Tech Entrepreneurs Agree: It’s Time To Regulate The Internet Ecosystem

Author

Adrienne Burke, Contributor

November 20, 2013

Among the crowd of optimists and cheerleaders for the transformative power of the Internet, Andrew Keen stands out as the contrarian. The Internet is transformative, all right, he says: It’s transforming humans into commoditized products—bits of sellable data. The subtitles of Keen’s two recent books sum up his point of view: “How Today’s Internet Is Killing Our Culture,” and “How Today’s Online Social Revolution Is Dividing, Diminishing, and Disorienting Us.”

Keen, who founded Audiocafe.com in 1995, joined a panel of fellow entrepreneurs and commentators at Techonomy 2013 in Tucson last week for a discussion on the theme, “Is the Internet for or Against You?” Keen stood his ground—“against”—while founders of shopkick inc. (Cyriac Roeding) and Bloomberg Beta (James Cham) argued “for.”

The Techonomy program guide prefaced the discussion with a reminder of this harsh reality: “The data you generate on- and off-line about what you watch and look at, buy, borrow, even what ails you, is tracked, quantified, packaged, and sold. Your virtual self and your reputation are being qualified, commoditized, and monetized.”

And yet, Techonomy CEO David Kirkpatrick was among several who argued that the benefits of the Internet outweigh whatever the negative consequences of that tracking and qualifying might be.

Reputation.com founder Michael Fertik moderated the discussion. And while he seemed to mock Keen’s stance, he’d been captured on video months earlier expressing sentiments not far afield from Keen’s:

“We’ve all been opted into the machine without our knowledge or consent, and while there are net benefits to society of this, they accrue disproportionately to a small number of very classically corporate companies … so we have become products without our explicit knowledge or consent in exchange for value we can barely articulate. The great business model of the Internet is to take your data without your knowledge or consent and sell it to people you can’t identify, for purposes you can never know…. You have advertising at the epicenter of the Internet, purporting to let you be at the center of the Internet. I want human beings to change from being digital serfs to being digital landlords.”

Keen made a similar argument at Techonomy: “The Facebooks, the Googles, they’re all claiming to be free. They’re in the business of acquiring our data and packaging us up. We have become the product. The free model is a failure for everyone who hasn’t made a fortune from these services.”

Perhaps worse, said Keen, is that the typical user does not know how his data is being used. The typical user is lazy when it comes to reading terms and conditions, he asserted.

Dan Elron, a managing partner at Accenture, argued that consumers aren’t as gullible as Keen suggests. Surveys, he said, show that 60 percent of consumers believe that companies will sell their data, 52 percent believe they will send spam, and a high number also believe companies will post on their Facebook pages.

What’s more, consumers move away from those sites that don’t earn their trust, Elron said. In e-commerce, he noted, there’s a 3 percent decline in use for every permission vendors ask consumers to give, and companies that shut off requests for permission from consumers can see a 300 percent increase in use.

“You don’t need to read the terms of service to know what’s going on,” added Kirkpatrick. “People are realistic. They know they’re giving something away if they’re getting something for free. Would you prefer that Facebook and Google don’t exist at all?”

“I would prefer that they charge for their services,” said Keen.

Cham, whose Bloomberg Beta is a new venture fund, said much of what Keen maintains is right, in the same way that “the King of England would have complained about dirty capitalists who are stealing his land.” Keen’s argument, he said, represents the “small number of elites who have access to data.” For the rest of the world, he said, the Internet offers a chance to “expand the pie enormously.” Thanks to a network, “there’s a great deal of value being offered to people all over the world,” he added.

Perhaps like the muckrakers who expanded access to insider information with a gaudy form of journalism in the first half of the 20th century, some Internet services will cross the line and make bad decisions, Cham argued. The industry has only existed for 20 years, after all. “But now we’re at the point where we understand enough of this information economy that we need to make political decisions about where the power sits.”

Roedling’s shopkick collects information about consumers and offers them discounts and rewards for visiting stores in person. He said he “fundamentally disagrees with” Keen’s premise that consumers are being fooled. “I find it patronizing to talk down to consumers and say ‘you don’t know what you want and you don’t know what you’re doing.’”

“Short term,” Roedling said, “there are a lot of companies that don’t respect consumers. But long term, they won’t survive.”

Fertik conceded that there are data companies that are “reluctant to show consumers what they know about them; they won’t even give them a copy of the data they have about them.” But Roedling argued that such behavior is mostly problematic in industries that “need to be shaken up,” such as cable and phone companies with oligopoly structures.

“Whenever you create something new and powerful like the Internet, you’re creating problems with it,” Roedling conceded. He said that Keen is right to point out certain problems that come along with it, “but it’s true for anything that comes along: when you go from a horse to a car, people die in car accidents, and when you go from cash-only to credit there’s fraud. In the long run if the benefit is greater than the cost, it will stay.”

Coming down on the side of imposing regulation was Techonomy participant Paddy Cosgrave, founder of F.ounders, an annual gathering of 150 of the world’s leading tech-company founders. Of the entrepreneurs he has interacted with, he said, “I’m not positive if they respect or don’t respect consumers. It’s a spectrum and a constant battle. If seizing more information from the hands of consumers helps your company grow, then you’ll optimize for that outcome.”

Cosgrave added, “Throughout history, large businesses that have had an interest in accumulating information on customers will become more aggressive until they’re regulated.”

The panelists finally seemed to reach common ground regarding the need for regulation of Internet information. “We are at a juncture where government regulation should come in,” said Elron, while Cham cautioned, “The Internet is good for you, but it’s not your friend. You should be getting involved on the policy side.” Roedling asked, “What’s the Golden Rule, and what kind of regulation is necessary for people who don’t understand the Golden Rule?” Calling the Internet “the platform for 21st century life,” Keen offered at least part of the answer, saying, “We need to force it or teach it to forget.”

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