By Roger McNamee
In 1982, when I began my career as a technology investor, privacy was not a concern. The denizens of Silicon Valley shared a goal: to improve the lives of the people who used technology. An idealized form of capitalism reigned supreme. IBM had just shipped its PC, and the personal computer was about to take off. Optimism pervaded the nascent industry. Steve Jobs spoke of computers as “bicycles for the mind,” expanding human capabilities with little or no downside.
Over the course of a three-decade-plus career, I have advised countless companies and entrepreneurs, from those early days of personal computers to the current generation of social networks. I was an adviser to Mark Zuckerberg at Facebook from 2006 to 2009, and I helped bring Sheryl Sandberg to that company (I remain a shareholder in the company). Since 2017, I have been raising awareness of the threats to privacy, democracy, public health and innovation from the business models and algorithms of internet platforms.
Privacy did not become a problem until the widespread deployment of networks in the 1990s, and even then the issues were comparatively small. Up until around 2000, the technology industry never had enough processing power, memory, storage or network bandwidth to build products that could be deeply integrated with our lives. Every product required compromises, every design depended on the experience and artistry of its creators.
The bursting of the internet bubble in March 2000 set in motion forces that would alter the culture and priorities of Silicon Valley. The venture capital industry retreated, and in its place arose a new group of investors, known as angels, who typically invest their own personal fortunes in start-ups. Foremost among them was the so-called PayPal Mafia — led by Peter Thiel, Elon Musk and Reid Hoffman — who transformed Silicon Valley with two brilliant insights.
First, they saw that the internet would evolve from a web of pages to a web of people, called Web 2.0, which led them to start or bankroll companies like Plaxo, LinkedIn and Facebook.
Second, they anticipated that the limits imposed by technology would soon evaporate, enabling the first global tech platforms.
The costs of creating a start-up would become significantly lower. Clever programmers could bring a product to market with a credit card, thanks to the emergence of companies that would rent the infrastructure for a software business, the industry that Amazon Web Services dominates today. The price of failure was vanishingly low, while the rewards of success proved to be without precedent.
These leaders of Web 2.0 were young entrepreneurs with a different value system than those of us who came of age in the 1960s and 70s. They left behind the hippie libertarianism of Steve Jobs for an aggressive version that was more in line with Ayn Rand. Mr. Thiel, the PayPal co-founder who made the first outside investment in Facebook, wrote a 2014 essay in The Wall Street Journal titled, “Competition Is For Losers.” The subtitle encapsulated his advice to entrepreneurs: “If you want to create and capture lasting value, look to build a monopoly.”
They pursued monopolies with a passion, coining terms like “blitz scaling” to describe a growth philosophy that sought to eliminate all forms of friction in pursuit of more customers. Eventually, they transformed capitalism.
LinkedIn and Facebook took off first, in the mid-2000s, followed by Zynga, Twitter and others. Their services were mostly free, supported by advertising and in-app purchases.
These global apps transformed the relationship of technology to users, taking over far more of our everyday life — while gathering vast amounts of personal data. The early threats to privacy — identity and financial theft — were replaced by a greater threat few people recognized: business models based on surveillance and manipulation.
The new danger was pioneered by the last great Web 1.0 company, Google. As described by the Harvard professor Shoshana Zuboff in her book, “The Age of Surveillance Capitalism,” sometime in 2002, engineers at Google discovered that user data generated by searches could also be used to predict behavior beyond what purchases a visitor to the site intended to make. They realized that much more data would lead to much better behavioral predictions. They embraced surveillance and invented a market for behavioral predictions.
They created Gmail, an email product that connected identity to purchase intent, but also shredded traditional notions of privacy. Machine reading of Gmail messages enabled Google to gather valuable insights about users’ current and future behavior.
Google Maps gathered user location and movements. Soon thereafter, Google sent out a fleet of cars to photograph every building on every street, a product called Street View, and took pictures from satellites for a product they called Google Earth. Other products enabled Google to track users as they made their way around the web. They converted human experience into data and claimed ownership of it.
And Google learned to reach beyond its own products. The company would attempt to acquire all available personal data — in public and private spaces across the web — and combine it with data gathered from its own products to construct a data avatar of every digital consumer.
Data from third parties like banks, credit card processors, cellular carriers and online apps — along with data from web tracking, and data from surveillance products like Google Assistant, Street View and Sidewalk Labs — became part of user profiles. Our digital avatars are used to predict our behavior, a valuable commodity that is then sold to the highest bidder.
Thanks to convenient services — and disingenuous framing of the trade-offs — Google made previously unimaginable ideas, like scanning private messages and documents, acceptable to millions of people.
Having started Facebook with relatively strong privacy controls, Mark Zuckerberg adopted Google’s monetization strategy, which required systematic privacy invasions. In 2010, Mr. Zuckerberg declared that Facebook users no longer had an expectation of privacy.
Because of the nature of Facebook’s platform, it was able to capture emotional signals of users that were not available to Google, and in 2014 it followed Google’s lead by incorporating data from users’ browsing history and other sources to make its behavioral predictions more accurate and valuable.
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