Many thought the 2008 financial crisis was a game changer in the way this world functioned. We had learnt the hard way how the excesses of capitalism had run havoc and never would we let it happen again. The technologists would be our saviours.
These were smart, young kids with all the passion and idealism that comes with youth. They were building platforms where our voices would be heard, where anyone with a brilliant idea could be famous. On the internet all of us were truly equal.
Or were we?
Ten years have passed and so has the baton. At the end of 2017, the top four firms by market capitalisation were all technology related: Apple, Google, Microsoft and Amazon. Facebook was sixth on the list. These firms and their products have enriched our lives in many ways but as the darker side of their success is revealed, one has to wonder more and more whether their towers are erected on the same hollow foundations as those greedy behemoths on Wall Street. Dig deeper and the muck oozes out. The similarities simply cannot be denied.
Doing deals with the Devil
At the height of its terrible madness, Wall Street was in bed with some of the worst regimes on this planet. Accounting tricks sponsored war and oppression throughout the world, all for a hefty fee. HSBC was fined $1.9 billion a few years ago for its role in financing organisations with terror links. Wells Fargo’s (formerly Wachovia Bank) role in laundering Mexican drug money is well documented.
Surely then, when our new tech entrepreneurs took over the reigns, we expected their decisions to stand on an edifice of sound morality. But that is sadly not the case.
Google was more than happy to rake in the advertising revenues from the websites of terrorists and extremists until the advertisers withdrew their ads in protest. Both Microsoft and Google argued for months that blocking of child porn from their search engines “could not and should not be done” before being forced by governments into executing a U-turn. Even after years of chiding, many believe Facebook, Twitter and YouTube still don’t do enough to counter extremist or violent content on their platforms.
Tim Loughton, member of the UK Parliamentary Home Affairs Committee, wasn’t off the mark when he charged Twitter executives in December last year of profiteering from extremist content:
“You are profiting from the fact that people use your platforms to further the ills of society and you are allowing them to do it and you are not doing simple things to prevent it.”
A magic trick Wall Street would be proud of
The worthiness of a bank is based on its customers. Even today a bank is considered to be doing well if it has a large deposits of savings in its coffers. However, a bank makes money not by serving these customers but by using the cash these regular people have trusted it with towards other profitable ends.
Replace money with personal information and you would see an immediate parallel with the social media firms of today. Their entire business model is based on refashioning something that their customers should rightfully own and turning it into a profit making commodity.
Someone who had a savings account with Citibank would probably not have agreed to their monthly paycheck underpinning its predatory lending practices. Similarly, most Facebook users would have objected to their personal information seeding the personality algorithms being used to influence US elections.
But just as customers had little say over how their money was used by Wall Street, we have no claim over the information Silicon Valley collects from us. Before the regulations tightened, it was common for banks to make borrowers agree to terms and sign forms they didn’t understand. Social media firms get its users to tick an innocuous looking checkbox and sign away everything. It is a magic trick even the most corrupt bankers would be proud of.
Power rests with the powerful
During the days of Wall Street indulgence, power was one of its biggest problems. It still is. Power rested with a few, all transactions were shared between the same firms and the money simply went around in circles. Rising up the corporate ladder was based less on who you are and more on who you knew.
Silicon Valley was supposed to be the model of ultimate meritocracy but the cafes in San Francisco are filled with entrepreneurs with great ideas hoping up bump into an influential VC, or at least an incubator or deal maker who claims to have the VC’s private number on his cell phone. There exists a full ecosystem around networking and connections. As it was once on Wall Street, getting a meeting with the right person is everything.
As power gets more and more concentrated, your network becomes more important than your ideas. This is no different from how the wittiest tweet can die unread unless you can get it retweeted by an influencer.
It doesn’t need an expert to understand why this new version of the old Wall Street universe is problematic. All networks come with their inherent biases. The cosy group of white male Harvard MBAs in fitted suits has simply been replaced by a cosy group of white male Stanford dropouts in grey hoodies.
These boys and their toys
Algorithms are to Silicon Valley what mathematical models were to Wall Street. The protagonists and their toys have changed but the playbook remains the same.
During the financial crisis, top bankers admitted their models had side-effects, that they didn’t account for the risk in their portfolios correctly. It is common these days for technology bigwigs to sing a similar tune.
“No algorithm is perfect,” said Eric Schmidt, the Executive Chairman of Google, in an op-ed in the Daily Mail late last year. The response was similar when investigations proved YouTube’s recommendation engine directs viewers to misleading material.
Of course, these issues were highlighted by external agencies. If the problem wasn’t thrust in its face, Silicon Valley would continue on as it had for the past few years: chasing profits, evading taxes, lobbying politicians, bending the rules, being less than honest with their customers. Does this list sound familiar? Yes, we’ve seen it on Wall Street.
The plush carpets and oak furniture on the 57th floor have been replaced by open plan offices with bean bags and foozball tables but the similarities are still remarkable. The floors are filled with mostly men, mostly white. Uber was Silicon Valley’s rising star until we discovered the culture of harassment against women in its offices. A few days later we found the firm had concealed a massive breach of data. The tales are endless.
It is said that those who don’t study history are doomed to repeat its mistakes. Sadly for us, the history of corporate greed isn’t a compulsory course in any programming school around the world. Hardly a decade has passed, and while we have travelled from New York to California, it feels like we are back at square one again.