Will The Internet Just Fix Itself?
The internet is consolidating under centrally managed conglomerates and is endeavoring to remake the broader economy in its image. Much in the way that social media companies have been able to convert their temporary monopolies over novel forms of interaction into enormous corporations that, having ascended so quickly themselves, become immediately terrified and obsessed by self-preservation, newer companies are converting their brief control over soon-to-be-trivial labor concepts — software that matches drivers with riders, shoppers with buyers, clients with the variously self-employed — into multi-billion-dollar defense funds against their theoretical future disruptors.
Right? It all feels so inevitable, and so fast, and so inline with perfect economic principles, that it always seems a little too soon to talk about it. Why worry about life in an economy managed by toll-extracting asset-and-employee-free middleman companies when we only have to wait a few years to see what it will actually be like?
A cousin of this concern was expressed recently by Chris Dixon, a partner at Andreessen Horowitz, a powerful VC firm, in the form of a “tweetstorm,” (TM) which I have rendered here as a “paragraph.”
The history of the internet is a series of battles between proprietary services and open protocols. Imagine if HTTP or SMTP were owned by a single company that could cut off access to developers. The world would have had far less innovation and wealth creation. In the 90s open protocols like HTTP and SMTP won out over closed services like AOL. Today, the situation is reversed, and closed services are winning for social networking, micromessaging, payments etc. But eventually the pendulum will swing back as the closed services atrophy and entrepreneurs & developers go elsewhere.
Maybe this is true; it is certainly appealing. Or maybe the decentralized internet was an anomaly! It is hard to square some sort of Return to Internet Nature with so many prospectors wandering the land with glints in their eyes. But who knows? The internet hasn’t been through enough macro cycles to give us any real sense of what the next one might look like.
Besides, this is optimism extending from resignation: the decentralization of the internet is something that will happen “eventually,” and an internet taxed by the platforms that host and shape it is still “winning.” And elsewhere in the world of people with millions of dollars to invest in tech, resignation to the externalities of the on-demand economy, as well as to its centralization, is being discussed more openly as a future problem. Labor is losing. (Again.)
Albert Wenger, a partner at Union Square Ventures, wrote in September of last year:
One of the major economic trends we are currently seeing is the breakdown of traditional employment and the rise of labor marketplaces for freelancers, such as Uber, Task Rabbit and WorkMarket (to name just a few). The valuations for at least some of these companies suggest that investors expect them to be very profitable in the longrun. During the growth phase it is entirely possible to create value for both freelancers who participate in the marketplace and for the investors who own it but eventually there is a tradeoff where on the margin an extra dollar for investors means a dollar less for labor.
He asks: “So what influences the bargaining power in the future that determines how these marginal dollars get split?” He suggests a simple regulation:
an individual right to an API Key. By this I mean a key that would give an enduser *full* read/write access to the system including every action or screen the enduser can take or see on the web site or application. Alternatively one could think of this as an individual right to be represented by an algorithm.
Workers should have great access to the software that manages them, and should be able to delegate their negotiations with this software to.. software. His colleague, Fred Wilson, found these ideas very interesting. And they are certainly fun to think about: If the internet, as well as the part of the economy managed fully through its infrastructure, increasingly amounts to an expression of the wills of a small group of companies and people, then it is creating a scenario that could — or should — give rise to a new sort of labor movement, one that uses the tools of the new software industrialists to check their power. It is no coincidence that the most vocal proponents of the 1099 economy as a boon to “flexible” work schedules are the companies that stand to benefit from the normalization of insecure labor. These jobs are only meaningfully “flexible” to people who can afford to treat them that way, and only for as long as the jobs tasks they create are worth doing on a part-time basis. Their goal is to sell the labor of people who most definitely aren’t their employees to people who most definitely are their customers. Their goal is to do this at the lowest possible cost while eventually making a profit. This is what they are optimizing for, and it is reflected not just in their management and goals, but in their software. So why not entertain the idea of an algorithmic labor union? Some sort of organization that might pit software optimized to serve Uber’s interest against software optimized to serve the collective interests of its drivers? One demands absolute efficiency and the lowest possible consumer cost; the other wants steady schedules and livable rates for the people providing the service. Just as software logistics sweeps through established industries, it could streamline unions, making them more efficient, less prone to political distraction, more effective, and less precious about the past. Wouldn’t that be great, if software could go to battle not just for the benefit of companies and their consumers but against itself, for the benefit of the people living under its new mandatory reality?
Sure! (Although I can’t think of anything that would accelerate the replacement of human labor where possible — self-driving Ubers are a stated objective of the company — more quickly than algorithmic labor unions.) But it’s not clear that the tech money’s heart is really in this, and it’s a convenient way to brush off a major consequence of a thoroughly disrupted version of our current economy. It is the software equivalent of full market faith.
Besides, this is just a brief detour on the way to the real next internet, according to Wilson (and others):
I believe that in the long run these platforms may/will be replaced by blockchain based networks of labor where there is no platform middleman and there would be no need for a legal right to an API because all the data would be public by default.
Yes, no worries, Bitcoin’s got everyone covered in the long run. Dixon’s firm is bullish on this too: the “blockchain” — a decentralized public ledger of transactions — will provide a new economic fabric for the internet that would preclude the existence of middleman services for payments and trade in general; this is when “the pendulum will swing back.” It would arrive, for lack of an apt comparison, like a million Craigslists at once, sapping value from all those companies that colonized the internet with promises of efficiency before becoming exemplars of arbitrary inefficiency themselves (tech’s metaphoric vampire squids are identifiable by their company t-shirts).
This is narratively appealing; it’s the kind of twist you might expect at the end of a sci-fi book about the singularity, a glitch the prevents the machines from fulfilling their destiny by eradicating humanity entirely. “Don’t worry,” it assures readers, with rich dramatic irony, “even the most powerful companies couldn’t see the blockchain coming!”
But books end that way so the human story can remain intact, and so readers might consider reading the sequel. Here, on Earth Internet, we have no choice. From a venture capitalists’ mouth, such predictions sound like polite, conversation-ending promises; from anyone else’s, they sound a little too much like prayers.