Slavery by algorithm
Thursday, 27 December 2018
By Selva Freigedo
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The following article was originally published on 5 October 2018.
As you probably already know, I recently spent a few weeks in Spain visiting family. And let me tell you — the hot topic of conversation there is property.
However, differently from 10 years ago — when property sales were on everyone’s mind — now it’s rentals.
Rental prices have been rising, a lot. The reason being that long-term rentals are in short supply.
You see, people are buying properties and renting them out for the short term. As SUR In English reported recently:
‘“People are buying properties just for holiday lets”. This is something you often hear now in the property sector, which is already talking about a new bubble […]
‘The more than 30,000 properties available on Airbnb in the province, plus the number of hotel beds, means that Malaga can now accommodate 250,000 tourists a day. Of those, 60 per cent would be staying in a self-catering property.
‘The numbers are growing. The DataHippo portal, which collects data from digital rental platforms, says Barcelona is the leader in Spain with 24,029 beds advertised on Airbnb, followed by Madrid (22,909), Valencia (8,120), Seville (6,973) and Malaga (5,762), although the figure for Marbella is almost the same (5,721).’
Needless to say, there is a lot of animosity against Airbnb. For one, it’s driving long-term rental prices up. For another, neighbours are finding it hard to cohabitate with noisy tourists.
Yet, what was interesting was something a town hall official said during a radio interview.
The gist of it is that the town hall doesn’t see Airbnb and new technologies as a liability, but rather as a tool.
You see, before Airbnb, it was hard to track those property owners renting short term.
Airbnb makes it much easier. Everyone is together in one spot. It makes it easier for the town hall to spot them, regulate them, and tax them — all in one go.
This is something this week’s expert mentions. That is, that tech is collecting a lot of data which is concentrated in one place.
Dan is sceptical of big tech. In fact, last December Dan told us — way before the Cambridge Analytica scandal — that Facebook would fall apart.
So far, Dan has been right. And, as we heard from Dan, the US government has big tech in its sight.
You see, according to Bloomberg, the White House is looking at drafting an executive presidential order, that would instruct antitrust and law enforcement agencies to open probes into the practices of big tech firms.
Dan thinks this could spell disaster for the US stock market, and yet this could be the best case scenario.
What’s going on? Dan explains:
‘The story starts, as things often do these days, with President Trump. In late August, he tweeted that Google search results were “rigged” to block conservative-leaning content.
‘Trump suggested that this practice could be illegal. Larry Kudlow, Trump’s economic advisor, said the White House was “looking into the issue.”
‘In an interview with Bloomberg, Trump also said that, while he wouldn’t comment on breaking up tech companies like Amazon, Google, and Facebook, they were in a “very antitrust situation.”
‘Then, at a rally in Indiana, the president said that he would not tolerate “censorship, blacklisting, and rigged search results,” and that “we’re not going to let them control what we can and cannot see.”
‘And this sort of language isn’t just coming from the White House.
‘Earlier this month, the U.S. Department of Justice warned that technology companies may be “intentionally stifling the free exchange of ideas” and hurting competition.’
It looks like politicians have big tech as a target. Why should you be paying attention to this?
As Dan explained:
‘When you introduce a political element into these businesses, things get very uncertain. It’s a cliché, but investors hate uncertainty.
‘Will these firms be broken up, as happened with AT&T in 1982? Will they keep getting fined, like when Google was fined $5.1 billion by the EU in July for antitrust violations? Will the government regulate how these companies can use your data?
‘All these questions make it harder for investors to predict companies’ future earnings and apply a valuation to them today. That’s going to put the brakes on their stock prices.
‘If you don’t have any of the Big Techs in your portfolio, you might think that’s not a big deal. But you can be hurt by falling tech stocks — even if you don’t own a single one.
‘The Big Techs have been the engine behind the bull market. As recently as July, a handful of these tech companies accounted for almost 100% of year-to-date S&P 500 returns.
‘That’s all well and good while these companies continue to grow. But it also works in reverse.
‘Put the brakes on these stocks, perhaps through government regulation, and you throw the whole thing into reverse. Stocks – and I’m not just talking about tech stocks — fall hard. The bull market ends. And investors who never bought shares of Facebook, Google, or Amazon still get wiped out.’
The way Dan sees it, there are two possible outcomes:
‘The first is that the government goes after these firms on antitrust grounds and breaks them up, the way it did to AT&T.
‘That’s going to be difficult, though…mostly because of how the government views antitrust cases.
‘The current standard is that these companies must be causing commercial harm to consumers to be considered to be violating antitrust laws. That usually means that they’re using their dominance in an industry to force consumers to accept higher prices for a service.
‘But most of the Big Techs offer services for free, at least in terms of dollars. […]
‘Breaking up Big Tech would require a dramatic reclassification of what counts as antitrust behaviour.’
This is the ‘best-case’ scenario. The other one is more troubling.
‘The tech firms cave under political pressure and fall in line. They cooperate openly with the federal government to surveil and control you, and “nudge” you to make the “right” decisions.
‘It’s no secret that what these companies are aiming at is behavior control on a massive scale.
‘That was confirmed when an internal Google video was leaked online. The video showed how the company could, if it had enough data to work with, create a blueprint of human behavior. Then, it could introduce stimuli (showing you the “right” information) that would push you toward a “correct” action.
‘Think about that for a minute. On a philosophical level, it tells us that these companies don’t trust you to make decisions. It’s saying that you don’t know what’s best; that the people in power — maybe the government or even Big Tech — would do a better job running things.
‘So they’ll use artificial intelligence (AI) and the massive troves of your data that they have to “nudge” you in the direction that they “know” is best.
‘[…]when you start to connect the dots, you see a pretty grim picture.
‘These Big Tech firms, which are actively trying to influence user behavior, are getting their thumbs twisted by Washington. And if they’re willing to work with the Chinese, why would they have a problem working with the American spook agencies that say they need their help to stop the next 9/11?
‘It’s seems pretty clear that the relationship between Big Tech and the government is about to get cozier. And that’s how you arrive at what I’ve called “slavery by algorithm.”
‘In other words, we’re moving towards a tech-fueled police state. Every web search, online purchase, and “like” is catalogued and analyzed to make sure you’re making the “right” decisions.
‘A lot of people can’t imagine that coming to America. But I believe that’s the direction we’re headed in.’
What to do
As Dan sees it, there are two case scenarios. Either the government breaks up these companies…or they start to collaborate with the government even more.
If the government starts breaking up big tech, we could very well see a market crash.
That’s why you should maybe shift some of your wealth from stocks into more tangible assets like cash, gold or property, even if you are not holding big tech stocks.
Yet I am of the view, as Dan is, that the more likely scenario is the second one. All that data collected in one place is too juicy to pass up on.
The more you use these services, the more data they collect on you. Rather than using Google, Dan recommends using www.startpage.com.
Consider limiting your time or even stopping using these services.
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