"Here's money, fire the prosecutor investigating us": Everything wrong with politics and the tech economy in one interview
This is messed up.
A must watch.
Two of the biggest problems plaguing our economy is the hyperconcentration of ownership and collusion. They all lead to less choice, less competition, and higher prices. It means companies can set prices at will through collusion or diktat instead of the market, because consumers have no real options to take their business elsewhere.
Lina Khan's work has shone a light on business practices that are blatantly corrupt, including the fact that U.S. oil companies were colluding with OPEC to drive up oil prices around the world.
If anyone doubts how important it is for tech companies to be properly regulated, and have basic standards they must follow, consider that in the last month alone, one bad update managed to shut down airports, banks, and hospitals around the world.
Announcing publicy you are donating millions of dollars while saying that someone who is actively investigating companies where he has a financial stake is mind-blowing.
It's reasonable to phrase this as “The companies I own are being investigated and I will give you millions of dollars and I want you to replace the top law enforcement official pursuing the investigation.”
It is a shocking lack of self-awareness, but I think Hoffman's compartmentalization is sincere - the problem is that he has deceived himself into believing he can occupy these two roles. This is exactly how people who are otherwise reasonable, smart, successful, and even kind, can convince themselves that they're in the right, when they're not.
Lots of the time, when people talk about "regulation," they're really talking about following the law.
Despite what anyone else claims, it's clear that lots of laws and rules are put in place in response to a human disaster or catastrophe, because we don't want it to happen again.
That's what laws and regulations are for, and if you think about it, that is what all of our politics and government and the justice system are actually supposed to be about. People saying "there oughta be a law."
And while some laws and regulations are bad, and don't work, lots do. Whether it's building codes, food safety, clean water, the criminal law and all the other rules we've got. Many rules, regulations and laws are there because we know, from past experience, that when they weren't being applied, it was a disaster.
Tech has made many billionaires out of people, but their products have done real harm. They have contributed to the collapse of legacy industries that created real value and jobs. It's not creative destruction, it's just demolition. This is a huge problem for local news and reporting, but there are much more serious problems.
One is a problem with the safety and security of computer systems. Massive data breaches, where the private information of millions of people is exposed are routine.
Our entire economy and society is now dependent on information technology infrastructure. One of the biggest problems with technology is that people get so excited about the possibilities of a piece of tech, they don't ask what should be the first question out of anyone's mouth: "How can this be weaponized?"
There are examples of real harm from the way tech has been abused, and is being used in harmful ways. Everything from marketing harmful treatments that may be deadly to bots and propaganda.
The other thing about tech, generally, is that they have been legally exempt from accountability or responsibility for what is on their sites, and it is part of why we have a broken market, and why an exemption for tech has broken it.
That exemption is that tech companies aren't liable for the content posted by users on their sites. If someone puts it up and it's a problem, it gets taken down. This means that anyone can post anything - text, sound, images, video on Web 2.0, social media.
All of these social media networks - Youtube, Reddit, Twitter/X, Facebook, Instagram, TikTok - they are just providing a tech framework where all the content and value comes from others filling in the blanks.
All of their value is someone else's intellectual property, whether it's personal, corporate, or copyrighted.
We got used to consuming a lot of stuff for free, or cheaper, because it was paid for with advertising. Newspapers, TV, Radio.
That's one of the biggest differences between digital and legacy Newspapers, TV and Radio. By law and by regulation legacy media had to pay people for their intellectual property. Newspapers paid for photos. TV and radio had to pay royalties, and so did record companies.
Tech companies don't. They simultaneously reduced the cost of advertising to nearly nothing. The biggest revenue generator for newspapers was classified advertising. The revenue underpinning an industry around the world was collapsed by Craigslist, a company that had 30 employees.
The other issue however is that intellectual property theft is routine, and royalties either aren't paid at all, or are so low they are literally pennies.
The result is that creators are making less than they did decades ago. For audio, you can stream anything for a small fee - like buying dozens of albums for a few dollars. Most of the companies selling access to music take more money and pay artists less than brick and mortar stores did. And at the time, buying that music meant we were paying enough to support artists and the people who ran brick and mortar stores, radio stations, TV stations, movies theatres, and so on.
To add to all of that, because the revenue streams for legacy media dropped, newspapers especially tried to make up for it with subscriptions.
This meant that the businesses that, by law, had to respect intellectual property and pay for it, had to put up a paywall.
The impact on the media reflected the broken market. What is derided as the "mainstream media" was one that considered the profession of journalism where the most important value was accuracy.
The reason for that isn't all moral purity. It's also fear of the consequences if you get something wrong, because you may be sued.
So you have a situation where information that would be considered "balanced" and is more reliable is behind a paywall. It's hard or impossible to share it. This is the case right now, in Canada, where Facebook is expected to pay into a media fund, but won't. The reason these media are paywalled is because it we are paying a premium price for access to news and opinion that is more reliable and accurate than what's circulating.
Instead of paying copyright for what is by definition, premium content to its users, Facebook is blocking all media content in Canada.
It means that everything else that circulates is operating at a lower standard of accuracy.
This is an amazing real-world example of "Gresham's Law" - of "bad money driving out good". We have a society where the high quality information is being hoarded, while misinformation, disinformation and inaccurate information spreads unchecked.
The problem here is one for the law, and there is a moral moral link to the law that we have forgotten.
One fundamental purpose of the law and justice is to hold people - and corporate persons - responsible for their actions.
I want to emphasize this because we are clearly getting to a very dangerous point because so many people clearly do not care about the law anymore, and that is an inexpressibly dangerous place to be.
We are seeing escalations of lawlessness, where the lawless actions of one's opponents are used to justify lawless reprisals. "They got to do it, so I should too," is the core justification of "whataboutism."
The best and only way out of the current madness will ultimately have to be political and legal, and part of that means enforcing the law, enforcing intellectual property rights, including ending tech's exemption from royalties and copyright.
If we are going to have an information based economy that works, we need a market where intellectual property rights are enforced, so that the people who invested in the creation of that intellectual property are properly compensated for it, through a new royalty and copyright regime, that would treat these companies as publishers and require them to pay royalties for copyrighted material.
These companies are all, at their core, database companies. They have software that scans for copyright. They should be able to identify content, it's creators, and pay a royalty.
This is not an option. Gresham's law is a classic example of "market failure." It's broken down, and it's not going to fix itself, because it requires an outside fix - the law.
There is also an incredible amount of manipulation of data.
To fix the Internet and tech companies, we just need the law to apply to it, in sense of holding someone responsible for their actions.
The push back against the "regulatory state" on the part of tech is often done in the name of some ridiculous Ayn Randian fantasy where people treat existing enforcing laws of theft, fraud, collusion, exploitation, patent and copyright as oppression.
There are tech companies who make and build things and that are creating real value.
Too many others are based on taking other people's intellectual property, as well as people's private data, and selling access to it.
This is especially true of machine learning, also called artificial intelligence. These “bots” learn patterns of probability based on analyzing huge amounts of information, much of which is someone else’s intellectual property.
That is not the free market - it is not a functioning market at all. It's a colossal "land grab" of intellectual property, and the only people who are able to get compensated for the use of their property are the big players who can afford to sue the biggest companies in the world.
These companies all rely on the enforcement of other laws to protect them - including intellectual property rights, which they strongly defend.
Aside from challenging monopolies and oligopolies and collusion, a new legal framework needs to exist. The idea that “convenience” trumps all is because it is awfully convenient for certain companies to be exempted from compensating people for harm or theft.
If we want to have a digital economy that makes sense, we need to make sure that creators are compensated, instead of being exploited or driven out of existence. Treating companies as publishers would put them back on a level playing field with legacy companies.
The idea that “everything is free” ignores that someone somewhere isn’t getting paid.
And remember one of Steve Jobs’ insights: “There’s no upside to being wrong.”
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"They have contributed to the collapse of legacy industries that created real value and jobs."
Mind you, some of those legacy industries got to be as big as they became at their height because they employed very similar modus operandi. However, they were fortunate in most cases to have leadership that supported the U.S. government rather than undermining it. (If they want to really run things their own way, they need to have California secede from the union...).