Digital Mass Extinction
The ecosystem of our planet is undergoing significant changes. In addition to climate change, to which the human species has made a significant contribution, we are also witnessing a significant reduction in biodiversity.
It is a process that began at the end of the last ice age, about 12,000 years ago, just when the human species began its dominance on Earth. The planetary ecosystem was, and still is, a collateral victim of human activities.
It is a worrying fact that biodiversity loss is accelerating. According to scientists, the next few decades will be crucial for the survival of as many as 1,000,000 plant and animal species on Earth. It is a degree of extinction unseen in human history.
A similar pattern by which human activity affects the environment is visible in some areas of human society.
Online diversity loss
Just as we are witnessing biodiversity loss of the planet ecosystems, we may also be concerned about the collapse of the digital ecosystem of the Internet.
Of course, these two problems are not equally important for the future of the planet and all living species that inhabit it. They should not be considered equally challenging. But it is impossible not to notice the similarity between the processes of biodiversity and digital diversity loss although their causes and dynamics are entirely different.
Namely, a group of scientists from three Australian universities (University of New South Wales, Sydney; The Australian National University, Canberra; University of Technology, Sydney) recently published a study entitled “Evolution of diversity and dominance of companies in online activity”.
Australian researchers have analyzed the impact of tech companies on the digital market over time, from 2006 to the present. They have applied quite an interesting methodology.
We all know that modern, digital society embraced the principles of the economy of attention. Attention is a measure of value in the digital world. With this in mind, the researchers measured the attention Internet users gave to competing tech companies over 15 years.
They tallied the number of external links posted by users on Reddit and Twitter to the main domains of competing tech companies. In this way, researchers have gained insight into the interest of social media users in the products and services of tech companies over the years.
More than 6 billion user comments were analyzed published on Reddit since 2006, and 11.8 billion posts published on Twitter since 2011. A total of 5.6 Tb of global online activity data was analyzed.
Research has shown there is a trend of consolidation of each segment of the digital market. In other words, a small number of tech giants are taking dominance over every part of the market, from data search, through retail, to social media.
We already knew that. But the value of the research is the exact figures of the extent of digital market consolidation.
For example, the ten most popular domains mentioned on Reddit in 2006 received only about 35% of all links. That percentage rose to as much as 60% in 2019.
On Twitter, the number of links to the top ten domains rose from 50% in 2011. to 70% in 2019.
New companies looking to enter the consolidated digital market, ruled by tech giants, have little chance of survival. The fact is that only 3% of network domains created in 2015 are active today, compared to almost 40% formed in 2006.
Due to too little competition or too much dominance of a small number of players in any economic sector, exists a potential for artificially raising prices and supply constraints. Also, digital diversity loss limits the development and implementation of future innovations in the long run.
With this study, the researchers showed that there are patterns of birth, growth and survival of companies on the Internet, which are otherwise common in the natural environment.
After the opening of a new internet market, happens a burst of different companies (birth). After that comes the development phase (growth), in which the number of competitors reaches its peak. Then their number begins to decrease (survival).
Finally, in the maturity phase comes a significant reduction of diversity as users opt for a single, dominant organization, such as Google for Internet search or Amazon for online shopping (extinction).
Surveillance capitalism
This research has shown that digital diversity is declining in the long run. In this way, although the Internet continues to grow, the attention of Internet users is shifting to a declining number of technology giants.
The question is why digital diversity loss is happening at all. What is the secret ingredient that gives such an advantage to a handful of tech giants over their competition?
Mariana Mazzucato, Professor in Economics of Innovation and Public Value, University College London, that the secret to the success of technology giants lies in knowing our behaviour. Not just our past or present, but also our future behaviour.
The big players want to know the patterns of behaviour of Internet users. That is why our personal data have become such a valuable commodity in recent years.
Knowing our past and present behavioural patterns helps digital platforms to develop products and services that we might want. But digital platforms have gone a step further. Digital platforms know us better than our spouses. Therefore they can foresee what we might want in the future. They are not just selling goods and services to us, but they are selling to our future selves also.
Prof. Mazzucato further argues that some of the activities of digital platforms do not serve to create new value but only to extract value through the monopolization of online services. Monopolists thus use their dominant position in the digital market to stifle competition.
A way out
To solve the situation with the dominance of the big players on the Internet, prof. Mazzucato believes that we should not deal with the issues we are dealing with today. Namely, a question of the size of tech companies, and whether they need to be break up. Or a question of state regulation of the digital market.
Instead, we should go in the direction of creating an environment that encourages value creation while discouraging value extraction. To democratize the platform economy, it is also necessary to revise the governance of data, establish new institutions, consider alternative forms of ownership and accept concepts such as co-creation, said prof. Mazzucato.
Mazzucato said that governments should be shaping markets to ensure that collectively created value serves collective goals.
The methods of democratizing the platform economy and aims that she has proposed may look similar to the ideas of platform cooperatives. Mazzucato did not explicitly state whether she believes platform cooperatives are a way to democratize the platform economy. Anyway, they may not be the only way, but they are certainly one of the ways.
Platform cooperatives are one of the association forms that will benefit most from third-generation blockchains, such as RChain. Will some platform cooperative soon take Amazon’s place as the largest Internet company? The time will show. Hopefully, yes.
The question here is who will shape the online marketplace. Will that be the governments, as Mazzucato claims, or communities, i.e. platform cooperatives?
It does not matter. It is important that collectively created value serves collective goals.
