Tech and the Fake Market tactic

In one generation, the Internet went from opening up new free markets to creating a series of Fake Markets that exploit society, without most media or politicians even noticing.

Anil Dash
Anil Dash
Feb 10, 2017 · 11 min read

1. The open internet markets

American culture loves to use the ideal of competitive free markets as the solution to all kinds of social problems. Though the vaunted Free Market has no incentives to, say, take care of babies with cancer, a well-functioning market can definitely be a great way to see which provider offers the cheapest price for a roll of toilet paper or a bushel of apples.


2. The rise of rigged markets

The inevitable automated gaming of the early open digital markets inadvertently catalyzed the start of the next era: rigged markets. Google got concerned about nefarious search engine optimization tricks, and kept changing their algorithm, meaning that pretty soon the only web publishers that could thrive were those who could afford to keep tweaking their technology to keep up in this new arms race. After just a few years, this became a rich-get-richer economy, and incentivized every smaller publisher to standardize on one of a few publishing tools in order to keep up with Google’s demands. Only the biggest content providers could afford to build their own tools while simultaneously following the demands of Google’s ever-changing algorithm.

Illustration from Rob Weychert/ProPublica https://www.propublica.org/article/amazon-says-it-puts-customers-first-but-its-pricing-algorithm-doesnt

We saw a rapid shift where the companies hosting formerly-open markets started to give themselves unfair advantages that couldn’t be countered by the other sellers in the market.

This shift to rigged markets was perfected in the app stores, where the major players like Apple and Google choose which apps get featured and promoted, and prevent the creation of any apps that would displace or threaten their market dominance. Even if an app does succeed, the app stores promote an ad-supported model that makes app creators dependent on the tech company’s platform for distribution, instead of an app deriving revenues directly from its users.


3. Now: The Fake Markets

Uber‘s promise is simple: you use their app to hail a car, and one driver from a pool of independent drivers agrees to pick you up, and everybody’s happy. In their formulation, they’re a neutral marketplace connecting customers and service providers — kinda like eBay!

  1. A single opaque algorithm defines which buyers are matched with which sellers.
  2. Sellers have no control over their own pricing or profit margins.
  3. Regulators see the genuine short-term consumer benefit but don’t realize the long-term harms that can arise.

[A]ll this equates to is an economic transfer from the working class over to urban metropolitan elites, which benefits one particular corporation over others. This is plainly crazy.

These new False Markets only resemble true markets just enough to pull the wool over the eyes of regulators and media, whose enthusiasm for high tech solutions is boundless, and whose understanding of markets on the Internet is still stuck in the early eBay era of 20 years ago.

  1. A single opaque algorithm defines which readers are matched with which publishers.
  2. Publishers have no control over their own ad rates or profit margins.
  3. Regulators see the genuine short-term reader benefit but don’t realize the long-term harms that can arise.

4. After Markets: Self-Driving News

But wait, it gets worse. Next we replace the sellers in the market.

So what do we do?

Most of the people building these features at these companies don’t mean to undermine markets. The coders and designers at companies like Uber and Facebook and all the others are usually well-intentioned and genuinely see their work as benefiting users. In the immediate term, they’re not even wrong; being able to easily hail a cab or quickly read a story is a real benefit. But most tech workers, including at the biggest tech companies, are blind to the radical political and social agendas of their companies’ owners and investors.


Humane Tech

There are people making tech who are positive, ambitious…

Anil Dash

Written by

Anil Dash

CEO of @Glitch. Trying to make tech more ethical & humane. (Also an advisor to Medium.) More: http://anildash.com/

Humane Tech

There are people making tech who are positive, ambitious, thoughtful, inclusive, curious, empathetic and self-aware. They’re going to win.

Anil Dash

Written by

Anil Dash

CEO of @Glitch. Trying to make tech more ethical & humane. (Also an advisor to Medium.) More: http://anildash.com/

Humane Tech

There are people making tech who are positive, ambitious, thoughtful, inclusive, curious, empathetic and self-aware. They’re going to win.

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