normalized in some sense. Target had one. Yahoo had one. Heck, even the Office of Personnel Management within our federal government suffered a massive-scale data breach. Yet the consequences of losing control over our data, our identity tied to it, are becoming increasingly severe as we move more parts of our lives into the digital realm. It’s clear that we need a new paradigm for building security into critical services, but that’s easier said than done. The Atlantic published a poignant piece today on how critical systems have failed over the years and what’s being done to build systems that live up to a different standard today, titled “The Coming Software Apocalypse.”

Another trend we’re seeing with recent events is the close intermingling of technology and civic life or politics. Facebook’s sales of ads to Russian bot accounts demonstrates the threat targeted advertising and social media pose to our democratic systems. While Facebook has promised to take more significant efforts to block political manipulation on their platform, it remains to be defined what exactly the role of a giant social media platform is in today’s age. Sure, it’s a corporation designed to extract maximum profits through an advertising revenue model, but at what point does it become so big as to warrant further scrutiny/regulation? When 2/7 of the world is using a platform, it no longer behaves like a simple product and rather becomes almost like a new public space for the world to gather, albeit one that isn’t truly free nor public. But what responsibilities does this place on a corporation that acts as a content gatekeeper? Does the government intervene or just let the free market do its own thing. The concern with the latter approach is that the technology sector is increasingly becoming an oligopoly, with Facebook, Apple, Google, Amazon, and a few other firms controlling the major platforms, and therefore serving as gatekeepers for any upstart entrants.

On another note, I’m fascinated with the future of work in technological, AI-first society. The increasing emergence of automation in occupations poses fundamental questions about what it means to be a human? Do we work to live or live to work? Say it is possible for most jobs to be automated away, and somehow, we manage to reap the benefits of this increased productivity equitably. Some may still argue that life would lose meaning in this scenario, with massive hordes left with no sense of purpose in their life, relegated to beings who sleep and eat. Of course, this is a far-away scenario, but imagining it helps analyze proposals meant to address technological unemployment, like universal basic income. I worked on a year-long research project last year analyzing the implications of technological unemployment on public policy, specifically looking at case studies like the trucking industry. A cursory reading of opinions on the topic reveals a key difference at root: will artificial intelligence be a substitute or a complement to human labor? Throughout history, fear mongering has occurred with the introduction of new technology, only for the fears to be unfounded as people find new, more interesting things to work on with the extra time. Will it be any different this time? Our relation to work has already begun to shift with the rise of the gig economy, for better or worse, which is another topic that could be analyzed to no end.

The long tail model has shifted the way in which we consume goods and services, and how companies effectively take a data-centric, targeted approach to finding new sales. The shift in consumer patterns has been most felt in retail. While 50 years ago, it was the big-box stores obsoleting mom-and-pop outfits, now the same big-box retailers are feeling increasingly threatened by online giants like Amazon. Well, mostly Amazon. The ease of scaling infrastructure on the cloud as compared to the ground is what enables companies like Amazon to utilize a long tail approach. In fact, Amazon turned out to be so good at scaling that they launched Amazon Web Services as a standalone service, creating a new revenue stream beyond advertising. With the rise of machine learning and predictive analytics, retailers can target us better than ever using carefully assembled profiles. I think the future of e-commerce is one in which the long tail can be taken to its logical extreme, where instead of presenting personalized recommendations, a computer just orders what we need before we can be bothered to think about it. Amazon’s already working toward this vision, with Dash buttons mounted in relevant places, subscriptions to products, and by tying into smart devices with various sensors. Peak retail is when shopping is impossibly effortless.

 

One thought on ““The Effects of the Internet on the Economy, from Working to Shopping to Finding Information”

  1. Wow–a lot in this blog. Hard to know where to start.

    Amazon is an interesting company– while it started as the paradigm of the internet replacing a brick-and-mortar establishment, in many ways it is now more a technology company than a retail company. An old friend of mine is the CTO there, and he once told me that Amazon was going to win in the tech space because they knew how to make a profit on retail margins (which are generally under 10%) rather than the kind of margins technology companies required (at the time, over 50%). Changing the margins like that changes the rules pretty effectively.

    The other interesting question about the technology monopolies is how long they can maintain their monopoly status. Microsoft was once considered the technology monopoly, and even went through a long court action with the U.S. department of justice for monopolistic practices. By the time the court case was done, Microsoft had been replaced by Google as the technology monopoly (and now there is Facebook). Now here comes Amazon. With the rules changing so quickly, it is hard to know how resilient anyone’s business model is…

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