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BONUS: How the Internet Got Worse with Cory Doctorow · Masters in Business

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  Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. This week on the
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  Speaker 1: podcast a special bonus episode. Corey Doctorow has a new
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  Speaker 1: book out entitled Ingentification, all about the decay of digital platforms.
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  Speaker 1: I've been reading Corey for a long time, both at
• 0:26
  Speaker 1: Boing Buying and elsewhere. I'm a big fan of his
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  Speaker 1: takes on technology. I thought this conversation was really intriguing,
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  Speaker 1: and I think you will also with no further ado,
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  Speaker 1: my conversation with technology author Corey doctor Corey doctor O,
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  Speaker 1: Welcome to Bloomberg.
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  Speaker 2: Thank you very much. Berry. It's a great pleasure to
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  Speaker 2: be here.
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  Speaker 1: It's a pleasure to have you. So you Before we
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  Speaker 1: get into the book, I have to just go into
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  Speaker 1: a little bit about your background. I think of you
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  Speaker 1: as a writer first, but you have such a multifaceted career.
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  Speaker 1: How do you describe what you do?
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  Speaker 2: Well?
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  Speaker 3: You know, it's funny, before I became a British citizen,
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  Speaker 3: when I was living in London, every time I landed,
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  Speaker 3: I had to fill in a landing card with my
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  Speaker 3: occupation and just had this little like three quarter inch
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  Speaker 3: blank and I would eventually just write in writer. But
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  Speaker 3: you know, trying to explain to my grandmother when she
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  Speaker 3: was alive. What I did for a living was always challenging.
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  Speaker 3: I'm a writer, I'm an activist. I've worked for the
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  Speaker 3: Electronic Frontier Foundation for nearly a quarter of a century.
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  Speaker 2: Now.
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  Speaker 3: It's a digital rights group that tries to make sure
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  Speaker 3: that your human rights apply online and offline in these days,
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  Speaker 3: that the Internet isn't taking away your human rights. Offline,
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  Speaker 3: I write science fiction novels. I've written a couple of
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  Speaker 3: dozen of those, won a bunch of awards, had New
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  Speaker 3: York Times bestsellers.
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  Speaker 2: And I'm a blogger.
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  Speaker 3: As you say, I edited Boing Boing for nineteen years
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  Speaker 3: and these days I have my own blog, Pluralistic dot net,
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  Speaker 3: and I write about tech, policy, culture, science fiction, all
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  Speaker 3: kinds of stuff.
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  Speaker 1: So let's start with tech culture and EFF. What was
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  Speaker 1: the first issue that got you interested in exploring digital
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  Speaker 1: rights and just protecting user rights on the Internet.
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  Speaker 3: Well, like a lot of EFF supporters, you know, I
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  Speaker 3: got started reading about the stuff EFF was doing long
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  Speaker 3: before I got involved with them.
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  Speaker 2: So, you know, one of the big.
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  Speaker 3: Cases that we got involved with very early almost and
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  Speaker 3: then called Bernstein. So the NSA had classed encryption as
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  Speaker 3: a munition and they said that civilians should not be
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  Speaker 3: able to access working encryption. They had a kind of
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  Speaker 3: weak form of encryption they called DEZ fifty. It was
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  Speaker 3: the defense encryption standard with fifty bits of key, and
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  Speaker 3: they said DEZ fifty is good enough for anyone.
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  Speaker 2: The mafia won't.
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  Speaker 3: Break it, our foreign adversaries won't break it. But you know,
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  Speaker 3: the NSA can break it if they need to. And
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  Speaker 3: we tried all kinds of things to say this was
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  Speaker 3: a bad idea. One of our founders, John Gilmour, actually
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  Speaker 3: built a computer called deep crack that could brute force
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  Speaker 3: all of DEAs fifty and two and a half hours.
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  Speaker 3: It cost a quarter of a million bucks and it's
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  Speaker 3: actually in my office now because John got tired of
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  Speaker 3: having it in his garage and no one cared. But
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  Speaker 3: then we went to court representing a cryptographer grad student
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  Speaker 3: at Berkeley called Daniel J. Bernstein, who had made an
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  Speaker 3: encryption program that was stronger than des fifty, that was
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  Speaker 3: as strong as modern encryption these days. You know, when
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  Speaker 3: you take your distraction rectangle out of your pocket and
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  Speaker 3: click it. In the instant it takes for that file
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  Speaker 3: to land on the mass storage, it's encrypted, so well
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  Speaker 3: that if every hydrogen atom in the universe were a
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  Speaker 3: computer and it did nothing until the end of the universe,
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  Speaker 3: but try and guess the key, you would run out
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  Speaker 3: of universe before you ran into keys. So he makes
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  Speaker 3: a working encryption, this kind of miraculous modern thing, the
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  Speaker 3: thing that protects your bank transactions and the firmware updates
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  Speaker 3: for your anti lock breaks, and you're a pacemaker and
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  Speaker 3: all that other stuff that we want to keep secret
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  Speaker 3: and secure. And we argued that he had a First
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  Speaker 3: Amendment right to publish his source code, that source code
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  Speaker 3: was a form of expressive speed each under the First Amendment.
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  Speaker 3: We won in the district, we won at the appellate
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  Speaker 3: division in the ninth Circuit. The NSA didn't want to
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  Speaker 3: take their chances with the Supreme Court. And ever since then,
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  Speaker 3: code has been speech and we have had the tools
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  Speaker 3: to have secure communications.
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  Speaker 1: So I recall you being very involved with Digital Rights
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  Speaker 1: Management and Napster and Grockster, and there was a video
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  Speaker 1: version of that.
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  Speaker 2: There was a broadcast flag, right.
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  Speaker 1: That's that's when I first realized, Oh, he's more than
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  Speaker 1: just a curator, he's really very much an activist. You
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  Speaker 1: started writing about surveillance and monopolies and information asymmetries. I
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  Speaker 1: don't know, is it twenty twenty five years ago? Tell
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  Speaker 1: us a little bit about that.
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  Speaker 3: Well, I'm partly it's because I'm a science fiction writer,
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  Speaker 3: and so as a science fiction writer, the thing that
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  Speaker 3: I'm most preoccupied with is not what the gadgets do,
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  Speaker 3: but who to gadgets.
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  Speaker 2: Do them for?
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  Speaker 3: And who to gadgets do them too. I think of
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  Speaker 3: science fiction as a kind of inverse of this kind
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  Speaker 3: of vulgar thing aturism that says there is no alternative.
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  Speaker 3: You know, Margaret Thatcher used to say there is no alternative,
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  Speaker 3: so often they called her Tina there is no alternative.
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  Speaker 3: What she met was like, stop trying to think of
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  Speaker 3: an alternative, right, And and you know, when you are
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  Speaker 3: a technologist, and that's my background as a software developer,
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  Speaker 3: and when you have that kind of science fiction imagination,
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  Speaker 3: you look at the things that you're using, You're thinking,
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  Speaker 3: why do we have to take the bad with the good?
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  Speaker 2: Right?
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  Speaker 3: Why is the product designer here delivering me a prefeast
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  Speaker 3: menu that's full of a bunch of stuff that no
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  Speaker 3: one would ever want to eat instead of just the
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  Speaker 3: a la carte that has the things that I want.
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  Speaker 3: And so I started to wonder why we couldn't, you know,
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  Speaker 3: seize the means of computation, take the things that we
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  Speaker 3: were using, and you know, make them work for us,
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  Speaker 3: not for someone else. They sell you a printer that
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  Speaker 3: only takes our third party inc. You modify the printer
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  Speaker 3: so it takes generic ink. They sell you a phone
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  Speaker 3: that only uses their apps. Store you modified so it
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  Speaker 3: uses anyone's apps. They put you on the web and
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  Speaker 3: they start spying on you. Well, you put a privacy blocker.
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  Speaker 3: You know, more than half of all Internet users have
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  Speaker 3: installed an ad blocker.
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  Speaker 2: It's the largest consumer boycott in history.
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  Speaker 1: Wow.
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  Speaker 3: And it means that whenever a product manager sits down
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  Speaker 3: to think about, like how invasive and obnoxious should our
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  Speaker 3: ads be, they kind of have to contend with this
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  Speaker 3: possibility that users will take it upon themselves to correct
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  Speaker 3: the situation, to make a counter offer.
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  Speaker 2: Right, my offer is I'm.
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  Speaker 3: Going to show you this web page, but I'm going
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  Speaker 3: to spy on you and bombard you with ads.
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  Speaker 2: Your counter offer might be how about no? Right?
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  Speaker 3: And so you know that's dangerous because if like making
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  Speaker 3: your ads twenty percent more obnoxious makes forty percent of
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  Speaker 3: your users put in an ad blocker. You don't get
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  Speaker 3: money from them anymore, and no one ever goes back
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  Speaker 3: to the search engine and types how do I start
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  Speaker 3: seeing ads again? So that's that's a permanent thing. And
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  Speaker 3: you know, one of the big changes and one of
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  Speaker 3: the things that I've tracked over these these this quarter
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  Speaker 3: century is the rise and rise of IP rules that
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  Speaker 3: prohibit that kind of modification. So the biggest one being
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  Speaker 3: something called anti circumvention law, which is law that just
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  Speaker 3: says you can't modify something that's designed not to be modified.
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  Speaker 2: In other words, of the.
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  Speaker 1: Programmer, despite the fact that you paid for it and.
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  Speaker 3: It's yours, you want to do something legal with it.
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  Speaker 3: So if the programmer, basically when they're writing the code,
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  Speaker 3: does equivalent of drawing a chalk dotted line around some
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  Speaker 3: of the code and says like don't look in here
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  Speaker 3: or change this, under laws like the Digital Millennium Copyright
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  Speaker 3: Act of nineteen ninety eight, it becomes a felony to
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  Speaker 3: change it, even for a lawful purpose. And so you know,
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  Speaker 3: an app, it's just the web, but it has these
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  Speaker 3: these these technical protection measures that make reverse engineering illegal.
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  Speaker 3: So an app is just a website, you know, skinned
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  Speaker 3: to the right eyep to make it a felony to
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  Speaker 3: defend your privacy.
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  Speaker 2: When you use it.
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  Speaker 3: This is why you know, bosses are so horny to
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  Speaker 3: make you use their apps and not their websites.
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  Speaker 1: Right, right, So it's interesting because you lived in Europe,
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  Speaker 1: and in particular in London for so long, it seems
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  Speaker 1: like the Europeans have a much more user friendly perspective
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  Speaker 1: on privacy rights and digital rights. How how far away
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  Speaker 1: is the United States from if not the platonic ideal
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  Speaker 1: just the way Europe does it? Or am I giving
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  Speaker 1: them too much credit?
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  Speaker 2: Well?
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  Speaker 3: Look, I don't think it's necessarily because the Europeans are
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  Speaker 3: better at regulation than the Americans. I think it has
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  Speaker 3: a lot to do with the fact that the companies
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  Speaker 3: that abuse us on the Internet are not called Nokia, Olivetti,
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  Speaker 3: ericson Deutsche Telecom. Right, It's a lot easier to get
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  Speaker 3: the political space to do evidence based policy when your
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  Speaker 3: economy isn't so focused and controlled by a small number
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  Speaker 3: of very dominant firms. That's just a rale politique here.
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  Speaker 3: I think though, that something is changing in Europe, and
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  Speaker 3: it has changed over the last few years, and it's
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  Speaker 3: about to accelerate quite a lot, I believe.
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  Speaker 2: So.
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  Speaker 3: For a long time, the European approach to tech was
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  Speaker 3: to try and make them behave themselves.
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  Speaker 2: Right.
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  Speaker 3: So, you know, Mark Zuckerberg has a platform with a
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  Speaker 3: lot of abuse and hate speech and harassment. They say,
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  Speaker 3: Mark Zuckerberg, you have to prevent that.
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  Speaker 2: Right.
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  Speaker 3: What they're saying to him is the problem isn't that
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  Speaker 3: you have the power. The problem is how you wield
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  Speaker 3: the power. We would like you to wield your power
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  Speaker 3: more responsibly, and in fact, if you need more power
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  Speaker 3: to do that, right, Because if you're going to stamp
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  Speaker 3: out harassment on a platform, you have to know whatevery
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  Speaker 3: user is doing and have the power to stop them.
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  Speaker 3: So even if you need to arrogate more power to
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  Speaker 3: yourself over your users, that's okay.
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  Speaker 2: Just use the power in the way that we want.
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  Speaker 3: It's kind of a constitutional monarchy, right, he is the
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  Speaker 3: absolute ruler, but he suffers himself to be draped and
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  Speaker 3: like gilded chains held by his courtiers.
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  Speaker 2: Right.
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  Speaker 3: In the last few years, the European Union has started
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  Speaker 3: to regulate as though the problem was the power itself,
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  Speaker 3: not that Mark Zuckerberg was bad at being the social
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  Speaker 3: medias are for four billion people unelected with an office
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  Speaker 3: for life, but rather that that office shouldn't exist, And
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  Speaker 3: so they've started to impose things like interoperability requirements that
• 9:48
  Speaker 3: make it so that if you leave a social media
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  Speaker 3: platform when you get somewhere else, Blue Sky masked it
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  Speaker 3: on something that doesn't exist, because why would you capitalize
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  Speaker 3: something when everyone's locked into Facebook or Twitter.
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  Speaker 2: When you get there, you.
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  Speaker 3: Should be able to see the messages posted by the
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  Speaker 3: people you left behind. You should be able to have
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  Speaker 3: discourse with them, be part of those communities in the
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  Speaker 3: same way that like when you switch from you know,
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  Speaker 3: Vota phone to T Mobile, you do some administrative work
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  Speaker 3: and a few seconds later your phone number cuts over.
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  Speaker 1: No, one doesn't seem to work that way. You used
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  Speaker 1: to be able to drag your either the people you
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  Speaker 1: were following or your own followers. Sure from Twitter to
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  Speaker 1: Blue Sky that that those ais got.
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  Speaker 2: Yeah, they made it a lot harder.
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  Speaker 3: So it wasn't that you could drag them over, you
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  Speaker 3: could find them, right And this was all cutting off
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  Speaker 3: the This is what musted when he cut off the
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  Speaker 3: API is he made it much harder to build those
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  Speaker 3: migration tools, and so you know, the EU is like
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  Speaker 3: focusing on those migration tools, and they're about to become
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  Speaker 3: a lot more focused because of Trump's foreign policy. So
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  Speaker 3: for more than twenty years, I have gone around the
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  Speaker 3: world more than thirty countries on behalf of the FF
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  Speaker 3: and talk to policy makers about what would make a
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  Speaker 3: better Internet policy, things like improved interoperability rules, the right
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  Speaker 3: to reverse engineer, modified bet are privacy rules. And what
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  Speaker 3: they've said at every time is that, well, we'd love
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  Speaker 3: to do that. It sounds very sensible, but the US
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  Speaker 3: Trade Representative has made it very clear that if we
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  Speaker 3: don't have policies that protect the rent extraction of American firms,
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  Speaker 3: they're going to hit us with tariffs. Well, you know,
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  Speaker 3: a happy liberation day, right if the guy.
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  Speaker 1: Says this trade thing is two sided? Yeah, suggesting.
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  Speaker 3: So if the guy says, do what I tell you're
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  Speaker 3: going to burn your host down, you do what he
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  Speaker 3: tells you, and he burns your host down.
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  Speaker 2: Anyways, you're kind of a sucker if he keep doing
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  Speaker 2: what he tells you to do.
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  Speaker 3: And not only that, but Trump has made it so
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  Speaker 3: clear that what we used to call American trading partners
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  Speaker 3: are now America's rivals, right, and that that rivalry will
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  Speaker 3: be pursued through the American tech giants.
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  Speaker 2: You know, this is what we were told Huawei was
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  Speaker 2: going to do to us.
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  Speaker 3: Every accusation is a confession rights.
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  Speaker 1: That's exactly right.
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  Speaker 3: You know, when the International Criminal Court swore out a
• 11:52
  Speaker 3: complaining against Benjamin and Yahoo for genocide, Trump denounced this
• 11:56
  Speaker 3: and then Microsoft terminated his online accounts.
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  Speaker 2: He lost his e email, he lost his.
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  Speaker 3: Address book, he lost his calendar, and he lost the
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  Speaker 3: working files of the International Criminal Court.
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  Speaker 2: Well, this has lit a fire under Europe. Right.
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  Speaker 3: They are now pursuing this thing they call Eurostack. There's
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  Speaker 3: a lot of money for it, and they want to
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  Speaker 3: replicate American tech stacks. They want to replicate the data centers,
• 12:15
  Speaker 3: they want to replicate the applications Google Docs and so
• 12:18
  Speaker 3: on and so on. The problem is, no one is
• 12:21
  Speaker 3: ever going to copy and paste a million documents from
• 12:23
  Speaker 3: their government ministry, one at a time, out of g
• 12:26
  Speaker 3: Docs and into a eurostack.
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  Speaker 1: This sounds very much like Europe has a TikTok problem
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  Speaker 1: the way the United States does. Only the issue is
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  Speaker 1: American tech companies, not a Chinese social media network.
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  Speaker 3: And Honestly, I don't think TikTok is doing what they
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  Speaker 3: say they're doing, and if they are, the best way
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  Speaker 3: to solve that is to just update American privacy law
• 12:46
  Speaker 3: because that's the problem. You know, the last time we
• 12:49
  Speaker 3: got a new privacy law in America, you may know this,
• 12:51
  Speaker 3: it was nineteen eighty eight. It was when Ronald Reagan
• 12:53
  Speaker 3: signed the Video Privacy Protection Act. It makes it a
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  Speaker 3: crime for video store clerks to disclose your VHS rentals.
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  Speaker 3: Everything else is fair game, right, Why is TikTok spying
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  Speaker 3: on you? That's why I ticked it because we let
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  Speaker 3: them right. But you know, in Europe, when they reach
• 13:08
  Speaker 3: this point where they're not gonna be able to migrate
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  Speaker 3: from these old American services to these new European services,
• 13:15
  Speaker 3: they're going to have to start reinvigorating their reverse engineering
• 13:19
  Speaker 3: game and make it so that you can run headless
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  Speaker 3: phones and the cloud that impersonate users and iterate through
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  Speaker 3: the documents and move them over and do scraping or
• 13:28
  Speaker 3: all clients on device bridging, all this stuff that we
• 13:30
  Speaker 3: used to do.
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  Speaker 2: All the time. Right, That was like ross Perot's.
• 13:34
  Speaker 3: Business, right, it was helping people move data between systems
• 13:36
  Speaker 3: that we used to do all the time. As they
• 13:38
  Speaker 3: would say in the Star Wars universe, this elegant weapon
• 13:41
  Speaker 3: from a more civilized age. They're gonna have to revive
• 13:43
  Speaker 3: it because right now it's like they've observed a giant
• 13:45
  Speaker 3: housing crisis in East Berlin, and so they built a
• 13:48
  Speaker 3: bunch of houses in West Berlin, and they're not thinking.
• 13:50
  Speaker 2: About how the people are going to move in.
• 13:52
  Speaker 3: They're gonna have to tear down the wall, right, And
• 13:54
  Speaker 3: so this is in some ways one of the most
• 13:58
  Speaker 3: amazing things to happen in digital rights in my whole career.
• 14:03
  Speaker 3: It's sort of analogous to what happened when Putin invaded Ukraine.
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  Speaker 3: You know, there used to be all these structural reasons
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  Speaker 3: that couldn't solarize Europe, right planning, permission, electrical and safety
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  Speaker 3: codes and so on. All of a sudden, when you're
• 14:14
  Speaker 3: shivering in the dark, that stuff isn't so important. And
• 14:16
  Speaker 3: now Europe is ten years ahead of their solar transition plan, right.
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  Speaker 3: I think that we're about to get this on a
• 14:22
  Speaker 3: global scale, not least because economically it makes so much sense.
• 14:26
  Speaker 3: You think about the extraction from these locked platforms right
• 14:30
  Speaker 3: in jet inc In jet ink is the most expensive
• 14:32
  Speaker 3: fluid you can buy as a civilian without taking a
• 14:35
  Speaker 3: special license. It would be cheaper to print your grocery
• 14:38
  Speaker 3: list with this semen of a Kentucky derby winning Stylly.
• 14:41
  Speaker 1: That's unbelievable.
• 14:42
  Speaker 3: And you know the only reason we don't have generic
• 14:44
  Speaker 3: ink in our printers is because it's against the law
• 14:46
  Speaker 3: to like make modifications to printer firmware so it doesn't
• 14:50
  Speaker 3: check for generic ink.
• 14:50
  Speaker 1: But you can buy your don't work.
• 14:53
  Speaker 3: Reliably, right, and the printer companies push non consensual updates
• 14:57
  Speaker 3: to your printer that shuts this down. And they've done
• 15:00
  Speaker 3: all kinds of sleazy things, like HP pushed an update
• 15:02
  Speaker 3: in March that was a security update that was like
• 15:05
  Speaker 3: a Manchurian candidate, a sleeper agent. It sat there until September,
• 15:10
  Speaker 3: didn't do anything, waited for all the parents to go
• 15:12
  Speaker 3: to Costco and buy back to school kits of generic inc.
• 15:16
  Speaker 3: And then it detonated and all that ink was useless. Right,
• 15:19
  Speaker 3: So they're trying to like send a message to America's parents,
• 15:22
  Speaker 3: don't buy generic inc. Ever, you never know when it's
• 15:26
  Speaker 3: going to stop working. They were like maximizing the pain.
• 15:28
  Speaker 1: Here unbelievable, absolutely unbelievable. So literally had to have a
• 15:33
  Speaker 1: conversation with the powers that be to figure out how
• 15:37
  Speaker 1: to say the title of your book, which ironically has
• 15:41
  Speaker 1: been named the word of the year in two separate
• 15:46
  Speaker 1: major three three I found two in.
• 15:49
  Speaker 2: My two dictionaries, but three countries, three countries.
• 15:52
  Speaker 1: Yeah, so let's talk about in shitification. How do you
• 15:57
  Speaker 1: define it sure in a way that we can broadcast
• 16:00
  Speaker 1: without running a foul of the of.
• 16:01
  Speaker 3: Course, well, you know, working for the Electronic Frontier Foundation,
• 16:06
  Speaker 3: as I have for so long, my job has really
• 16:08
  Speaker 3: been about trying to raise the salience and the urgency
• 16:12
  Speaker 3: of these digital issues that are very abstract, very technical.
• 16:15
  Speaker 3: You know, they eventually become very concrete, but it's when
• 16:17
  Speaker 3: your house is on fire. You kind of want people
• 16:19
  Speaker 3: to get active before then. And so that's a game
• 16:22
  Speaker 3: of coming up with similesm metaphors and framing devices, funny words,
• 16:26
  Speaker 3: parables and so on. And the latest of these is
• 16:28
  Speaker 3: this one in shitification. And in shitification is both observation
• 16:34
  Speaker 3: about how things go bad and also a theory about
• 16:37
  Speaker 3: why they're going bad. And so the observation is quite straightforward,
• 16:41
  Speaker 3: and in the first phase you have firms that are
• 16:43
  Speaker 3: good to their end users, but find a way to
• 16:45
  Speaker 3: lock those users in. In the second phase, they make
• 16:48
  Speaker 3: things worse for those end users, and they rely on
• 16:50
  Speaker 3: the lock in to stop those end users from departing,
• 16:53
  Speaker 3: and they make things good for business customers. In the
• 16:55
  Speaker 3: third phase, they lock in those business customers and extract
• 16:58
  Speaker 3: all of their surplus as well. They leave behind the
• 17:01
  Speaker 3: kind of meanest homeopathic residue needed to keep users locked
• 17:04
  Speaker 3: to the platform, businesses locked to the users, and they
• 17:07
  Speaker 3: extract everything for themselves and they turn into a palocrap.
• 17:10
  Speaker 3: That's the kind of observational end of it. But the
• 17:13
  Speaker 3: question I want to interrogate is why is it happening now?
• 17:17
  Speaker 2: Right? Because we didn't invent greed in the middle of
• 17:19
  Speaker 2: the last decade.
• 17:19
  Speaker 3: The people running these companies are often the same people
• 17:21
  Speaker 3: around them from day one. You know, Mark Zuckerberg was
• 17:24
  Speaker 3: running Facebook from his Harvard dorm to today, and he
• 17:27
  Speaker 3: owns the majority of the voting shares. Google actually got
• 17:29
  Speaker 3: worse when Sergey Brin came back in terms of its
• 17:32
  Speaker 3: path to platform decay. So what is it that made
• 17:35
  Speaker 3: these companies bad now? And I think really the way
• 17:38
  Speaker 3: to understand that is to ask the inverse, which is
• 17:40
  Speaker 3: why weren't they worse before? Because obviously firms would like
• 17:44
  Speaker 3: to charge more, deliver less, pay less to their suppliers,
• 17:49
  Speaker 3: pay less to their employees, seek more beneficial terms of themselves.
• 17:52
  Speaker 3: And when you freeze it that way, you know why
• 17:54
  Speaker 3: firms don't do it. Because if you charged infinity and
• 17:57
  Speaker 3: paid nothing, well, maybe you'd be running a scholarly journal.
• 18:00
  Speaker 3: But if you're not running a scholarly journal, no one
• 18:02
  Speaker 3: would do it right. You would lose your employees, you'd
• 18:05
  Speaker 3: lose your customers. You have to labor under the discipline
• 18:09
  Speaker 3: of competition of regulators, and if you're in tech, you
• 18:13
  Speaker 3: had other sources of discipline, like interoperability, the ability to
• 18:16
  Speaker 3: make two programs work with each other. So maybe if
• 18:18
  Speaker 3: you had a rent extraction scheme, some would alienate your
• 18:21
  Speaker 3: users from you by coming up with a plugin that
• 18:24
  Speaker 3: made it possible for them to avoid that rent extraction scheme,
• 18:27
  Speaker 3: and those customers would then discover that there was a
• 18:30
  Speaker 3: better firm out there, and they might switch to becoming
• 18:32
  Speaker 3: the customers of them. And you had to worry about
• 18:34
  Speaker 3: your workers because tech workers were so powerful and they
• 18:37
  Speaker 3: often really fought hard for their users. They cared about
• 18:39
  Speaker 3: their jobs. And so my thesis is that when we
• 18:42
  Speaker 3: dismantled these sources of discipline, we created what you could
• 18:45
  Speaker 3: call the eshridogenic policy environment, right, the environment that rewards
• 18:50
  Speaker 3: the firms that do the worst, that rewards the factions
• 18:53
  Speaker 3: and the firms that advocate for the worst, that rewards
• 18:55
  Speaker 3: the impulses and CEOs that are tempted to do the worst,
• 18:59
  Speaker 3: and then the worst happened.
• 19:01
  Speaker 1: So let's talk about some of these firms, because I imagine
• 19:05
  Speaker 1: everybody has experienced the title of your book. Platform decay
• 19:11
  Speaker 1: is the phrase I like to use. I mean, in
• 19:15
  Speaker 1: my experience, and I'm a few years older than you.
• 19:18
  Speaker 1: It began with Microsoft, probably the Suez generis first company
• 19:26
  Speaker 1: that figured out how to lock people in and then
• 19:28
  Speaker 1: abuse the monopoly position they had. That was followed by
• 19:32
  Speaker 1: let's go through the list eBay, Google, Amazon, I would
• 19:38
  Speaker 1: be biased if I didn't include Apple. I think I
• 19:42
  Speaker 1: can also include Starbucks and other entities like that. I
• 19:47
  Speaker 1: have a peeve with them because they basically threatened users
• 19:52
  Speaker 1: with their Starbucks points during the pandemic. I thought that
• 19:55
  Speaker 1: was very misguided and okay, SIA, that was an easy
• 20:00
  Speaker 1: platform to Wait, there was an article in the Wall
• 20:03
  Speaker 1: Street Journal that the Starbucks app, you would load it.
• 20:07
  Speaker 2: Up with a credit card?
• 20:08
  Speaker 1: Wait, why don't I have to give you fifty dollars?
• 20:11
  Speaker 1: Just hit my credit card right, and it turned out
• 20:13
  Speaker 1: it was a three or four billion dollar interest free
• 20:16
  Speaker 1: loan there, giving free cash flow. So that was a
• 20:19
  Speaker 1: little bit of a oh and you want to take
• 20:21
  Speaker 1: my points? All right, I'm done with you not boycotting
• 20:23
  Speaker 1: them just they just kind of fell off my first choice.
• 20:27
  Speaker 1: But let's I'm curious.
• 20:29
  Speaker 2: They overcook their beings too, right, Well.
• 20:31
  Speaker 1: If you like strong coffee and don't mind a little
• 20:34
  Speaker 1: bit of bitterness, sure for sure. But I'm curious what
• 20:38
  Speaker 1: were your experiences that led to the book. What was
• 20:41
  Speaker 1: the first platforms that you watched decay?
• 20:45
  Speaker 3: Well, let me be clarify a little here, because there
• 20:49
  Speaker 3: is there have been lots of platforms that have decayed,
• 20:51
  Speaker 3: but they didn't shamble on, right. I think that's one
• 20:54
  Speaker 3: of the mysteries that I'm trying to plumb here.
• 20:55
  Speaker 1: Well, there's a difference between a company like MySpace that
• 20:59
  Speaker 1: just loses out to a superior technology or a better
• 21:02
  Speaker 1: interface or whatever, versus something where the entire platform follows
• 21:09
  Speaker 1: the pattern that you've outlined.
• 21:11
  Speaker 3: And they but but and then they stay in business. Right,
• 21:14
  Speaker 3: that's the thing that I want to.
• 21:15
  Speaker 2: Interrogate profitably wildly profitable.
• 21:17
  Speaker 3: Yeah, so you know, uh, let's think about a few
• 21:21
  Speaker 3: examples that you just raised and what happened when they hitified?
• 21:25
  Speaker 2: Right?
• 21:25
  Speaker 3: So Microsoft, I was you mentioned Apple and you said
• 21:28
  Speaker 3: you'd be biased if you didn't mention Apple.
• 21:30
  Speaker 2: I was a kind of.
• 21:31
  Speaker 3: Cio for hire in the early two thousands, and every
• 21:34
  Speaker 3: shop that I.
• 21:35
  Speaker 1: Would a chief info or chief chief info chief.
• 21:37
  Speaker 3: Info yeah, never chief investor. I invested all my dot
• 21:40
  Speaker 3: com money wisely in laptops. I'm sure they're going to
• 21:42
  Speaker 3: appreciate someday.
• 21:44
  Speaker 2: No, I was.
• 21:45
  Speaker 3: I was going around helping little SMEs get online. I
• 21:48
  Speaker 3: put up their land, I get the file server everything.
• 21:50
  Speaker 3: And they all had a problem, which is that they'd
• 21:52
  Speaker 3: have a couple of Macs in the shop and they
• 21:55
  Speaker 3: couldn't read or reliably read or write Microsoft Office files.
• 21:58
  Speaker 2: Because Microsoftice Microsoft Off. Yeah.
• 22:01
  Speaker 3: Microsoft Office for the Mac was the most cursed piece
• 22:04
  Speaker 3: of software to come out of redmand and just wave
• 22:06
  Speaker 3: the floppy disk around the office and files with spontaneously
• 22:09
  Speaker 3: go corrupt. And so Eventually you'd go to the designer
• 22:11
  Speaker 3: and maybe the CEO would have a power Book, and
• 22:13
  Speaker 3: you put a PC on their desk that was just
• 22:16
  Speaker 3: for like Excel, Word and PowerPoint, and then that was
• 22:20
  Speaker 3: kind of unwieldy, so then you put a big graphics
• 22:22
  Speaker 3: card in there. You'd buy Windows versions of all the
• 22:26
  Speaker 3: programs the graphic designer used, and you throw away the Mac.
• 22:29
  Speaker 3: And so Steve Jobs knew that this was a problem.
• 22:31
  Speaker 3: He didn't just beg Bill Gates to fix Office for
• 22:34
  Speaker 3: the Mac. He reverse engineered Office for the Mac. He
• 22:38
  Speaker 3: reverse engineered the Office file formats, and he made iWork
• 22:42
  Speaker 3: pages numbers in Keynote, which can perfectly read and write
• 22:44
  Speaker 3: the Microsoft Office file format. So what he did in
• 22:47
  Speaker 3: economics terms is he reduced the switching costs to zero
• 22:51
  Speaker 3: because you didn't have to leave any of your files
• 22:53
  Speaker 3: behind when you went from Windows.
• 22:54
  Speaker 2: To a Mac.
• 22:56
  Speaker 3: And he solved the collective action problem of convincing everyone
• 22:59
  Speaker 3: to move to a Mac because you didn't have to.
• 23:01
  Speaker 3: You could go to the Mac and other people could
• 23:03
  Speaker 3: join you when they were ready. This saved apples.
• 23:05
  Speaker 1: Bacon I recall the famous prey cover of Wired in
• 23:09
  Speaker 1: nineteen ninety eight and My pet theory, or it's not
• 23:13
  Speaker 1: even mine, is that Microsoft cut a deal in order
• 23:18
  Speaker 1: there was already the antitrust doublings. So hey, we have
• 23:21
  Speaker 1: to keep a legitimate operating system.
• 23:23
  Speaker 2: Run otherwise controlled opposition. That's right.
• 23:25
  Speaker 3: Well, yeah, and they ran these switch ads if you'll recall,
• 23:29
  Speaker 3: oh very much, how easy it us to switch So
• 23:32
  Speaker 3: this was this incredible moment. Now what would happen if
• 23:34
  Speaker 3: you did this to Apple? Right, we have people locked
• 23:36
  Speaker 3: into the iPhone today. Their apps are there, their data
• 23:39
  Speaker 3: is there, and so on. It's not hard to make
• 23:41
  Speaker 3: an iPhone emulator that runs on another computer, including like
• 23:45
  Speaker 3: on an Android device, right, and so you could run
• 23:48
  Speaker 3: all those apps, you could access all that data if
• 23:50
  Speaker 3: you did that to Apple today. If you did onto
• 23:52
  Speaker 3: Apple as Apple had done unto Microsoft, first, they'd hit
• 23:55
  Speaker 3: you with Section twelve to one of the Digital monam
• 23:57
  Speaker 3: Copyright Act for circumvention. That's a five h thousand dollar
• 24:00
  Speaker 3: fine in a five year prison sentence for a first offense.
• 24:03
  Speaker 3: Then they would call you a tortious interferer with their
• 24:05
  Speaker 3: contract for violating their terms of service, and they might
• 24:07
  Speaker 3: hit you with criminal terms of service violation under the
• 24:09
  Speaker 3: Computer fraud and Abuse Act. They would call you a
• 24:11
  Speaker 3: copyright violator, they call you a trademark violator, a patent violator.
• 24:15
  Speaker 3: Maybe if you hired some ex employees, they'd say that
• 24:18
  Speaker 3: you're going after their trade secrets, and maybe there are
• 24:20
  Speaker 3: ex employees non disclosures. They would basically nuqu till you glowed, right.
• 24:26
  Speaker 3: And so it's true platforms went bad all through history,
• 24:30
  Speaker 3: but they had counter maneuvers.
• 24:32
  Speaker 2: You know.
• 24:33
  Speaker 3: It wasn't just that MySpace was outcompeted by Facebook. It
• 24:36
  Speaker 3: was that when Facebook was trying to lure users over
• 24:39
  Speaker 3: from MySpace, it gave them a bot, and you gave
• 24:43
  Speaker 3: that bought your login and password, and it would go
• 24:45
  Speaker 3: to MySpace several times a day. It would grab everything
• 24:47
  Speaker 3: in your MySpace feed and put it in your Facebook
• 24:49
  Speaker 3: feed so you could apply to it and it would
• 24:51
  Speaker 3: push it back out again. So again you didn't have
• 24:53
  Speaker 3: to choose between the people that you loved on MySpace
• 24:56
  Speaker 3: and the superior application that was Facebook. Because Facebook's pay
• 25:00
  Speaker 3: which at the time was don't use my Space. It's
• 25:02
  Speaker 3: owned by an evil billionaire. No one wants to use
• 25:03
  Speaker 3: social media owned by an evil billionaire. Plus, did you
• 25:06
  Speaker 3: know they spy on you? We're never going to spy
• 25:08
  Speaker 3: on you at Facebook, right, But you know, no one
• 25:10
  Speaker 3: is going to just smugly read the superior terms of
• 25:12
  Speaker 3: service while they wait for their dumb friends to join
• 25:14
  Speaker 3: them on Facebook.
• 25:15
  Speaker 2: They're going to be where their friends are. So they
• 25:17
  Speaker 2: just solved that problem for them. Now.
• 25:18
  Speaker 3: In the book, I tell the story of an app
• 25:20
  Speaker 3: called og app was created last year by a couple
• 25:23
  Speaker 3: of teenagers. They just reverse engineered Instagram. And so you
• 25:26
  Speaker 3: would give Instagram, you give the app your Instagram logging
• 25:29
  Speaker 3: and password. It would go to Instagram, pretend to be
• 25:31
  Speaker 3: You would grab everything in the queue waiting to be
• 25:34
  Speaker 3: shown to you, and it would throw away the ads,
• 25:35
  Speaker 3: it would throw away the recommendation, so it would throw
• 25:37
  Speaker 3: away the boost of content, would throway everything and been
• 25:39
  Speaker 3: like surfaced from three months ago because it was getting clickbait,
• 25:43
  Speaker 3: and it would just show you the things that the
• 25:44
  Speaker 3: people you followed had posted in reverse chronological order.
• 25:47
  Speaker 2: It was the og app.
• 25:49
  Speaker 1: It's what Facebook did to MySpace in take they're doing
• 25:53
  Speaker 1: to a Facebook owned property.
• 25:55
  Speaker 3: And so within twenty four hours it was in the
• 25:58
  Speaker 3: top ten on both app stores. Wow, And then that
• 26:01
  Speaker 3: night Apple and Google shut it down at Meta's request.
• 26:04
  Speaker 3: No kidding, because now we have these choke points, and
• 26:06
  Speaker 3: it turns out that there is honor among thieves. Right,
• 26:09
  Speaker 3: they will all defend to the death one another's ability
• 26:13
  Speaker 3: to structure whole markets and decide which products can reach audiences,
• 26:18
  Speaker 3: how profitable those products can be, what they can charge,
• 26:21
  Speaker 3: whether or not you can even use them. Right, all
• 26:23
  Speaker 3: of those things are now being privately regulated by entities
• 26:29
  Speaker 3: that are not winning their markets alone, but rather are
• 26:32
  Speaker 3: enlisting the state to win their markets. So people have
• 26:36
  Speaker 3: different views about how much industrial policy we should have
• 26:39
  Speaker 3: and so on, but nobody I think that I know
• 26:42
  Speaker 3: of is like, we should have industrial policy, but the
• 26:44
  Speaker 3: way that it should work is that the government should
• 26:46
  Speaker 3: find some monopolists, pay no attention to what they're doing,
• 26:49
  Speaker 3: except when the monopolists get angry and then destroy anyone
• 26:52
  Speaker 3: they're angry at. That is like the weirdest form of
• 26:55
  Speaker 3: industrial policy I've ever heard of.
• 26:57
  Speaker 1: And that seems to be the sort of policy we have.
• 27:00
  Speaker 1: Let's talk a little bit about the crapification of Amazon. Sure,
• 27:05
  Speaker 1: which the Great revealed to me was during the pandemic
• 27:09
  Speaker 1: when they would frequently run out of stuff, and then
• 27:13
  Speaker 1: sometimes it would be at Walmart, sometimes it would be
• 27:15
  Speaker 1: at Target, sometimes it would be on Instacart. And the
• 27:21
  Speaker 1: shock of the pandemic to me was, these guys have
• 27:25
  Speaker 1: been I've had an Amazon account since I got a
• 27:28
  Speaker 1: gift from a college roommate. I want to say it
• 27:30
  Speaker 1: was ninety eight something like that, so a long time.
• 27:33
  Speaker 1: The same with eBay, and suddenly you discovered that Amazon
• 27:39
  Speaker 1: wasn't the low cost provider. And then the free overnight shipping.
• 27:43
  Speaker 1: It's like, hey, your shipping day is Wednesday. We'll send
• 27:46
  Speaker 1: it to you on Wednesday. We'll give it to you
• 27:47
  Speaker 1: tomorrow for three ninety nine. Wait, this isn't next day
• 27:51
  Speaker 1: shipping or even two day shipping. And then the last
• 27:54
  Speaker 1: insults was the advertisement. I was searching, you know, the
• 27:58
  Speaker 1: little lithium batteries for kifire, Like they're very specific. Durcel
• 28:03
  Speaker 1: fifty three seventy four. You put that in the search
• 28:06
  Speaker 1: bar and the first thing that pops up it's a
• 28:08
  Speaker 1: Dura cell. You click it, you send it, you open
• 28:10
  Speaker 1: up the package. Wait, this isn't a fifty three seventy
• 28:13
  Speaker 1: four right, Why you I'm advertising for this exact size
• 28:18
  Speaker 1: voltage whatever? Why on earth would you show me something else?
• 28:22
  Speaker 1: And I'm enough of a jerk that I make them
• 28:25
  Speaker 1: pay me the two dollars and eighty nine cents for it,
• 28:28
  Speaker 1: and I send it back.
• 28:29
  Speaker 3: So you remember Lily Tomlin's bits on SNL where she
• 28:32
  Speaker 3: would pretend to be Ernestine the phone operator doing these.
• 28:34
  Speaker 2: Commercials for effort.
• 28:35
  Speaker 3: Well, start on a laughing and she took to been
• 28:37
  Speaker 3: corrected by so many panantic people, but she started on laughing.
• 28:41
  Speaker 3: She did it on SNL. She did more segments on
• 28:43
  Speaker 3: SNL though yes that's it.
• 28:45
  Speaker 2: Yeah, so it's but yes, I but both.
• 28:49
  Speaker 3: And she would at the end of these ads for
• 28:51
  Speaker 3: the Bell system, she would turn to the camera and
• 28:53
  Speaker 3: she'd say, we don't care.
• 28:55
  Speaker 2: We don't have to. We're in the phone company. Right.
• 28:58
  Speaker 3: One of the insights I think that Lena had when
• 29:00
  Speaker 3: she was in office that really landed was that companies
• 29:03
  Speaker 3: don't just become too big to fail. They don't just
• 29:05
  Speaker 3: become too big to jail. They become too big to
• 29:07
  Speaker 3: care that when they're insulated from consequence, they do this. Now,
• 29:11
  Speaker 3: what's striking about Amazon is the growth that they've experienced
• 29:15
  Speaker 3: from rent, right, not from products, but from rent. So
• 29:18
  Speaker 3: you mentioned the advertisements when I wrote this book. They're
• 29:21
  Speaker 3: so called ad market, which is the payola market. It's
• 29:24
  Speaker 3: the payment for placement and a search result. That was
• 29:27
  Speaker 3: like a thirty two billion dollar business, it's now a
• 29:30
  Speaker 3: fifty something billion dollar business. This is remarkable growth. And
• 29:35
  Speaker 3: that's the reason that the first item in your Amazon
• 29:38
  Speaker 3: search result is on average twenty nine percent more expensive
• 29:41
  Speaker 3: than the best match for your search.
• 29:42
  Speaker 1: Or just the ruling item.
• 29:43
  Speaker 3: It's amazing, sure, and then the top bar twenty five percent,
• 29:46
  Speaker 3: and then you get down to position number seventeen or so,
• 29:49
  Speaker 3: and that's where you find the good result. And of
• 29:51
  Speaker 3: course the companies spending more to advertise have less surplus
• 29:56
  Speaker 3: to allocate to product quality, and so they're just dominating
• 29:59
  Speaker 3: these search results, and they're they're shipping bad things to you.
• 30:03
  Speaker 3: By the same token, every merchant on Amazon is paying
• 30:06
  Speaker 3: junk fees to list on Amazon, and most of these
• 30:09
  Speaker 3: fees are listed as option we'll practically speaking, if you
• 30:11
  Speaker 3: don't pay them, you won't get there. So you have
• 30:13
  Speaker 3: to do fulfillment by Amazon. You have to pay for prime,
• 30:15
  Speaker 3: you have to pay for advertising. When I wrote the book,
• 30:18
  Speaker 3: it was, depending on the estimate, forty five to fifty
• 30:20
  Speaker 3: one percent in junk fees, and now today in the
• 30:23
  Speaker 3: New York Times, Tim wu sites fifty to sixty percent.
• 30:27
  Speaker 3: That's on and I've been through New York Times fact checking.
• 30:29
  Speaker 3: I think he wouldn't make that. And I've known Tim
• 30:32
  Speaker 3: since we were in elementary school together fifty years Columbia Professor,
• 30:35
  Speaker 3: Columbia Professor. We both grew up in Toronto, like all
• 30:38
  Speaker 3: the best Americans were Canadians.
• 30:40
  Speaker 1: So in the book, it's funny because I'm assuming the
• 30:44
  Speaker 1: advertising on Amazon yields a result. In the book, you
• 30:50
  Speaker 1: talk about how the process of decay got worse and
• 30:53
  Speaker 1: worse at Facebook and what was it twenty eighteen Procter
• 30:57
  Speaker 1: and Gamble said we're just going to cut twenty seventeen
• 30:59
  Speaker 1: two hundred billion dollars in advertising and they source zero
• 31:02
  Speaker 1: decrease in sales.
• 31:03
  Speaker 2: Yeah.
• 31:03
  Speaker 3: So one of the things that Facebook did early on
• 31:06
  Speaker 3: was allocate a lot of resources to anti fraud because
• 31:10
  Speaker 3: ad fraud is very easy.
• 31:11
  Speaker 2: You think about how the.
• 31:11
  Speaker 3: Ad market works, it's very complicated, and you know, if
• 31:14
  Speaker 3: you're a publisher and you're getting paid by the click,
• 31:16
  Speaker 3: you can just fire fake clicks.
• 31:18
  Speaker 1: On ads, right boy, farms and everything else.
• 31:20
  Speaker 3: Yeah, yeah, or you know, just websites that don't even
• 31:23
  Speaker 3: exist that are just loading like they just they only
• 31:26
  Speaker 3: exist like as a series of API calls that are
• 31:29
  Speaker 3: then generating click responses.
• 31:32
  Speaker 2: And so on.
• 31:32
  Speaker 3: You know, it can be very lucrative, and so they
• 31:35
  Speaker 3: put a lot of money into policing this, and then
• 31:37
  Speaker 3: they just drew down that spend because it's expensive, right,
• 31:41
  Speaker 3: and so you just.
• 31:42
  Speaker 1: Like, providing a quality product and service is expensive.
• 31:45
  Speaker 3: And so a million dollars disappeared down the fraud hole. Right,
• 31:48
  Speaker 3: that's someone else's problem, right, it's not Facebook's problem. I'm
• 31:51
  Speaker 3: sure Facebook would prefer a fraud free marketplace, but why
• 31:54
  Speaker 3: bother you know, gold plating their anti fraud.
• 31:57
  Speaker 1: When one of the biggest advertisers in the purchase the
• 32:00
  Speaker 1: country says, cutting this out because your ads are garbage,
• 32:04
  Speaker 1: that's why.
• 32:05
  Speaker 3: Well they're back now though, Oh they reinstituted it, and
• 32:07
  Speaker 3: they just have more anti fraud on their own ends.
• 32:09
  Speaker 3: So they're internalizing those costs. They're doing more auditing on
• 32:12
  Speaker 3: their end.
• 32:13
  Speaker 1: Unbelievable. So we talked about Facebook, we talked about Amazon,
• 32:18
  Speaker 1: got to ask about Uber, which has all sorts of
• 32:21
  Speaker 1: interesting platform issues. The big one was when the vcs
• 32:26
  Speaker 1: first realized, hey, we have to stop subsidizing these millennials
• 32:30
  Speaker 1: and allow the prices to float freely. The one I've
• 32:34
  Speaker 1: noticed over the past year or two is there's time
• 32:38
  Speaker 1: as it exists in the universe, and then there's time
• 32:41
  Speaker 1: on the Uber app waiting for a car that seems
• 32:44
  Speaker 1: to have no correlation to the actual time. What's going
• 32:48
  Speaker 1: on with Uber in terms of what they pay people,
• 32:51
  Speaker 1: surge pricing, and their wonky perspective on time.
• 32:57
  Speaker 2: So when Uber kicked off, they tapped the cow market.
• 33:00
  Speaker 3: Specifically, they got Masioshi's son, Star of Stage and Screen,
• 33:04
  Speaker 3: the man who gave us Yahoo, buying and destroying every
• 33:06
  Speaker 3: promising web two point zero company, and we work and
• 33:10
  Speaker 3: these days open aiyes latest round, and he went to
• 33:13
  Speaker 3: his favorite suckers, the Saudi royal family, and he got
• 33:16
  Speaker 3: thirty one billion dollars out of them. And then they
• 33:19
  Speaker 3: lost forty one cents on every dollar for the next
• 33:21
  Speaker 3: thirteen years and just lit it on fire. But that
• 33:24
  Speaker 3: did have some salutary effects from their business perspective. It
• 33:27
  Speaker 3: provoked a lost decade in transit investment all over the world,
• 33:30
  Speaker 3: because why invest in transit when it's so cheap. They
• 33:33
  Speaker 3: put medallion cabs out of business everywhere, and they used
• 33:36
  Speaker 3: predatory pricing to freeze out all but one also ran
• 33:41
  Speaker 3: ride hail company, which is lyft and then having effectively
• 33:45
  Speaker 3: cornered a market and spent a lot of money on
• 33:47
  Speaker 3: policy adventurism. Think about the two hundred and twenty five
• 33:50
  Speaker 3: million dollars that was spent in California on Prop. Twenty
• 33:52
  Speaker 3: two to formalize the Workermer's classification allowed them to you
• 33:56
  Speaker 3: only pay the drivers when they had a passenger in
• 33:58
  Speaker 3: the car, and they not when they were cruising around,
• 34:00
  Speaker 3: giving free labor and wear and tear on their cars
• 34:02
  Speaker 3: to the company. They were able to raise prices and
• 34:05
  Speaker 3: they were able to lower wages, and to do both
• 34:08
  Speaker 3: they tap both private data and algorithmic fluidity. So the
• 34:15
  Speaker 3: labor or the lawyer rather the labor lawyer viena do
• 34:18
  Speaker 3: ball coin. This term algorithmic wage discrimination. It's when two
• 34:23
  Speaker 3: workers are offered a different wage based on the algorithm's
• 34:27
  Speaker 3: estimation of their desperation. And so in the case of Uber,
• 34:31
  Speaker 3: the way that this works is if you take a
• 34:33
  Speaker 3: low ball offer, and when you get an offer as
• 34:35
  Speaker 3: an Uber driver, just a few seconds to say yes
• 34:38
  Speaker 3: or no, and you've got to figure out like mileage,
• 34:40
  Speaker 3: minutes and so on. When if you take that offer
• 34:43
  Speaker 3: and it's lower than your historic rate, then that becomes
• 34:46
  Speaker 3: a new ceiling and they start to nudge you down
• 34:49
  Speaker 3: lower and lower.
• 34:50
  Speaker 1: Really, and that's unbelievable.
• 34:51
  Speaker 3: Yeah, So drivers they bucket themselves into pickers and ants,
• 34:55
  Speaker 3: and the pickers are picky, and the ants take everything,
• 34:57
  Speaker 3: and ants have their wages go down and down and down.
• 35:00
  Speaker 3: And the idea is to turn every picker into an ant,
• 35:02
  Speaker 3: because an ant is subsidizing the company.
• 35:05
  Speaker 2: Right, they're just.
• 35:06
  Speaker 3: Driving around and around. They're on the road, no matter
• 35:08
  Speaker 3: how garbage the fares are. It's great for the company.
• 35:12
  Speaker 3: And of course if you can take a low ball
• 35:13
  Speaker 3: offer and you can find a passenger who will take
• 35:16
  Speaker 3: a price gouging offer, then the differences to companies to
• 35:20
  Speaker 3: sock up. And so we on the passenger side we
• 35:23
  Speaker 3: have our own version of this where they are doing
• 35:25
  Speaker 3: all kinds of calculations in the back end to calculate
• 35:28
  Speaker 3: how desperate we are get to take the ride. Now,
• 35:30
  Speaker 3: it used to be that they had this whole thing
• 35:31
  Speaker 3: about how we're going to match supply with demand using
• 35:33
  Speaker 3: price signals. We'll have surge pricing when everyone gets out
• 35:37
  Speaker 3: of a dodger's game, we'll crank.
• 35:38
  Speaker 2: Up the price and that'll drive drivers out.
• 35:41
  Speaker 3: That's not what they do anymore, right, they do have
• 35:44
  Speaker 3: surge pricing. They just keep the searge right unless the
• 35:48
  Speaker 3: drivers won't take it. Now again, if it were lawful
• 35:51
  Speaker 3: to do reverse engineering modification, you could imagine drivers doing
• 35:55
  Speaker 3: what they're already doing in other countries, like in Indonesia,
• 35:58
  Speaker 3: gig riders, because they don't cars. They ride motorbikes there,
• 36:01
  Speaker 3: and those are the taxis and delivery vehicles and so on.
• 36:04
  Speaker 3: Those gig riders, they started these little clubhouses because you
• 36:06
  Speaker 3: need somewhere to pee and to have a cup of
• 36:08
  Speaker 3: tea and you know.
• 36:09
  Speaker 2: Working your bike.
• 36:10
  Speaker 3: And those clubhouses turned into co ops, and the co
• 36:12
  Speaker 3: ops started commissioning software, and the commissioned software to modify
• 36:15
  Speaker 3: their dispatch apps.
• 36:16
  Speaker 2: And it started pretty modest.
• 36:18
  Speaker 3: It started with the well understood tendency of graphic designers
• 36:22
  Speaker 3: to torment the rest of us by making all their
• 36:24
  Speaker 3: type eight point great type on white, right, and all
• 36:27
  Speaker 3: the older riders are like, I cannot see my goddamn
• 36:29
  Speaker 3: phone and I'm in traffic.
• 36:30
  Speaker 2: Make the type bigger and black.
• 36:31
  Speaker 3: But these days it's stuff like an app that allows
• 36:33
  Speaker 3: all the riders to say, none of us will take
• 36:36
  Speaker 3: a ride.
• 36:36
  Speaker 2: That's a low ball offer.
• 36:38
  Speaker 3: So automatically calculate the mileage and the per minute when
• 36:41
  Speaker 3: you get the offer over the air, and just turn
• 36:43
  Speaker 3: it down automatically so that you can force the algorithm
• 36:46
  Speaker 3: to force the wage up right. Drivers here can't do that,
• 36:50
  Speaker 3: not because it's technically impossible, because it's unlawful.
• 36:52
  Speaker 2: You know the posse would that be unlawful.
• 36:54
  Speaker 1: It's like a union.
• 36:55
  Speaker 3: Because you're bypassing the technical protections in the app and
• 36:59
  Speaker 3: unders section twelve one of the Digital One Name Copyright Act.
• 37:02
  Speaker 3: That's illegal, even if you're doing so for a lawful purpose.
• 37:05
  Speaker 3: So the mere presence of what's called an effective means
• 37:09
  Speaker 3: of access control in the statute creates a zone where
• 37:13
  Speaker 3: you cannot enter, irrespective of the legitimacy of the reason
• 37:17
  Speaker 3: for your entry.
• 37:18
  Speaker 1: That's unbelievable. You would think they could create a very
• 37:21
  Speaker 1: simple client app where the server is the one that's
• 37:25
  Speaker 1: doing all of that. It's not, and just do the
• 37:27
  Speaker 1: calculation and say.
• 37:28
  Speaker 3: No, yeah, but scraping, So scraping the number right when
• 37:31
  Speaker 3: it comes in is illegal.
• 37:33
  Speaker 1: You're not even scraping it. You're just you're seeing it.
• 37:36
  Speaker 1: You don't have to go to their site and see no.
• 37:38
  Speaker 2: No, but it's on your device, but on your device. Right,
• 37:41
  Speaker 2: they're blocking.
• 37:42
  Speaker 3: Other apps, but they're blocking other apps from reading what
• 37:46
  Speaker 3: one app. One app by design, one app can't see
• 37:48
  Speaker 3: what the other app is doing, which is good. You
• 37:50
  Speaker 3: kind of want that, right, you don't want you don't
• 37:52
  Speaker 3: want like the malware and your browser seeing your prodcasts.
• 37:55
  Speaker 1: Right, that's fair.
• 37:56
  Speaker 3: But you, as the owner of the device could certainly say, well,
• 37:59
  Speaker 3: I give permission for this, right, But for someone to
• 38:03
  Speaker 3: write the app that bypasses that control, even with permission
• 38:06
  Speaker 3: from the owner, is unlawful because that control itself has
• 38:10
  Speaker 3: its own zone of protection that is not in the
• 38:12
  Speaker 3: control of the owner of the device. It's in control
• 38:15
  Speaker 3: of the author of the software. I'll give you a
• 38:17
  Speaker 3: quick exam.
• 38:17
  Speaker 1: It's unbelievable.
• 38:18
  Speaker 3: All the audio books on Audible are sold with these
• 38:21
  Speaker 3: technical protection measures.
• 38:23
  Speaker 2: Play.
• 38:23
  Speaker 3: Yeah, they only play on Amazon's approved apps. They're ninety
• 38:26
  Speaker 3: percent of the market. That means every time I sell
• 38:28
  Speaker 3: you an audiobook, I create a switching cost for you.
• 38:31
  Speaker 3: And so if Amazon screws me and I leave to
• 38:34
  Speaker 3: you I have to guess whether you're willing to throw
• 38:36
  Speaker 3: all your audiobooks to follow me.
• 38:38
  Speaker 1: No. Well, I mean, how many people listen to the
• 38:41
  Speaker 1: same audiobook twice?
• 38:42
  Speaker 3: Lots of people big library. Yeah, lots of people are
• 38:44
  Speaker 3: big library. So here's the thing. If I give you
• 38:47
  Speaker 3: a tool to move your audiobook library from one app
• 38:50
  Speaker 3: to another, I the author of the book, and in
• 38:53
  Speaker 3: this case, I read the book aloud myself in a studio.
• 38:55
  Speaker 3: I finance the production, I paid the director, I paid
• 38:58
  Speaker 3: the engineer. This is my copyright from top to bottom.
• 39:02
  Speaker 2: This is not a lot to do that.
• 39:04
  Speaker 3: Not only do I commit a crime, but I commit
• 39:07
  Speaker 3: a more serious crime than you would if you pirated
• 39:09
  Speaker 3: the audiobook. I face a worse sentence than if you
• 39:13
  Speaker 3: shoplifted the audiobook on CD at a truck stop. And
• 39:16
  Speaker 3: we would probably get the same sentence if you and I.
• 39:19
  Speaker 3: If I were to provide you with a tool to
• 39:20
  Speaker 3: take the audiobook out of the app, and if you
• 39:22
  Speaker 3: were to stick up the driver of the truck that
• 39:24
  Speaker 3: delivered the CD.
• 39:24
  Speaker 1: Set, that's unbelievable. I have to ask you about general
• 39:28
  Speaker 1: of AI, the impact on artists and writers, and what
• 39:31
  Speaker 1: it means in terms of.
• 39:33
  Speaker 2: Oh We're never going to get this in two minutes,
• 39:35
  Speaker 2: but let me try.
• 39:35
  Speaker 1: Go ahead.
• 39:36
  Speaker 3: So look, the only your boss is insatiable horney for
• 39:39
  Speaker 3: firing you and replacing you with an algorithm. That has
• 39:41
  Speaker 3: been true since the time of the Luddites. Bosses don't
• 39:45
  Speaker 3: like to pay workers, and they're looking for a way
• 39:47
  Speaker 3: to erode the rights of workers. If we were to
• 39:50
  Speaker 3: give to creative workers a new right to control AI training,
• 39:54
  Speaker 3: those workers would still have to sell their labor into
• 39:56
  Speaker 3: a market of five publishers for studios, three labels, two
• 39:59
  Speaker 3: companies that control all the apps, and one ebook audiobook company,
• 40:03
  Speaker 3: and those companies would negotiate change their terms of contract
• 40:06
  Speaker 3: to non negotiably acquire that training right. They would license
• 40:09
  Speaker 3: our data to the AI companies, and then they would
• 40:12
  Speaker 3: buy back the resulting algorithm and try and put us.
• 40:14
  Speaker 2: Out of business.
• 40:15
  Speaker 3: However, we do have some remedies to us. So the
• 40:18
  Speaker 3: first important one is that the US Copyright Office has
• 40:21
  Speaker 3: said correctly that copyright is only for works of human creativity,
• 40:25
  Speaker 3: so anything out by a bot excuse my language, is
• 40:28
  Speaker 3: not eligible for a copyright. And the only thing our
• 40:30
  Speaker 3: bosses hate more than paying us is having people take
• 40:32
  Speaker 3: the stuff we make for them and using it without
• 40:37
  Speaker 3: paying them without their permission. So that's the first thing,
• 40:39
  Speaker 3: and the second thing is what the Writers Guild taught us,
• 40:42
  Speaker 3: which is that you can't solve AI with a copyright,
• 40:46
  Speaker 3: but you can solve it with a union that has
• 40:47
  Speaker 3: the right for sectoral bargaining right to bargain with all
• 40:50
  Speaker 3: the studios. And if creative workers are going to advocate
• 40:54
  Speaker 3: for a new law, let's not make it a law
• 40:56
  Speaker 3: that our bosses want, which is a new copyright law.
• 40:58
  Speaker 2: Let's make it a law that our boss's hate.
• 41:01
  Speaker 3: Which is a sectoral bargaining right for all creative workers
• 41:04
  Speaker 3: to bargain with all employers in their sector. Because that
• 41:07
  Speaker 3: actually worked.
• 41:10
  Speaker 1: That was my conversation with Cory doctor O, author of
• 41:13
  Speaker 1: the new book in Citification. If you enjoy this conversation,
• 41:17
  Speaker 1: well be sure and check out any of our previous
• 41:20
  Speaker 1: six hundred we've done over prior twelve years. You can
• 41:23
  Speaker 1: find those at iTunes, Spotify, YouTube, Bloomberg, wherever you get
• 41:28
  Speaker 1: your favorite podcasts.
• 41:30
  Speaker 2: I would be.
• 41:30
  Speaker 1: Remiss if iden thank our crack staff who helps us
• 41:33
  Speaker 1: put these conversations together each week. Alexis Noriega is my
• 41:37
  Speaker 1: video producer Sean Russo is my researcher. Anna Luke is
• 41:42
  Speaker 1: my producer. I'm Barry Rittolts. You've been listening to Masters
• 41:46
  Speaker 1: in Business on Bloomberg Radio.