Cory Doctorow is a Canadian-British journalist and author who has a recently released his latest book – The Internet Con: How to Seize the Means of Computation. You can get his new book here. If you want to read more of Cory’s thoughts, click here. This guy writes!
This is such a fascinating conversation, and we really got a lot out of this conversation – even though it wasn’t a pure investing convo, if you’ve any investments in Google, Amazon, Spotify, actually, any of the tech names, there’s a lot for you to think about.
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Bryce: [00:00:20] Welcome to another episode of Equity Mates, or should I say? Hey there. World changes and Disruptors. Welcome to another game changing episode of Equity Mates, where we're not just connecting you to your friends, we're connecting you to financial freedom. Whether you're just a newbie coder, booting up your investment journey or your IPO ready, like in 2012. We've got the algorithms to transform your portfolio into a unicorn. Now, my name is Bryce, and as always, I'm joined by my equity buddy, Ren. How are you?
Alec: [00:00:48] I'm very good, Bryce. As always, you have got ChatGPT to rewrite your introduction. A bit of a thematic introduction from you today. Yes, we are talking all things big tech. Yes, as always. We start by guessing who you are. And the IPO in 2012 gave it away even though you stumbled over your line.
Bryce: [00:01:11] No I flipped it out. It said the company.
Alec: [00:01:14] Should have gone anyway. But you are Facebook.
Bryce: [00:01:19] Close, but no cigar.
Alec: [00:01:20] You are. You're Mark Zuckerberg?
Bryce: [00:01:21] Yes. I'm Mark Zuckerberg. Now, before we get into it, a quick reminder that while we are licensed, we're not aware of your financial circumstances. So any information on today's show is for education and entertainment purposes only. Any advice is general.
Alec: [00:01:37] Now, Bryce, I said this was thematic and it is thematic because we have just come off an interview with Cory Doctorow. He's a Canadian British journalist and author. And as we find out in this interview, this guy writes.
Bryce: [00:01:52] Yeah. Big time.
Alec: [00:01:53] He left the pandemic with eight books ready to go. But what we're talking about today is his latest book, The Internet Con: How to Seize the Means of Computation. People may be familiar with one of his earlier books, Choke Point Capitalism. He's a big thinker and writer on big tech and tech policy. And I guess the economy has developed around a lot of these tech platforms. And as we get into the interview, he thinks a lot about what the alternatives could be.
Bryce: [00:02:29] I found this interview fascinating. Not hardcore investment or stocks, but really relevant. I think if you're interested in tech policy and the role that big tech companies play and also antitrust.
Alec: [00:02:43] Let me make the argument that it is critical to investing. If you invest in any of the big tech platforms, the biggest competitive threat is not a business competitor, but it's regulation. And, you know, does Google get broken up or does Facebook lose something? You know, people are even trying to. I don't think you could do it, but like, oh, anyway, you know, like split up Facebook and Instagram and WhatsApp and stuff like that. Yeah, we speak a lot about regulation here. It's going to be important. This is going to be the decade Google's in court with the government now. There's heaps of laws moving in Europe and America. Not so much in Australia.
Bryce: [00:03:21] Well Ren, in this episode, we asked Cory what he would do if he was prime minister for a day here in Australia to combat big tech. So let's jump straight into it. A reminder that if you're interested in his book, The Internet on how to seize the means of computation, there's a link in the show notes, but let's crack in. Cory, welcome to Equity Mates. It's great for you to be here.
Cory: [00:03:42] It is likewise great for me to be here from my perspective.
Bryce: [00:03:47] That was a rough start. But anyway, I'm looking forward to this on Cory. There's a lot to unpack today, but as always, we start with a would you rather so would you rather always say everything on your mind or never speak again?
Cory: [00:04:02] Oh, definitely. Always say everything on my mind. That's approximately where I am. Anyway,
Bryce: [00:04:07] I felt like that was going to be your answer.
Alec: [00:04:11] Looking at the amount of books you published, Cory, and how quickly you publish books. Yeah, we sense that you would lean that way.
Cory: [00:04:19] I write to distract myself from anxiety. So I came out of lockdown with eight books.
Bryce: [00:04:25] Whoa.
Cory: [00:04:26] And so this is number three, and then the next one comes out in about six weeks as we record this. And then the next one, eight weeks after that. So busy time.
Bryce: [00:04:35] Oh, my goodness.
Alec: [00:04:36] And we're talking about, I guess, some of your more, I guess, academic writing or more non-fiction writing. We're going to be talking about your latest book, The Internet Con: How to Seize the Means of Computation. But don't get it twisted. You're also writing science fiction and whole. You're writing a whole range of books.
Cory: [00:04:54] Yeah, I mostly am a science fiction writer. I also write sort of tech policy polemics like this one. And included in the upcoming lot is middle grade graphic novel. But I also during lockdown had a picture book for Little little has come out. So I really run the gamut.
Alec: [00:05:13] Well.
Bryce: [00:05:13] Out of all of those. What do you enjoy writing the most?
Cory: [00:05:16] I mean, which of your favourite meals is your favourite? I mean, I like them all for different things. Oftentimes I'm carrying on the same argument by some other means, right? You know, it's I'm taking the abstract policy argument as far as it can go and then overlaying it with some fiction and narrative.
Alec: [00:05:36] Yeah. Yeah. Well, I can't wait for the picture book version of this book.
Cory: [00:05:42] You laugh, but the picture book that at the middle grade graphic novel that's coming out is based on my novella, Unauthorised Bread, which is a high tech thriller about toasters that won't accept third party bread. That is in fact a sharp critique of the anti circumvention clauses that the US Free trade Agreement with Australia included. So it's a way to take something very boring and make it very interesting.
Alec: [00:06:05] I like that. I like that. Well, let's get to this book and we wanted to start with the first line because I think that's a good jumping off point. So I'll quote it. This is a book for people who want to destroy big tech, so no messing around there. So give us the pitch for people that maybe haven't read some of your previous books. Choke Point Capitalism is one some people might have read, but give us, I guess, your overarching view of big tech and why we should join you on this quest.
Cory: [00:06:35] Yeah. So I have spent more than 20 years working on tech policy. I work for a non-profit called the Electronic Frontier Foundation in San Francisco. I was their European director for many years, and now I'm what's called a special advisor, which is what they call you if they don't know what you do. And there has been a lot of not very good tech regulation proposed over the years and some that's quite good, but generally it's been a pretty poorer calibre. You may recall that at one point Australia tried to ban working encryption and they they said that they would only ban working encryption for bad guys, but not for good guys. And the mathematicians said, well, this violates the laws of mathematics. And the Prime Minister at the time said the laws of mathematics are all well and good. But I assure you in Australia the law is the law of Australia, which may be the stupidest thing anyone has ever said about technology and tech policy in decades of these fights. [00:07:37][61.9]
Alec: [00:07:38] Cory, I don't mean to interrupt you, but we have a litany of stupid moments from our prime ministers, including one eating a raw onion on live TV. [00:07:45][7.5]
Cory: [00:07:46] I know, I know. I am for my sins a naturalised British citizen. So, you know, I have had prime ministers that would curly hair on your toes. You know. But there is the sense historically that these large tech companies are, on the one hand, quite dangerous. Right, because they hold so much of our lives in our hands. But on the other hand, quite useful, right? If you can suborn Google or Facebook or Amazon to do your work, to do the work of the state, to say, surveil people or to do something else that the state desires, like censoring people or policing what kinds of goods can be bought and sold or policing, What kinds of things can be said, even if they're not unlawful, the so-called lawful but awful rules that we can kind of make for a better Internet than we would have. If we didn't have these tech giants, because if there were thousands and thousands of places where we congregated online and met with one another and did things with one another, then it would be kind of an ungovernable rabble right there be just too much of it going on. And so there's this sense that the answer to the monarchy we find ourselves in is to make it a constitutional monarchy, right to get these these self-appointed kings of the Internet to suffer themselves, to be draped with golden chains that will be held by regulators who are probably drawn from their own mets. Because, you know, when the sectors only got five companies and it the only people who understand how it works are all alumni of those five companies, and that they will keep the king from overstepping their bounds while keeping them as king. I am a not in the American sense, a Republican of the Internet, Right? I want an Internet where technology is operated by and for the people who use it where rather than trying to make Facebook capable of distinguishing between people who've been harassed, who are discussing the things that their harasser said and people who are harassing them, which is the thing, Facebook gets wrong all the time and kicks people off the platform for repeating the racial slurs that were directed at them rather than trying to make them better at doing that. I mean, yes, let's make them better at doing that. Let's make it possible for people to have self-governed communities where we don't have to hammer sense into Facebook's skull, which frankly would be a lot easier job if Facebook knew that people who didn't like Facebook could leave without having to sacrifice all these things that are important to them, like their social relations. And so if we want to make Facebook biddable, even if you want to fix big tech, you should also want to make it obsolete because it's the fear of obsolescence that makes tech fixable.
Bryce: [00:10:27] I just want to follow up on that, Cory, because I think what would it have been? Ren, 12 months ago, so maybe 18. The concept of Web three really sprung into action. And I think one of its biggest sort of proponents was this idea that it would become decentralised in the sense that Facebook would lose its ability to be the sort of central power for a lot of communities online. So what was your sense of how Web three was communicated? And it feels like it's really sort of fallen off the aether at the moment, but out of Aether. But whatever the saying is. But what's your views on Web three?
Cory: [00:11:07] Well, I think that there's two ways to criticise Web three and the obvious one and one, which frankly I agree with, is that it was a speculative bubble grounded in the idea of blockchains that could only be maintained if there was always incoming speculators who would keep the liquidity in the system and that everything else would just disappear unless you had suckers who are showing up to get fleeced. Right. But even if you disagree with me and you think blockchain based services held the possibility of long term stability without the wild price swings and concomitant instability that we see associated with speculative markets more broadly. This is the second critique. They didn't really have a theory of transition, right? So they observed an Internet where people were stuck to platforms by all kinds of things. So with Facebook, mostly we're stuck to it by each other. We hold each other hostage on Facebook. You know, if you've ever been out to a, say, a tech conference and then it rolls up like 6pm and you're like, Oh, we should all go out and get a drink and there's 20 of you. You're still going to be sitting there at 8:00 arguing about which bar to go to, right? The idea that 150 or 200 of your friends on Facebook can all agree that on the one hand you want to leave Facebook and on the other hand that now is the time to go. And on the notional third hand, that we should all go to this other place. It's impossible. It's what economists call the collective action problem with Amazon. People get locked in by digital rights management. So I mentioned a wrap, this novella about digital rights management under the U.S. Australian Free Trade Agreement, as well as laws in the U.S. and Canada, where I'm from in the United Kingdom, thanks to the European Copyright Directive, it's against the law to remove DRM even if you don't infringe copyright. So I as an author, can sell you an audiobook through Audible, which is the Monopoly platform owned by Amazon with more than 90% of the market. And when I do, you are locked to audible forever. In order to listen to that audiobook, you can never remove the DRM and convert it to a file that will play any non audible blast player. And that means that every time I sell you an audiobook on Audible, that is the money that you're going to have to forfeit. If I later find myself no longer in good order with Audible and want to go somewhere else, which means that audible holds enormous power over me, which is how it is that as as the writer from Perth, Susan May discovered and the audible gate scandal that Audible was able to steal more than $100 million from independent audiobook authors who still stayed on the platform because their customers were there. Right. And they couldn't go elsewhere. And the idea that you could just build something better, assuming that a cryptocurrency based web3 whatever was better, let's stipulate that I don't think it would be, but let's stipulate that it is and that people would just go because it was better Misunderstands the way that law can is the factor that prevents people from leaving. It's not dissatisfaction and it's not a lack of options. Those are both important, but they are not sufficient unto themselves. Your thing not only has to be better than the thing that you have that people have, it has to be so much better that it's worth giving up all the benefit they get from the thing that they have because they can't take the benefit with them. You know, when my grandmother was a Soviet refugee, when she left the Soviet Union, she had to give up everything. She didn't see her family for 15 years. She could take only the things on her back. Right. If you are a kid in France right now and you're thinking of moving to Berlin, you can just like hop on a train, put some stuff in storage, bring it with you later, go back. If you want to stay in touch with your friends, it's really easy to switch from one to the other. My grandmother was the only person in her family who left the Soviet Union. The rest of them all stayed behind in Leningrad, not because they loved the conditions, but because the cost of leaving was too high. And the theory that all you need to do is have a place that's better that people can go to without addressing the policy questions. Because these aren't technical questions, right? The reason you can't convert an audible audio book isn't that it's hard to figure out how to remove the DRM wrapper. It's because they'll put you in prison if you do. Right. So this idea that all you need to do is solve the technical question and not the policy question is somewhere between naive, ill informed and actively, maliciously ignorant. And for that reason, even though so much of the web3 rhetoric rhymes with the things that I care about, I never found myself with much confidence in the Web3 project.
Alec: [00:15:40] So Cory, for me, there's really two parts to this conversation. Firstly, there's the theory of change, how we like, how we change big tech and how we change the rules around it, how do we get there? And I want to put a pin in that part of the conversation because the second part is the end point. What is the there that we're trying to get to? Because you start by saying in your book, this is for people who want to destroy big tech. There is an argument that big tech is a natural endpoint in most capitalist markets, that if we look across the economy outside of tech, most mature markets have a couple of major players in the market. It's a pretty consolidated. And if we look at something like Facebook, there's a whole lot of arguments that if it wasn't Facebook that dominated social media, there would be just one big platform that dominates social media for Network Effect and in all those reasons. So before we get to the how, let's talk about the like what the endpoint is. What if we join you on this question? We destroy big tech. What does it end up with? Do we end up with just another? Five big monopolists? Or is it something else?
Cory: [00:16:50] Do we have time before we go on to what we'll have next to talk about how we got what we have now and why it's not naturally played? Why the duopoly isn't natural? So the thing to know is that in the mid-seventies around the world, there was a change in the way competition law was enforced. The historic contours of competition law, which has its origins in the United States in the late 19th century, was to prevent companies from consolidating power, because when they did, they would become too big to fail and too big to jail, right? They would have so much money they could outspend their governments is what IBM did. 1972, 1982, they were sued for anti-competitive conduct. They spent more on outside counsel every year than the entire Department of Justice Antitrust Division spent on all of their lawyers. Right. Can you imagine a company with so much money they could outspend the U.S. government on lawyers to fight the U.S. government every single year for 12 consecutive years. They called it antitrust, Vietnam. It was a quagmire. Right. So there was this sense that we would prevent companies from merging or acquiring other firms where you could have an anti-competitive result and that we would prohibit anti-competitive conduct, particularly something called predatory pricing, which will be very familiar to anyone who's ever written in an Uber right for the first 12-13 years. Uber spent $31 billion, mostly Saudi royal money, on losing $0.41 on every dollar that it earned in order to put all the taxi drivers and public transit systems and competing rideshare companies out of business. And now they've double the price of the ride. They've halved what they're giving the drivers. Right? And we don't have any public transit and cabs don't work. And you know, that's, that's why we used to prohibit it and we stopped prohibiting it. And so, yeah, you're right. Right. Every sector is incredibly wildly concentrated. Bottle caps. Two companies, right? Beer. Two companies. Spirits. Two companies. Professional wrestling. One company owned by this rapey Trumpist billionaire who reclassified all of his performers as contractors, took away their health coverage. Now, all those wrestlers we watch in the eighties are in their fifties, and they're begging on, Go fund me for pennies so they can die with dignity of their work related injuries. One company owns every eyewear brand you've ever heard of from Bausch Lomb and Dolce and Gabbana to coach and Oakley. They also own Sunglass Hut. They own LensCrafters, Target Optical, Sears Optical. And I'm at the largest insurer in the world. And also Essilor, which makes more than 50% of optical lenses. They raise the prices on glasses, 1,000% in the last decade. Right. If you wear glasses like I see you doing, Bryce, they stole your eyes.
Bryce: [00:19:24] I'm not okay with that.
Cory: [00:19:27] And so across the board it looks like this. But this wasn't because companies naturally arrive at the state. This was because the rules that we created for markets encourage monopoly formation, and those rules didn't come down off a mountain on to stone tablets. Right. We had different rules. We didn't have monopolies. We got rules. Now we got monopolies. It's like saying we used to have rat poison. We didn't have rats. We stopped putting out rat poison. Now there's rats everywhere. It must be the great forces of history, right? Well, maybe it's just like not putting out the rat poison that caused the rats to be everywhere. Now, tech, even under circumstances where there's a great deal of market concentration, has historically been pretty dynamic. Right? And the reason for that is that Tech has this underlying character that's called universality, the only computer we know how to make the Turing complete universal von Neumann machine is the computer that can run every program that is valid from the singing greeting card you buy down at Woollies to the computer that we're talking to on now to the thermostat on your wall. All of those computers are in some profound sense equivalent, and that means that you can always write a program to interconnect one thing to another. Right? In the old days of mainframes, they called it plug compatibility, right? IBM wanted to charge you 1,000% margin on hard drives. Fujitsu would come along and make a thing that literally plugged into the same port plug compatible that only had a 200% margin. Right. And so as a result, tech was super dynamic. Yeah, it had these network effects. The network effects would compile, compiling power and you would get this incredible explosive growth. But it also had incredibly low switching costs because whatever it is that they were doing to extract margin from you was the thing that would attract competitors, right? Who would pile into that sector for the same reason? Willie Sutton Rob Banks, that's where the money was. And they would start making the thing so that you could just walk away from one thing, go to the other. Like, here's an Australian example. When Facebook started, everyone who had a social media account who wasn't an American college kid, had an account on a service called MySpace that was owned by an evil crap hole, an Australian billionaire called Rupert Murdoch and Mark Zuckerberg. He didn't say, Hey, guys, I know all your friends are over there on MySpace, but we've got a great UI here on Facebook. Why did you come and admire our buttons while you wait for your friends to show up? Instead, he gave them a board and you bought your login and your password and it would go over to MySpace, pretend to be you, log in, grab all the messages waiting for you, scurry back to Facebook, deposit them in your inbox. You could read them, reply to them, and it would push them back out again. If you did that to Facebook today, they would reduce you to radioactive rubble. Right. And so what does a future tech where tech is operated by and for the people who use it, look like it's a tech where the choice always is a la carte instead of being preface that when the company says, Hey, you know, we know you love your friends here on Facebook, but like in the same weather, you can't make water that's not wet. You can't have a social relationship that doesn't involve being spied on from arsehole to appetite with every hour that God sends. And so you just got to take the good with the bad. Like we don't like it either. It's just physics complaining to the universe. Instead, you could say, how about no, right? You could do what we did with the web, which is install ad blockers. One in four internet users has an ad blocker. It's the largest boycott in human history, but more like 100% of users have pop up blockers. Like the way we got rid of pop ups was we just made it so that pop ups were invisible. And then people stopped trying to do pop ups, right? So on the one hand, we would be free to adopt the technology that we had to keep the parts that we like and throw away the parts that we didn't take our data somewhere else or go somewhere else and continue to send messages back and forth to the people that we love, that we sent back, that we left behind for us. And on the other hand, a tech sector that was in disarray where hundreds of squabbling companies were always trying to figure out how to rate each other's margins, steal each other's users and eat each other's lunch, is a tech sector that cannot capture its regulators because the kinds of surveillance and abuse that we see from these giant tech firms, they are facially obviously untenable and should be unlawful and often are unlawful. They're unlawful in Europe, and yet they still get away with it because the Irish data commissioner, who has jurisdiction for most of these companies, because they pretend they're headquartered in Dublin, because it's a lawless tax haven, the Irish data commissioner doesn't even put trousers on. They they get up in their pants and watch cartoons and eat breakfast cereal all day. Whereas, you know, the German regulator has got their boots laced up to the knee and is kicking arse from like 6 a.m. on. And so they never want to have their cases heard in Germany, right? So companies that can't afford to outspend the U.S. government for 12 consecutive years or maintain the pretence that they're Irish are those companies are going to be a lot more manageable. We can get them, we can bring them to heel. We can pass. And enforce the comprehensive privacy, labour and consumer protection laws that we should have on the Internet in the same way that we should have them in the real world. You know, and so it's not a vision of like one Internet where we all wake up in the morning and it all looks like this and it's going to be this. And so forever. Right. But the world is dynamic. People will invent new stuff. Circumstances will change. What's going to happen is in a world where technology is dynamic, is that when those circumstances change, your ability to adapt to them will be predicated on either your own technical nous or the technical nous of people who care about you or who want to sell you things, and not on the unilateral, unaccountable fiat of a handful of mediocre tech pros who have made themselves the unelected social media and technology tsars of the entire world.
Alec: [00:25:22] Now, Cory, I'm very sympathetic to that argument. I think that more competition is always good. But let me put the argument to you that I think a lot of people would be making. The Uber example, I think is a good one, which is that for all of Uber's ills and its recent, you know, price gouging, there is an argument that the World post Uber is a better world for consumers than the world pre Uber. And you could probably make the same argument about Amazon for all of Amazon's massive sponsored results and all of that. The world post Amazon is probably better for consumers in the world pre Amazon and those worlds only come about with massive upfront capital investment. The idea of an unruly rabble of tech entrepreneurs, you know, iterating and taking each other's margins doesn't lead to the companies that we sort of see today because you need the promise of ultra profitability. And also if we think about tech now and tech into the future, you know, the cost of GP used to have AI and all of that stuff like big tech is expensive. Do we, in the world that you're talking about, how do we get these big step forwards in sort of like satisfying consumer wants and needs?
Cory: [00:26:42] Well, I think that you could make the alternate argument that big tech is incredibly unfair, innovative. So think about Google, right? Google is a company that had one very, very good idea, which was a search engine, and it was magic. I don't know how old you guys are. I'm 52. I'm officially old now and I have two artificial hips and cataracts. That's how goddamn old. And and and when Google started, that search engine was like magic, right? Compared to, like, Ask Jeeves and AltaVista and whatever it was, it was incredible. Right. And that opened the spigots to the capital markets. And Google went on to produce nothing internally of note that Google video crashed and bombed every social media service they made, crashed and bombed their smart cities, their RSS reader, you name it, if it's an internal project, it failed. What they did was they went out and bought other people's ideas. Mobile ad tech, the entire ad tech stack, server management, docs, maps, collaboration, and now as this giant conglomerate that has admittedly proven that it's very good at operationalising other people's ideas, which is not the same thing as innovating as someone who's been both an operations person and a research person or product development person. They're not the same thing. In fact, they're the opposite thing, right? The thing that the operations person wants is for the product person to stop making new stuff, right? So that they can just keep the old stuff and like it works, don't change it. And so they're the opposite skills. Google is their janitors, right? Pretending to be like Willy Wonka's idea factories, their janitors with money who operationalise and run things. Now operationalising running things super important, but it's not innovation. So if your argument is how do we get innovation, you don't get it by feeding Google. Because not only has Google failed to innovate, but investors describe every line of business adjacent to where big tech sits as the kill zone because you don't want to invest in it and that goes head to head against them, you know. So right now the Federal Trade Commission or the Department of Justice is suing Google over payment for default search placement. Google spends $45 billion a year paying for default search placement. Right. They buy and light on fire a whole asked Twitter every single year to make sure that you never use another search engine. First of all, that is not the conduct of a company that thinks that it has the best search engine. Right. They're not doing it to protect us from being disappointed by lesser products. Right. And second of all, it means that everyone who has the power to do to Google what Google did to ask Jeeves is starved of market oxygen and doesn't get off the ground. So if we want to help consumers have an excellent experience, rather than use the increasingly in shitified Google search that is now so bad as to be not only unusable but actively harmful. Like there was a full three day period a couple of weeks ago where when you searched for an airline in the United States, instead of giving you the airline's phone number, it gave you the phone number of a criminal boiler room that would take your credit card number and clean you out because they're a single point of failure that drew down funding for their security side to prevent fraudsters from. Taking over airline accounts and fraudsters figured out how to do it and replaced the default phone number for every airline in the world. The your number and stole money from every flyer. Yeah. Yeah. And this happens up and down the stack because not only is Google in a position where they can be lazy and under invest in this stuff. Remember, Google fired 12,000 employees this year six months after they did a stock buyback that would have paid those employees salaries for the next 27 years. But also, Google's a very high value target. If you can get Google to serve a malicious link, everyone's going to see it because we have a monoculture. So, you know, I have a local Thai restaurant I like. And one day I was sitting on the sofa with a friend who come over to watch a video. We said, Should we get some takeout? She said, Sure. And so I looked at looked up their name, and they're at the top of the search results on my Android phone was the restaurant's website, and I clicked on it and there was their menu and I ordered and I placed the order and then my phone rang and it was the restaurant and they said, You just placed an order with a scammer. We've been trying to get rid of who pretend to be us. They've got a lookalike website and when you place an order with them, they then they charge you 15% more than we do. And then they call in the order on your behalf Right now, like if I'd been a little more attentive, if I had been using a desktop browser with an ad blocker or whatever, it never would have happened. But the fact is, why would anyone put all this energy into figuring out how to game Google? Well, the same reason Willie Sutton robbed the banks. That's where the money is. And so Google claims that by being the single dominant firm and that runs our digital lives, that they can, you know, sort of realise such efficiencies and extract such capital as can make them fit to perform that service, to have all of that structural importance. But they manifestly fail. And not only that, they're getting worse even as they're taking that capital that nominally they say they will spend to protect us and setting it on fire, pissing it up a wall through stock buybacks.
Alec: [00:32:01] So Cory, that's the sort of endpoint in terms of what the Internet economy could look like. Earlier, I put a pin in the first part of the question how we get there. We're going to take a quick break and then we want to ask you what you would do if you were prime minister for a day to actually help us realise this vision that you've just laid out with. Welcome back to Equity Mates. Today we're talking to Cory Doctorow, the Canadian British journalist and author of the Internet Con: How to Seize the Means of Computation. Cory, we've been talking about, I guess, the problems of the Internet economy as it exists and what the alternative could be.
Bryce: [00:32:45] So I guess the follow up for that is and so the first part of Ren's earlier question, if you were prime minister for a day, how do we get to this land of consumers having ala carte?
Cory: [00:32:58] Right. Well, the first thing I do is to eat an onion.
Bryce: [00:33:00] Nice. That'll get you real.
Alec: [00:33:04] Get you re-elected down here.
Cory: [00:33:06] Then I'd let the governor general prorogue and dissolve parliament. Yeah. What was it, Tony? What was Tory?
Alec: [00:33:11] Abbott?
Cory: [00:33:12] Tony Abbott sat there and silently just went.
Bryce: [00:33:13] Yeah, yeah, yeah, yeah. And then the report was like, Tory, you're not saying anything.
Cory: [00:33:21] I make, I make. What was it they said that that Tory said about Julia Gillard's chest. Something awful about that too. And yeah. You've had some, you've had some wild ones. If I were PM for the day in Australia after banning Drop Aires, I would. If I could pass one law it would be a an inter operator's defence. So there is a thicket of laws that stand in the way of interoperability. We broadly call these IP, but it's like tortious interference, contract anti circumvention software patents and copyrights, terms of service violations, trade secrecy, non-compete, non-disclosure. Just this kind of whole like thicket of stuff. And you know, there are legitimate reasons to wield that power, right? To protect your investment, to protect your users privacy, to protect the integrity of a service. But mostly what these are mobilised to do is to block entire operators from doing things that improve the service for your users, either by improving the security or by improving the usability or by improving the functionality or by improving the accessibility. Those are that, those are the areas. And so what I would say is just like that we have, I think in Australia you've just gotten an anti-SLAPP law or maybe that was mooted in Parliament and didn't pass. SLAPP is strategic litigation against public participation. It's when I say something you don't like and you threaten to sue me knowing that I can't afford to defend myself and then get me to retract the statement, even if the statement is true and not actionable. And anti-SLAPP laws allow people who've been sued over a speech act to go to court and in early motions, argue that there is no merit to the case and that what they're doing is a form of protected speech done in the service to furthering public discourse. And if they can make a credible case of that, the case ends there. And the belligerent who brought the case against them is on the hook for their costs. And so they have to pay their costs. And so in California, this has been a very powerful thing, having been slapped a couple of times, including by billionaires having a having a lawyer write to the billionaire who threatened to sue you for saying nasty things about them on Twitter and point out how much they make per hour and how how much they're going to enjoy getting that back and fees when they win their SLAPP motion. It's amazing. Just wonderful. So I would create a thing like a slot motion, but for inter operators where when a firm brings a cause of action against an individual tinkerer or against a rival firm, irrespective of the cause of action, if you can show that what you were doing was in furtherance of accessibility, security, usability, you know, so these are socially beneficial activities and that you didn't violate fraud, labour or privacy law, so you weren't doing something that not just that the company just prefers, but that Parliament had said you weren't allowed to do, then the case disappears right away. So it's not a free for all right. It's not like, oh, you can scrape Facebook and be Cambridge Analytica and say, No, I'm an inter operator. It's fine. What we say is if Facebook comes after you like they did, there's an app called OG App. Your audience is tech people. So I'll give you a little tech rundown. So what it did was it was an app that opened a web kit instance and then loaded instagram.com and then had you log in and then captured the session key that Instacart Instagram dot dot com fire back at you and then went and requested all the posts that Instagram had queued for. You discarded all the ads, discarded all the suggestions, and took what was left and ordered it in a reverse corona. So it was just it was the OG app. It was all the things your friends had posted, right? It was what you signed up to Instagram to get right. If you're doing that and Instagram comes after you and they say this is a reverse engineering violation as they did, they threatened them with a 12 hour long action, which is the anti reverse engineering element in the United States or a trademark violation or a tortious interference with contract or whatever. And you can say, look, all I did was make something that was better for users. I didn't violate the privacy. I didn't. Fraud them, and I didn't rip off any workers. Then Facebook. It's not that Facebook is helpless. It's that the courts won't help them. All they can do now is tinker with their firewall, their API, whatever. They can do that stuff that's available to them. But generally speaking, firms do not like to fight with reverse engineers. Like when Facebook saw the OG app, they had two choices, right? Some executive of Facebook walked out of their office and there were two buildings there. One was full of lawyers and one was full of engineers. And they walked into the building full of lawyers and they said, Make these people history. They didn't go into the building full of engineers and say, change the firewall rules. And the reason for that is that reverse engineers have the attackers advantage. Facebook has to make no mistakes when they change the API. The reverse engineer needs to find one error. So the red team is always going to win that fight. You know that gruelling guerrilla warfare can absorb a non quantifiable amount of engineering time and produce the kinds of surprises that cause investors to dump your shares by the billion when you know you do your quarterly numbers and reveal that you spent this whole time mired in, you know, an awful hand-to-hand guerrilla war rather than delivering a product your customers love. And so I think under that situation you create an equilibrium where firms generally tried to make things that people liked and where when there was a discussion around the boardroom table that said, let's make this thing worse in a way that makes our lives better. The person who said we shouldn't do that because is bad for our users would be joined by someone else who would say we shouldn't do that because our users will immediately be offered tools that allow them to fix that thing. And we're not going to be able to use the law to shut down those tools, and we're going to have to use an endless amount of engineering to stop those tools from coming into existence and working. I think that's a fair deal, right? The government's not going to defend you. You can change your technology. I think firms should generally have a broad hand to reconfigure their technology as they like, but I think that goes for competitors as well.
Alec: [00:39:25] Cory, you forgot that at Facebook there's always a third building, which is a building full of corporate finance people so they can acquire that competition as well.
Cory: [00:39:34] Right. And so that's true. And, you know, as I said, until the the Reagan, Thatcher, Mulroney, Pinochet era, we banned that kind of anti-competitive acquisition and we may yet ban it again. The Federal Trade Commission and the Department of Justice have just promulgated new merger scrutiny guidelines. So has the European Commission in the UK. The Competition and Markets Authority is like the only functional part of the British government. It's really amazing. They have this unit called the Digital Markets Unit, the largest technical unit of any competition authority in the world, 70 full time engineers on the public payroll, and they just produce these like astoundingly good 400 page reports on how adtech works and how mobile works. And it's like it's really deep in the weeds on how the underlying business stuff functions. It's amazing.
Alec: [00:40:20] So one thing when it comes to the regulatory story is the fact that these companies are now transnational. They're bigger than national governments. And I think it's a real challenge here in Australia. You know, we tried to do the Facebook news bargaining code, which has a whole lot of conflicted incentives, but we won't, we won't get into that. But, you know, it was Australia against these multinational companies. I think similarly Australia has tries to be a little bit tougher on mergers than some of our larger regulators around the world. But it's, you know, where we're so small relative to EU and the United States. And you alluded to earlier the fact that a lot of these protections for big companies, IP protection and stuff now sort of starts in like international trade agreements and stuff like that and then gets translated into national laws from that. How do we deal with the global nature of this challenge when all regulators are domestic?
Cory: [00:41:24] So I wouldn't sell Australia short, right? It's a really important market for these large firms. It's a low population, high income nation. And it's hard to imagine like Facebook pulling out of Oz, right. If Oz were so remember like it was the UK that stopped Facebook from buying Giphy, which I insist should have been called Giphy. And you know, again, the UK is like not a giant country, right? And it's increasingly a lower income country, so to say. And yet Facebook was like, well, as between never operating in the United Kingdom again and not making this acquisition, I guess this is how we're going to roll the news bargaining code. I know you said you'd want to talk about. I actually think it's a great example because it's an example of someone trying to fix big tech rather than abolish big tech, because it starts from the false premise which originates, I think, with Rupert Murdoch, that Facebook is stealing the news media's content. And Facebook does a lot of bad things. But they don't steal news media content, right? Letting people talk about the news or indexing the news or having links to the news or quoting the news is not stealing the news. If you're not allowed to talk about the news, that's not the news. It's a secret. Right. But what Facebook does steal from the news media is money. So they take 30% of every subscriber dollar that is paid through an app. Well, a credit card company takes 3% to process that same transaction. And that's generally considered by competition scholars to be an extremely high price. For one thing, that's gone up 40% since the start of the pandemic. So you have this already high price that Facebook charges 1,000% of. Right. So imagine if every subscriber that every news outlet in Australia had that they had through an app was suddenly worth 30% more because we stepped in and regulated the rake that Facebook could take or that Google and Apple could take out of app based payments. Google and Facebook take 51% out of every ad dollar. The historic sum that the ad intermediary sector took was 10 to 15%. So imagine again if every ad was worth 40%, 50% more to every publisher. How do you do that? Well, you either directly regulate the price or you step in and you regulate the conduct, because the way that they're able to take so much money out of the ad sector is that they are the buyer, the seller and the marketplace. Right. So they run the demand side platform where the publishers offer inventory for sale. They run the supply side. Or rather, where advertisers seek inventory, the supply side platform, where publishers offer inventory for sale, the marketplace where those two people meet. They are also advertisers and they are also publishers. And so this is like if you and your partner got a divorce and the same lawyer represented both of you, and they were also the judge and they were also trying to match with both of you on Tinder. And when the divorce was over, they owned your house. Right. And you would say, well, you know, what can we do about this? I guess we should just, you know, like we should order them to share the house with us. Well, what you could say is instead. You have to pick a lane. Right. There's an actually an act pending in the U.S. Congress, the America Act, which is very bipartisan. And when I say it's very bipartisan, I mean, two of its main sponsors are Elizabeth Warren and Ted Cruz. Right. Like, it does not get more bipartisan than that. And it requires I platforms to choose one. Right. You can either be a demand side, a supply side or a marketplace, but you cannot run even two of those. And you have a fiduciary duty to be fair to the people who buy your services as well. And there's teeth in it. So Australia could have enacted a law like that. You could also say, well, where does the advantage? Why do firms use ad tech platforms when they're so unfair? Well, one of the reasons is that we have gone all in on surveillance advertising. And surveillance advertising does involve enormous returns to scale. Even the largest, most evil newspaper baron, again thinking of Rupert Murdoch, could not possibly amass a surveillance dossier on you as complete as Facebook and Google have. And he's not going to get API's, like, integrated into all the case for every mobile app. He's not going to be buying data from the data brokers. He's not going to have your location data because he's got your phone is following you around with your phone in your pocket and whatever. And there's an alternative to behavioural advertising, which is context based advertising, context based advertising markets, ads based on the context of the user. So what article they're reading, what their IP addresses and therefore where they're located, maybe what device they're using, but not behavioural data. About the user context, advertising underperforms behavioural advertising by about 5%. But publishers can run their own context advertising marketplaces because they don't need to know everything about the reader. They just need to know everything about the content. Publishers always know more about their content than AdTech platforms. And so we could say in Australia, we're going to pass and enforce a strong federal privacy law with a private right of action. And that's something that will put the press on the same side as every Australian, none of whom woke up this morning and said, God, I want to talk to my friends. I wonder if I could be spied on while I do it right. That would make it perfect. And so it would it would be a thing with enormous political will, right? And it would make every publisher richer. So there is scope for Australia to take action in Australia that benefits Australians. As one of your Prime Minister said, the loss of mathematics are very well and good, But I assure you in Australia the law of Australia is the law of Australia.
Bryce: [00:47:10] So Cory, to close out today, for those of us that aren't a Prime Minister or in positions of power, how should we be thinking about our actions online?
Cory: [00:47:20] So look, I don't think there's much you can do individually. I like you can try. I'm a sucker vegan. I won't use meta products. Right. But it doesn't make a difference. It's just like me being stiff napped. You're not going to shop your way out of monopoly capitalism. You know, like every Australian who spent all those years lovingly washing and sorting their soft plastics, only to discover that they'd all just gone into a landfill, knows that there are limits to individual action on collective problem, systemic problems. But here's the thing in times of crisis. People reach for the ideas that are lying around. And that's something that originates with my arch nemesis. There's a guy called Milton Friedman who ran the Chicago school. He was the archduke of neoliberal thought, and he had these crazy ideas because he had this post-war prosperity that people loved, like they had dental and health care, retirement, weekends. Their kids got to go to uni. And Milton Friedman, he wanted to end all of that, right. And people would say, Milton, nobody wants to go back to tugging their forelock for their social betters, right? They like this. How are you going to change it? And he would say, in times of crisis, ideas move from the periphery to the middle with shocking speed and the impossible becomes the inevitable. Our our job is to keep good ideas lying around so that when the crisis arrives, those ideas can be the ones that move to the fore. Now tech is on fire and it is only going to always be on fire until we solve this, right? The problem isn't that Mark Zuckerberg is manifestly unfit to be the unelected social media, as are 4 billion people's lives. The problem is no one should have that job. And so long as that job exists, it will fail. And fail. And fail and fail. And so the way that we move these good ideas into the centre is we wait for these crises to occur because they're going to keep occurring. Right. There is a genuine and legitimate crisis in news that prompted this stupid idea of a news bargaining code. If there had been better ideas lying around like banning surveillance ads, like regulating or breaking up the ad tech sector, like regulating the price gouging on payments, then we could have done one or all of those things. And if you're interested in learning more, I wrote a series for the Electronic Frontier Foundation called Saving the News from Big Tech. If you type that into your favourite search engine, AltaVista asks Jeeves, Yahoo! It'll come right up. You know, that I think is our job, right, is to keep good ideas lying around, to make people understand that this isn't the great forces of history. Right. This is like a deliberate policy choice that we took 40 years ago that led to this point that we can have a better future. And you know what? If you're a tech worker, this should especially matter to you because think about how the dream of a tech worker has contracted over the last decade or two. Right. It used to be, oh, I'll go work for a big dumb tech company for three years and then start a business that dethroned them. And then it was like, Wow, I can't do that, but I'll go work for a big dumb tech company for three years and start a business that's acquired by them as the world's least efficient way of getting a bonus, right? And then it was like, Well, I'll go work for a big dumb tech company and have a job for life, and they'll give me free kombucha and I'll get massages on Wednesdays. And now it's like I'm going to work for big time tech company and they're going to fire me as soon as they can. Just like those 12,000 Googlers who are fired six months after a stock buyback that would have paid their salaries for 27 years. Right. There is a better future for tech users and tech workers. We're on the same side because we care about the free, fair and open Internet. We understand that the problem isn't tech. It's big. And that there is a better technology future waiting for all of us.
Bryce: [00:51:08] Well, Cory, thank you so much for your time today. You've certainly left us with a lot to think about. And I'm sure the Equity Mates community has taken a lot out of that conversation. For those listening, a reminder that Cory has just released his latest book, The Internet Con: How to Seize the Means of Computation, will include a link in the show notes. If you're watching the video, he's just held it up on the screen, but fascinating conversation. I really enjoyed it. Cory. And again, we thank you so much for your time.
Cory: [00:51:36] All right. Thank you very much. It is my pleasure.