Brooke Gladstone This is On the Media. I'm Brooke Gladstone. Last week we were led by our own digital guide, journalist and novelist Cory Doctorow. Through the three steps taken by big digital platforms like Facebook, Amazon, TikTok and Twitter to get richer and get worse, a process that Doctorow calls in defecation. Step one. Lose money to serve the customer better. Step two. Benefit the big suppliers at the expense of smaller suppliers. And step three, squeeze all the suppliers and bog down the users. So everyone but the shareholders is miserable but not too miserable to leave. Got it? Okay. Now on to the second part of our disquisition. Also in three parts, where we discuss how and why this is possible and whether big digital is maybe just different from other earlier monopolies. Hi, Cory. Welcome to Section Two.

 

Cory Doctorow Thank you very much. It's a pleasure to be here in the luxurious digs in the the second section.

 

Brooke Gladstone So this is the part where you explain, I guess, why the corrosion and corruption in the service provided by these huge platforms is not just possible, but kind of inevitable, right?

 

Cory Doctorow Sure. Yeah. I mean, for this, we need to talk about competition, which is not just about tech, but we also need to talk about some of the things that tech brings to the table that, you know, highly concentrated industries, from beer to professional wrestling to intermodal transport do not enjoy.

 

Brooke Gladstone But before we do that, I want you to step back and answer the charge that the power of technology is exceptional, not just about regulation or the lack thereof, but that tech has an exceptional power. Sean Parker, the founder of Napster and the first founding president of Facebook, wrote a may a culpa about using the ability to leverage dopamine, a neurotransmitter that makes us feel so good to steal our time and attention. But you've written that tech exceptionalism isn't where we should go for our answers.

 

Cory Doctorow Neurotransmitters are real, but stimulus regresses to the mean. It is absolutely true that the first time I read an Upworthy headline like Seven Amazing Things About Your Socks. You won't believe the third one. That I was like, I really want to find out about the third one. But by the time I'd seen that headline 200 times, you know, if you've ever gone into a casino and pull the lever on a slot machine, the first couple of times you do it. You're like, This is weirdly compelling and I'm enjoying it more than I predicted. It's true that there's a small proportion of people for whom this becomes a really pathological behavior. We definitely need regulation to limit the harms to those people, but it would be a mistake to extrapolate from those people.

 

Brooke Gladstone But what about people who don't get inured, people who aren't online all the time but get there and love the feeling of what it does to their body when they find their opinions affirmed online.

 

Cory Doctorow Maybe it's true they've established a foothold on human freewill, or maybe it's true. And this is the more likely explanation, given the historic evidence, as they found a small, temporary advantage that will erode over time. Just like 10.99 maybe didn't seem like $11 at one point. But today, for all but the smallest children, 10.99 is indistinguishable from $11.

 

Brooke Gladstone So we should aim some criticism at the technology. Critics like myself, who commit the sin of repeating tech barons claims of incredible prowess.

 

Cory Doctorow I mean, let us at least ponder the possibility that they aren't evil sorcerers, but rather ordinary mediocrities who've managed to corner a market.

 

Brooke Gladstone So now let's talk about what is undeniably different about digital tours, the speed in which they can change the game.

 

Cory Doctorow Absolutely. So I call this twiddling and we get back to this idea of evil sorcerers versus ordinary mediocrities. You know, if J.P. Morgan or John D. Rockefeller wanted to bankrupt a fairy line by laying a railroad line and offering below cost shipping to make sure that the fairy goes out of business and no longer competes with them, they don't get to click a mouse and lay some track. When Jeff Bezos wanted to stop Diapers.com after they left his offer to buy them out, he clicked a mouse and lost $100 million selling diapers below cost. And as soon as Diapers.com was broken, he clicked a mouse and the price went back up again. So it is not that the new generation of tech barons are doing anything that the old generation or tech barons didn't want to do. They're just doing it faster with computers. The trick is just that you've automated away something that used to require a lot of drudge work.

 

Brooke Gladstone So twiddling is what happens when tech companies have their hands on the levers and they're pulling them in their own favor. Like playing with pricing, the gig economy is rife with that.

 

Cory Doctorow Yeah, there's a term for this. It's algorithmic wage discrimination.

 

Brooke Gladstone Give me an example.

 

Cory Doctorow Yeah. So let's think about an Uber driver here. Uber drivers divide themselves into two categories. There's ants and pickers. Ants take every ride it's offered to them and pickers cherry pick. Uber has an algorithm to induce people to not be pickers and start being ants. And the way that it does that is it offers the pickers better rates than it offers the ants. There's a famous experiment from the rideshare guy where two brothers from Chicago, one of whom drives a Tesla only occasionally. Picking up Uber passengers, and the other one has leased a hatchback hybrid and drives every hour that God sends. They're sitting next to each other with their phones out and they're seeing the offers show up and the aunt is getting offered less than the picker.

 

Brooke Gladstone Seems to me that that would induce people to become pickers and not at all.

 

Cory Doctorow But the picker then starts to say, Oh, look at what a great deal I'm getting from Uber. Whatever else it is I'm doing to pay for my Tesla, I should do less of that and start doing more of Uber. So you give up your other side hustles, you become more and more beholden to the platform and the needier you get. That is to say, the more that you sign in, the more Uber starts to dial down the compensation. And there's heartbreaking stuff going on here. So one academic who studied this from an anthropological perspective found a Syrian refugee who lives in the Bay Area, who sleeps in his car for three days so that he can drive as much as he possibly can for Uber and make money for his family. And he can't understand why his payout isn't as good as the payout of everyone else on social media talking about their Uber takings. He thinks he's bad at Uber, and contrariwise, they think they're good at Uber. So the people who just happen to be algorithmically favored attribute their success to some measure of skill. And this is definitely a cognitive blind spot. Every rich person born on third base thinks that they did something special, that that janitor cleaning up the mess behind them didn't manage to do.

 

Brooke Gladstone And this is all legal.

 

Cory Doctorow Well, that's a question. If algorithmic wage discrimination is simply trying to find and convert pickers to ants. Maybe that's legal. But what if the strongest correlate of being an ant is being poor and the strongest correlate of being poor is being black or brown? What you're doing is paying black and brown people less than you are paying white people on the app. That starts to look a lot less legal. Now, it's a stretch as a legal theory to prove, but you know, it's not like we've never seen this before. Right. There are correlates in ad targeting that can cause the most attractive financial offers to be shown to white people and not black people. And there have been settlements, there have been enforcement actions, and there have been lawsuits that have fielded the theory that even if you don't explicitly set out to do digital redlining or other forms of unlawful exclusion, that you are nevertheless engaged in prohibited discrimination and companies are paid fines and settlements and adjusted their conduct on that basis.

 

Brooke Gladstone And the reason that the big platforms can do what they do is because they're monopolies. And you wrote that the best time to prevent monopoly formation was 40 years ago, and the second best time is now.

 

Cory Doctorow Yes, I did. Everyone take a drink. So during that golden age of antitrust enforcement, which is, you know, loosely speaking, like FDR and Reagan, there were a large number of bases on which we attacked monopolies and tried to prevent them from forming. That revolved around things like whether a company would gain too much political influence or whether it would be able to abuse its workers or whether it would foreclose on innovation. In the Reagan era, this kind of fringe figure named Robert Bork, who, you know, you may remember as the guy that Reagan tried to put on the Supreme Court and failed. And he wrote this genuinely bizarre book called The Antitrust Paradox. And he argues two things, that monopolies are often formed because they're efficient and therefore fence out all the competitors. And we don't want to punish efficient companies. And then he makes another argument that is just bizarre, which is that Congress knew this and never wanted to fight monopolies, and this is just not true.

 

Brooke Gladstone Had he ever heard of Teddy Roosevelt?

 

Cory Doctorow And more to the point, John Sherman, Tecumseh Sherman's brother, who in 1890 when he was stumping for the Sherman Act in front of the Senate and let me get this quote for you. He said, If we would not endure a king as a political power, we should not endure a king over the production, transportation and sale of the necessaries of life. If we would not submit to an emperor, we should not submit to an autocrat of trade. This is not a man who's concerned about efficiency. This is a man who is concerned about power.

 

Brooke Gladstone Right.

 

Cory Doctorow And about the corrupting influence of large firms and the autocrats who run them. And so Burke makes these two arguments and there is a good factual basis to argue about whether or not monopolies can be efficient and whether we're doing it wrong. But there's really no question about what the statutes say the Sherman Act, the Federal Trade Act, the Clinton Act. These are very clear that monopolists are able to seize the power of democratically accountable lawmakers and gather to themselves. And we see this. You know, AT&T ruled until 1982 the first attempt to break up AT&T was 69 years earlier. IBM went through a 12 year antitrust hell, 1972, 1982, and every year outspent the entire Department of Justice Antitrust Division on outside counsel. They called it antitrust's Vietnam. So allowing a monopoly to form is allowing a concentration of power to occur that if in hindsight you decide is dangerous, is very, very hard to diffuse again, because the monopoly has become too big to fail and too big to jail. In the case of AT&T. The Pentagon stepped in in the fifties to say, Don't break up Ma Bell or we'll lose the war in Korea. Womp womp.

 

Brooke Gladstone Wow. We're talking about monopolies. But let's pivot to monopsony, because if a single dominant seller is a monopoly, a single dominant buyer is just as powerful when it comes to screwing up a genuinely free market.

 

Cory Doctorow That's right.

 

Brooke Gladstone So that brings another platform into the discussion. Spotify, you have this orgy of mergers and acquisitions. You have three big record labels, Sony, Warner and Universal. So in the late aughts, when Spotify was trying to get off the ground, especially in the U.S., it made a deal with the Big Three.

 

Cory Doctorow Yeah. So Spotify goes to Sony, Warner Universal, 70% of all their sound recordings in their portfolios, which they didn't invest in. They bought from other companies when they bought those companies in mergers that would have been illegal before Ronald Reagan. They say to these three companies, What's it going to take to get your music on our service? And the three companies say, we're going to be your business partners. We're going to take a big equity stake and you're going to love that because we want those royalty rates to be as low as possible, a fraction of a penny per track, because these big three record labels, once they are co-owners of Spotify, can take money out of Spotify as license source. Right. And that money has to be shared with the labor force who made the music, or they can take it out of shareholders. And that money, they don't have to give it to the workforce if they don't want to. The musicians who made the works. And so the more they charge for the music you listen to on Spotify, the less their shares are worth.

 

Brooke Gladstone So this is how the record companies made money at the expense of their own artists by joining up and keeping prices for access unreasonably low.

 

Cory Doctorow But they also insisted that no one else get paid more than them. So for the 30% of independents and small labels, they got the same low per stream rate. They didn't get free inclusion in playlists, they didn't get free advertising, they didn't get minimum monthlies, and they certainly didn't get shares that were suddenly worth billions of dollars at Spotify's IPO.

 

Brooke Gladstone And the big three, they got all of that.

 

Cory Doctorow And again, remember, historic antitrust contours prohibited manufacturers from offering preferential terms to a single retailer that weren't more broadly available to other retailers.

 

Brooke Gladstone Mm hmm. Now, these enormous record companies could take a parcel of their huge profits and award them to particular musicians. Which reminds me of a theory you love called the giant teddy bear theory.

 

Cory Doctorow That's right. So I grew up going to a great little company in Toronto called the Canadian National Exhibitions, the CNE. By 10 a.m., and there'd be someone walking around with a giant teddy bear that they won by throwing three balls in a peach basket. As hard as you tried, you could never match the feat. So how did they get this giant teddy bear and why? Well, basically, the company made sure they won. The first person who came along and looked like a likely mark, they'd say, Tell you what, I like your face. You got just one ball in the basket. I'll give you a keychain. And if you do it again, I'll let you trade two keychains for the giant teddy bear. And the point was that if you carry that giant teddy bear around all day, other people are going to go, hey, I can get a giant teddy bear too, and put $5 down and fail to win the giant teddy bear. They may not even get the keychain. This guy is lugging around this conspicuous teddy bear doing the marketing for the rigged game where you see Joe Rogan getting $100 million for his podcast or you see TikTokers have these incredible success stories. Or back when Kindle was getting off the ground, there were independent authors who went to Kindle and reported these incredible findings. Substack. All of those early Substack writers who are guaranteed a minimum monthly. We're talking about how Substack was the future of journalism. And really all that was happening is they were being given these giant teddy bears, same as those Uber drivers who are filling Uber social media with accounts of how much money they make driving for Uber. They're just luring people to go through the picker to ant pipeline.

 

Brooke Gladstone And you say the big teddy bear theory plays out big on TikTok.

 

Cory Doctorow So the thing that even TikTok's critics admit is that it's pretty good at guessing what you want. That's why most people who use tech talk just tune in to the recommendation feed. People find themselves going viral because so many people have tuned in to this algorithmic feed. And the assumption had been this is what America wanted to see right now. And so America saw it. But then a reporter from Forbes revealed the existence of something called the heating tool. And it's just a knob that's someone at TikTok twiddles to say, we're going to stick this in front of a lot of people, even though the algorithm doesn't think they'll like it. This is a way of temporarily allocating a surplus, giving goodies to the kind of performer that they want to become dependent on TikTok. So maybe they want sports bros, they find a few of these guys and they give them giant teddy bears. You're viral. 10 million views every video you post. Are you really going to make like two different videos, one for YouTube and one for TikTok, especially when you're getting ten times the traffic on TikTok? And remember, you know, TikTok's got this like, idiosyncratic format. You really got to customize it for TikTok. So it's not really practical to make it for Instagram, YouTube and TikTok. Maybe you'd become a TikTok first performer, right? And then they can take it away from you if they decide they've got enough sports pro content and now they want to got, I don't know, astrology influencers. They can stop promoting, stop heating the sports bro content and start hitting the astrologer content. But also, it's impossible to tell whether a performer or a writer or creative worker on one of these platforms like Substack, is getting a giant payout. Whether they've been given a giant teddy bear, whether they even know. And in fact, if you and now we're getting into counter twiddling, if you get aggressive enough and trying to figure out how they're determining whether or not your videos will be shown to your subscribers. Right. If you start to reverse engineer their tools, start to pull apart their app to see if you can find the business rules, they will start to come after you for violating Section 1201 of the Digital Millennium Copyright Act, which broadly prohibits reverse engineering, violating the Computer Fraud and Abuse Act for tortious interference with contract for trademark violation, patent violation, copyright infringement. And again, this just boils down to felony contempt to business model.

 

Brooke Gladstone I don't know what that is.

 

Cory Doctorow That's just the idea that even if Congress never passed a law saying never displease a shareholder, that you can mobilize existing laws like copyright law to say that displeasing a shareholder becomes illegal. So, like, let's talk about iPhones just for a second. I make an app for an iPhone. You own an iPhone, you spend $1,000 on that iPhone. I made the app and I hold the copyright to it. I don't want to share 30% of all my revenue with Apple. And you don't think I should have to. So I give you the app and a tool that allows you to install it on your iPhone, which belongs to you. I the copyright owner, by letting you use my copyrighted work, violate copyright law. Section 1201 of the Digital Millennium Copyright Act, punishable by a five year prison sentence and a $500,000 fine.

 

Brooke Gladstone Mm hmm. It's amazing that people who talk about the free market lock it up so tight that it can't be responsive to the consumers that are supposed to operate it.

 

Cory Doctorow Oh, you know, it's even worse, right? Because it's not just that Apple, like all capitalists, hates capitalism when they're on the pointy end of it. It's that Apple did the thing that they would now sue you for two other companies. So if you think about when Microsoft Windows reigned supreme in the office and Macs were getting harder and harder to use because word for the Mac or office for the Mac was so bad, the way Steve Jobs resolved, that was by having some of his technologists reverse engineer Microsoft Office and make AI work that read and write Microsoft Office files. When Apple did it, that was progress. When you or I do it, that is theft that it it's allowing maximum twiddling on the incumbent side and preventing any twiddling on the new market entrants side. You know, ad blocking is the most successful consumer boycott in history. That's what Doc Searls says. And it's only possible because the web is an open platform. But if you wanted to make an ad blocker for an app, the fact that you have to first reverse engineer the app that you have to bypass digital rights management makes it a felony. And so the ads on apps are a lot more obnoxious, not just. In terms of their presentation, but in terms of the data that they gather and target with, we're all familiar with the stories about people being targeted by ads based on visiting mosques or abortion clinics and all of the other terrible abuses. That's because without the constraint of counter twiddling, the sky's the limit in terms of how much they can tell you.

 

Brooke Gladstone The FTC has lawsuits against Facebook, and the Department of Justice has an antitrust case against Google where twiddling resulted in undetectable fraud. So is there some accountability afoot?

 

Cory Doctorow I think that there's an attempt to do it. But let's go back to the best time to fight monopolies was 40 years ago, and the second best time is now. You know, there are people who say that the monopolies that we have in tech, the winner take all are winner take most monopolies that they come out of tech exceptionalism. There's just something about the great forces of history that have made tech so powerful. But, you know, Occam's Razor says we should look to the simplest explanation first. And the simple explanation here is that we used to do anti-trust and we didn't get monopolies. We stopped doing antitrust and we got a lot of monopolies. I think the world of the antitrust enforcers in the Biden administration, Lina Khan, is extraordinary.

 

Brooke Gladstone The head of the Federal Trade Commission.

 

Cory Doctorow That's right. She was a third year Yale law student just a couple of years ago. And she wrote this paper that was a direct answer to Robert Bork. So Bork's book was called The Antitrust Paradox. Her law review paper was called Amazon's Antitrust Paradox. And it was such a stinging rebuttal to Bork that it set the whole antitrust theoretical world on its ear. And just a few years later, she is the youngest ever chair of the Federal Trade Commission, and she found things like Section Five of the Federal Trade Commission Act, which wasn't that hard to find. It's right between Section Four and Section six, but hasn't been used in 40 years. And it's the article that gives the Federal Trade Commission broad latitude to act against deceptive and unfair practices. And that's the basis on which she promulgated a rule banning non-compete agreements. We are seeing in Khan what a skilled technocrat can do. If you know where the levers are, you're not afraid to pull the levers. You can make incredible things happen. And we are in an incredible moment for antitrust. And it's not just her, it's Jonathan Kanter at the Department of Justice. It's other commissioners like Rebecca Slaughter. And it's the whole of government approach that Tim Wu crafted when he was in the White House, where every department is now being asked to use its legislative authority to go ahead and act to reduce monopoly monopoly power across the entire economy.

 

Brooke Gladstone In Section Three, we'll talk about the other levers available to us. Are you game?

 

Cory Doctorow I like pulling on levers.

 

Brooke Gladstone Cory Doctorow, author of the new novel Red Team Blues and special advisor to the Electronic Frontier Foundation. Next week, our third and final conversation on Big Digital enshittification and what to do about it. On the Media is produced by Micah Loewinger, Eloise Blondiau, Molly Schwartz, Rebecca Clark-Callender, Candice Wang and Suzanne Gaber. Our technical director is Jennifer Munson. And engineers this week are Andrew Nerviano and Sham Sundra. Katya Rogers is our executive producer. On the Media is a production of WNYC Studios. And I'm Brooke Gladstone.