Mega-corporations as pseudo-governments [virtual feudalism]

Binyamin Appelbaum, Why Are Tech Companies Pretending to Be Governments? NYTimes, May 19, 2021.

Philadelphia spent almost half a million dollars wooing Amazon’s HQ2 campus in a 2018 competition that the company billed as merit-based. So city leaders probably weren’t thrilled to read in a new book that one of the company’s top executives frowned on its bid because he couldn’t abide the Eagles, the city’s football team. [...]

The HQ2 process was an example of an increasingly common feature of American life: big tech companies putting on shows of government-style decision-making about government-scale issues. Recent examples include Facebook’s reliance on an ersatz judiciary to decide whether Donald Trump may resume posting and Uber’s efforts to create different labor standards for that special group of workers known as Uber drivers.

Public outrage tends to focus on the poor quality of these pantomimes. The real injustice runs deeper. In a representative democracy, the process confers legitimacy on the result. A piece of legislation or a court ruling commands compliance because the decision is made by duly empowered representatives acting under the law.

Corporations behave like governments because they want to invest their decisions with that sense of procedural legitimacy. But they do it for the purpose of warding off the government.

The show is a sham, a mockery of democracy. Corporations may be people, but they’re not polities. Their executives are not our representatives. The rules they choose to follow are not laws. And legitimacy cannot be borrowed to justify decisions contrary to the public interest.

Anything goes on the frontier:

The government’s permissive attitude toward technology companies reflects the special place that frontiers have long held in American life and imagination.

New places were embraced as the solution to old ailments. As Greg Grandin writes in his acute 2019 book, “The End of the Myth,” the western frontier “allowed the United States to avoid a true reckoning with its social problems, such as economic inequality, racism, crime and punishment, and violence.” The sense of limitless possibility — and the absence of hierarchy — was an argument against the reallocation of existing resources.

The frontier, however, was also a place where people could take liberties.

Hey, kids! Let's start our own country! [all things virtual]

At balajis.com, How to Start a New Country, 9 April 2021.

Why?

We want to be able to peacefully start a new country for the same reason we want a bare plot of earth, a blank sheet of paper, an empty text buffer, a fresh startup, or a clean slate. Because we want to build something new without historical constraint.

What kind?

And finally we arrive at our preferred method: the cloud country. Our idea is to proceed cloud first, land last. Rather than starting with the physical territory, we start with the digital community. We recruit online for a group of people interested in founding a new virtual social network, a new city, and eventually a new country. We build the embryonic state as an open source project, we organize our internal economy around remote work, we cultivate in-person levels of civility, we simulate architecture in VR, and we create art and literature that reflects our values.

Over time we eventually crowdfund territory in the real world, but not necessarily contiguous territory. Because an under-appreciated fact is that the internet allows us to network enclaves. Put another way, a cloud community need not acquire all its territory in one place at one time. It can connect a thousand apartments, a hundred houses, and a dozen cul-de-sacs in different cities into a new kind of fractal polity with its capital in the cloud. Over time, community members migrate between these enclaves and crowdfund territory nearby, with every individual dwelling and group house presenting an independent opportunity for expansion.

What we've described thus far is much like the concept of ethnic diasporas, which are internationally dispersed but connected by communication channels with each other and the motherland. The twist is that our version is a reverse diaspora: a community that forms first on the internet, builds a culture online, and only then comes together in person to build dwellings and structures. In a sense you can think of each physical outpost of this digital community as a cloud embassy, similar to the grassroots Bitcoin embassies that have arisen around the world. New recruits can come to either the virtual or physical environment, beta test, and decide to leave or stay.

Now, with all this talk of embassies and countries one might well contend that cloud countries, like the aforementioned micronations, are also just a LARP. Unlike micronations, however, they are set up to be a scaled LARP, a feat of imagination practiced by large numbers of people at the same time. And the experience of cryptocurrencies over the last decade shows us just how powerful such a shared LARP can be.

Recognition?

Could a sufficiently robust cloud country with, say, 1-10M committed digital citizens, provable cryptocurrency reserves, and physical holdings all over the earth similarly achieve societal recognition from the United Nations? A cloud country with a population of this size would actually fit right in the middle of the pack globally, as out of the 193 UN-recognized sovereign states approximately 20% of existing countries have a population of less than 1M and ~55% have a population of less than 10M. This includes many countries people typically think of as "real", like Luxembourg (615k), Cyprus (1.18M), Estonia (1.3M), New Zealand (4.7M), Ireland (4.8M), Singapore (5.8M), and so on.

More at the link. 

Think of this as another variety of virtual feudalism.

Anand Giridharadas on the new feudalism

From YouTube:

Are Mark Zuckerberg and Jeff Bezos the new feudal elite?

Anand Giridharadas talks to INET President Rob Johnson about how the titans of Silicon Valley use “philanthropy” to control more of our lives.

See my various posts tagged as virtual feudalism.

Are Facebook and Google State Actors?

That's a very good question indeed, and Jed Rubenfeld asks it in Lawfare:

In 1924, concerned about monopolization in the radio industry, the secretary of commerce said something prescient:

It cannot be thought that any single person or group shall ever have the right to determine what communication may be made to the American people. ... We cannot allow any single person or group to place themselves in a position where they can censor the material which shall be broadcasted to the public.

What Secretary Herbert Hoover warned against has now come to pass. A handful of internet mega-platforms, unsurpassed in wealth and power, exercise a degree of control over the content of public discourse that is unprecedented in history. No governmental actor in this country, high or low, has the authority to excise from even a small corner of public discourse opinions deemed too dangerous or offensive. Yet Facebook and Google do that every day for hundreds of millions of people.

This is permitted as a constitutional matter because Facebook and Google are private companies, whereas the Constitution applies only against state actors. If Facebook and Google were state actors, their censorship policies would have provoked a constitutional firestorm.

But suppose Google and Facebook are in fact state actors when blocking speech they deem objectionable? Suppose existing doctrine already compels this result—not through any fancy reconceptualization, but through a straightforward application of precedent? Then the firestorm would be long overdue, and the world of social media would, as a constitutional matter, have to be turned upside down.

That’s the world I believe we’re living in. At least there’s a very powerful argument for it, deserving of careful consideration, that seems to have escaped litigants and judges alike. If Congress had done in almost any other setting what it’s done to online speech, the unconstitutionality would have been immediately apparent.

Congressional pressure goes to town:

For years, members of Congress have been pressuring Facebook and Google to block (or block more) hate speech, extremist content, false news, white supremacism and so on, threatening these companies with death-sentence regulatory measures, including an antitrust break-up and public-utility-style regulation. These threats have not exactly been veiled. “Figure it out,” said Rep. Cedric Richmond in April 2019, to representatives of Facebook and Google at a hearing on the platforms’ hate speech policies. “Because you don’t want us to figure it out for you.” The threats have apparently been quite effective. Just last month, one day before another round of hearings was to begin, Facebook announced a series of new, more aggressive measures to block hateful and extremist content.

A number of cases indicate that this pressure campaign might on its own be sufficient to turn Facebook and Google into state actors, entirely apart from Section 230. One of these cases, called Writers Guild, is especially analogous. In 1974, the big (pre-cable) television networks adopted the Family Viewing Policy, barring content “inappropriate for viewing by a general family audience” during the first hour of prime time and the hour immediately preceding. Plaintiffs in Writers Guild sued the networks as well as the Federal Communications Commission (FCC), challenging the Family Viewing Policy on First Amendment grounds. Defendants responded that the policy, having been voluntarily adopted by private parties, was exempt from constitutional scrutiny.

In a lengthy, closely reasoned opinion, after a weeks-long trial, the district court rejected this argument. The court found that the Family Viewing Policy had been adopted due to “pressure” from the FCC, which was itself responding to pressure from congressional committees. The FCC had not mandated the Family Viewing Policy, but its chairman had “threatened the industry with regulatory action” and “with actions that would impose severe economic risks and burdens” on the networks if they did not move to block excessive “sex and violence” from prime-time programming. As a result, the court concluded, the state action requirement was satisfied.

Writers Guild is hardly controlling. Not only is it a mere district court opinion about a different medium in a different era, but that opinion was later vacated on jurisdictional grounds. Nevertheless, the case is an important example. It shows that the question of whether, or how greatly, governmental pressure has influenced Google’s or Facebook’s content-based censorship policies is ultimately a triable question of fact—with the state action determination hanging in the balance.

The bottom line, however, is this: When governmental pressure is combined with a statutory provision like Section 230, the result must be state action. Immunity plus pressure has to trigger the Constitution’s restraints.

See this earlier post,  Henry Farrell on weaponized interdependence & regulating the internet [Tyler Cowen interview], and various posts under the heading of virtual feudalism, including the initial provocation: The New World Order of Virtual Feudalism (scan down the page a bit).

Henry Farrell on weaponized interdependence & regulating the internet [Tyler Cowen interview]

A day later: I've had a chance to sleep on this conversation. My initial impression remains: one if Tyler's best. Why? I keep looking for hints of new ways of thinking about the world in-the-large, but I rarely find much. This conversation has hints, particularly concerning the relationships between large platform media companies and the nation-states in which they deploy their platforms. 

* * * * *

Tyler Cowen converses with (Crooked Timber's) Henry Farrell on this that and the other, including the internet:

COWEN: Now, we’re chatting in early October, and there were two huge stories today, both about weaponized interdependence. The first is that the European Union seems to be insisting that Facebook take down material posted on internets outside the European Union. What’s your view? Is that a good decision or a bad decision?

FARRELL: Well, when I’m looking at this stuff, I try to wear my hat —

COWEN: But I’m interviewing Henry Farrell, the person. Right?

FARRELL: Okay, let me back up and say two things. First of all, if I’m to think about this as a political scientist under my political science hat, what I would say is that this is something which is inevitable. And this is something which we’re going to see more and more of, which is that the internet for a long period — there was a kind of an equilibrium in which the United States managed to persuade everybody that self-regulation and platforms looking after their own business was more or less okay for most purposes.

That equilibrium has broken down. It has broken down in the US. It has broken down in Europe, and it has broken down in authoritarian societies in particular. So I think we’re going to see more and more efforts to try and use the platform companies effectively as a means of extending reach into other jurisdictions and imposing universal-type restrictions on what they can or cannot do.

And now:

If I want to think about this as an individual, what I would say is that I’m not at all happy with what the European Union is doing in specific here, but I do think that there needs to be much greater regulation of platform companies. And in the absence of the United States, I think that the European Union is the most plausible actor which has got the regulatory clout and the willingness to do so in a manner which is at least somewhat compatible with broad liberal norms.

So my basic attitude will be to push back against a specific decision but to say that if the choice is between the United States not regulating or perhaps regulating — perhaps that will be different under a possible Warren administration — and authoritarian states, that I would much prefer to have a robust European Union than any of the other actors that I can think of that have the clout and the ability to try and bring the platform companies to heel.

The second shoe drops:

COWEN: The second big story from today is from the world of basketball. As you probably know, Houston Rockets general manager Daryl Morey tweets in favor of the Hong Kong protests. It seems both the Rockets and the NBA forced him to delete the tweet and basically retract the statement. Who is in the wrong here? Daryl Morey, the Rockets, the NBA, China, everyone? What do you think?

FARRELL: Again, looking at this from my political science hat, this kind of stuff has been happening for a long, long time, but not so much to the United States. There’s a book by Blackwill and Harris, which came out with the Council on Foreign Relations a couple of years ago, which looks at how China has been imposing this kind of pressure against a variety of smaller countries, especially with respect to the Dalai Lama. And when China says jump, companies do tend to jump.

And of course, we’ve seen Hollywood for the last number of years has been quite sensitive to the Chinese market, most recently as exemplified by the decision to remove, I think it was the Taiwanese flag from the remake of Top Gun from the back of Tom Cruise’s jacket because this was perceived as being possibly provocative. So this is pretty standard stuff, and this tells us something about the way that businesses operate.

You can see the way that businesses operate globally as having both great benefits and great weaknesses. If one wants to think about the standard story about how interdependence, at least under some circumstances, creates peace because businesses have an incentive to try and create peaceful and happy relations between nations in order to secure their commerce, I think that there’s something to it, although as my work with Abe on weaponized interdependence suggests, there also are some clear limits to that as well.

But the obverse of this is that business is obviously in the business of making profits, and when there are clear political risks associated to business doing certain kinds of things, by and large, businesses are not going to be especially courageous. And this is particularly likely to be true of big firms, which I think are more likely to come under this kind of pressure.

One saw this already with regards to Hong Kong. There have been that airways chief executive who effectively got ousted. I’m trying to remember the company, but I can’t.

I think that this is, in a sense, if you want to outsource a lot of our decision-making about culture, about the ways that things ought to be done to business, this is what you’re going to expect, for better or for worse.

Non-state actors and the implications of the recent attack on Saudi oil infrastructure

Tyler Rogoway, The Strike On Saudi Oil Facilities Was Unprecedented And It Underscores Far Greater Issues, The Drive, Sept. 19, 2019:

That brings us to my next point, one you probably also thought to yourself when this happened—this was an unprecedented attack. Welcome to the murky world of unmanned warfare that I have been warning about for many years. I almost take this issue personally because people use to blow it off or even snicker at it. Now all the predictions I wish were wrong are coming true and at an alarming pace.

The Department of Defense was ridiculously asleep at the wheel regarding this threat and is now scrambling to play catchup. Anyone who says differently is straight-up lying. It's well established what non-state actors can already do with relatively low-end unmanned aircraft technology—Houthi rebels alone have been using suicide drones for two and a half years—just imagine what a peer state will be able to do in the very near future. Instead of a mass of individual suicide drones layered in with other weapons, like cruise missiles, attacking a target simultaneously, imagine a swarm that is fully networked and works cooperatively to best achieve their mission goals, including jamming or killing air defenses in order for the swarm to make it to its final destination. America's adversaries are all too aware of this game-changing potential and the lack of defenses to counter it in any robust manner.

Here's a cold hard reality that most people just don't understand, including many defense sector pundits—air defense systems, no matter how advanced and deeply integrated, aren't magic. They have major limitations, especially considering most primarily rely on ground-based sensors.

Satellite imagery and GPS:

The cold hard truth is that counter-unmanned aircraft and counter-cruise missile capabilities are not 'sexy' to develop, field, and maintain operationally, but it will increasingly become absolutely essential to divert more funds in this direction. And no, I am not talking about some guys running around with wonky, sci-fi looking electronic warfare rifles. I am saying dense and layered counter-UAS capabilities will be required to even counter domestic threats in the years to come, especially against VIPs and critical infrastructure.

We live in an age where everyone has access to high-resolution satellite imagery of nearly any point on the globe. This is something that was unthinkable even following the end of the Cold War. A single individual now has the capabilities that entire government intelligence agencies were built to produce, all on their smartphone or laptop computer. And it's entirely free!

GPS is even more of a revolutionary capability. It's incredible pinpoint accuracy really has become more concerning since the hobby drone industry exploded and now components to control drones via GPS are somewhat off-the-shelf in nature and are supplied from manufacturers around the globe. With these two things combined, a bad actor has both the targeting intelligence and the precision targeting capabilities available for a minuscule fraction of what they cost in the past and without any major barriers of entry.

H/t Tyler Cowen.

Is the 'gig economy' a reversion to feudalism? California has passed a law against it. [Magna Carta for the 21st century?]

Miriam Pawel, You Call It the Gig Economy. California Calls It ‘Feudalism.' The New York Times, September 12, 2019.

Labor leaders cheered in the balcony and lawmakers embraced on the floor of the California Senate on Tuesday as it passed a landmark measure that defines employees, a move that could increase wages and benefits for hundreds of thousands of struggling workers.

But the bill is as much a starting point as an endgame: It will drive a national debate over how to reshape labor laws fashioned in the industrial era of the 1930s to fit a 21st-century service and knowledge economy.

With the measure, which Gov. Gavin Newsom says he will sign, California will lead in a shift that will likely redefine the roles of governments, unions and worker organizations. Just as federal labor laws were promulgated to help the country recover from the Depression, the imperative to extend basic guarantees like a minimum wage stems from the staggering income inequality in California, the state with the highest poverty rate in the country.

The new paradigms will need to fit not the relatively stable industrial work force of the last century but a gig economy in which workers are increasingly likely to hold multiple jobs or report to no workplace at all. California lawmakers took a major step in constructing the foundation of such a model with the new measure, which presumes workers are employees, entitled to all concomitant protections and benefits, unless they meet strict criteria as truly independent contractors.

Who controls the workers' life?

The bill was actually incited by a 14-year-old case in which Los Angeles delivery drivers sued their employer for lost wages after they were abruptly reclassified as independent contractors. Last year, the state’s highest court issued a broad ruling that sought to clarify what had long been a murky legal standard. The decision said workers are presumed to be employees unless a business can meet the “ABC test” — an independent contractor must be free from the control of the hiring entity, perform work outside the normal scope of the hiring entity and be an independent established practitioner of the trade performed. With exceptions for specific professions, the new measure adopts that definition.

Feudalism:

Accurate data is scarce, but a recent estimate suggests about 8.5 percent of people in the California work force in 2016 relied on independent contract work as their primary income. Of those, maybe one in 12 works for app-based companies, while an unknown number supplement their income with part-time gig work. Though they employ about 220,000 drivers in California, the ubiquitous presence of Uber and Lyft and the dissonance between their founders’ extreme wealth and their drivers’ poverty have come to symbolize the crisis of income inequality.

The “new economy, the gig economy, the innovation economy” is “feudalism all over again,” said the Assembly speaker, Anthony Rendon, a Los Angeles Democrat.

How the Norwegians strong-armed the robber barons of Big Oil

Mitch Anderson, The Viking guide to Oil Wealth Management, Reasons to be Cheerful.

Like many other nations, Canada is blessed with enormous resource wealth. We are the 7th largest oil-producing nation in the world (Norway is the 15th), with vast forests, mineral deposits and prime farming land. The Canadian province of Alberta legally controls almost 80 percent of the country’s fossil fuel production, has a similar population to Norway yet somehow managed to end up with a $62 billion debt and another $260 billion in unsecured environmental liabilities. Other nations like Nigeria, Venezuela, and Saudi Arabia have become even more wretched examples of resource mismanagement, with deplorable human rights records, dysfunctional economies and rampant graft.

Norway is different. Unlike many countries endowed with natural abundance, Norway has somehow avoided the so-called resource curse—where outside interests make off with most of the money and leave behind corrupt and enfeebled institutions.

Norway currently has $1 trillion in oil revenues in their sovereign wealth fund, the world's largest.

Some background:

Some of these values that pre-date the Viking Age are still reflected in present day Norwegian laws. The ancient principle called Odelsrett recognized that if the same family occupied land for six generations, family members have a right to purchase it back if ever sold to a stranger. A version of these 1,000 year old inheritance rights remain enshrined in the Norwegian constitution, and anyone buying a Norwegian farm over 3.5 hectares (8.6 acres) is required to live there for at least five years.

Such Old Norse cultural conditions proved important when they first encountered the 20th century economy. Around 1905, speculators started to pour into the fjords of Norway backed by French and German investors seeking to purchase water rights for hydro developments. Rural Norwegians were outraged that mere money might buy properties occupied by the same families dating back to the Iron Age.

Popular anger led to the passage in 1906 of the Panic Law, halting resource sales until Norway could develop a legal framework preventing natural heritage from being sold as a commodity. Norwegians wanted access to new technologies and the money to develop them, but on their own terms.

Later called Concession Laws, these restrictions decreed that hydro dams and generation plants could be built and operated for 60 years but foreign companies had to train Norwegians in their construction and maintenance. After 60 years the facilities were to be transferred free of charge to the Norwegian Crown. If companies didn’t like those terms, they could pack up their carpetbags and go elsewhere.

Not long after the hydro leases came due decades later in the 1970s, offshore oil was discovered and Norway imposed similar strict conditions on foreign oil companies. Many of these were laid out in what became known as the 10 commandments of the Norwegian oil industry. Tabled in a white paper in 1971, these stipulated that oil extraction would be slow, controlled by the Norwegian people and processed in Norway.

To say the oil industry is accustomed to getting their way around the world is an understatement, so Big Oil was in for a surprise when they failed to politically divide and conquer Norwegians as had been profitably done in many other countries. The government had already signed multi-year leases with many of the world’s largest oil companies but a Mideast oil embargo had ballooned the global price of oil fourfold. Norwegians decided windfall corporate profits were unfair, and that since they owned the resource, they could change the terms if they wanted.

And that's what they did. They raised taxes on oil profits to almost 80%. Of course the oil companies objected and threatened to abandon their leases. The Norwegian government called their bluff and they backed down.

There's more at the link. H/t 3QD.

Amazon delivery, cheap and fast but irresponsible?

Patricia Callahan has a long article in tne NYTimes about Amazon's use of contract drivers to deliver its packages, "The Human Cost of Amazon’s Fast, Free Shipping". The deck:

Amazon directs the destinations, deadlines and routes for its network of contract delivery drivers. But when they crash, the retail giant is shielded from responsibility.

We learn:

In its relentless push for e-commerce dominance, Amazon has built a huge logistics operation in recent years to get more goods to customers’ homes in less and less time. As it moves to reduce its reliance on legacy carriers like United Parcel Service, the retailer has created a network of contractors across the country that allows the company to expand and shrink the delivery force as needed, while avoiding the costs of taking on permanent employees.

But Amazon’s promise of speedy delivery has come at a price, one largely hidden from public view. An investigation by ProPublica identified more than 60 accidents since June 2015 involving Amazon delivery contractors that resulted in serious injuries, including 10 deaths. That tally is most likely a fraction of the accidents that have occurred: Many people don’t sue, and those who do can’t always tell when Amazon is involved, court records, police reports and news accounts show.

Even as Amazon argues that it bears no legal responsibility for the human toll, it maintains a tight grip on how the delivery drivers do their jobs.

Their paychecks are signed by hundreds of companies, but often Amazon directs, through an app, the order of the deliveries and the route to each destination. Amazon software tracks drivers’ progress, and a dispatcher in an Amazon warehouse can call them if they fall behind schedule. Amazon requires that 999 out of 1,000 deliveries arrive on time, according to work orders obtained from contractors with drivers in eight states.

And the law?

The law governing independent contractors varies by state, but it all boils down to control: Does Amazon control enough aspects of the drivers’ jobs to make it responsible for their actions?

The question of where companies draw the line is a contentious one that has spurred litigation and legislation. FedEx has settled lawsuits in recent years brought by drivers who argued that they functioned as employees, not independent contractors. Last week, Uber and Lyft announced that they would spend $60 million to contest a proposed California law that would force them to treat their contract drivers as employees.

In lawsuits, people injured in crashes and drivers in wage disputes have argued that Amazon retains so much control that it effectively is the drivers’ employer.

To counter that argument, Amazon says the contractors hire and fire their own drivers. Yet work orders and the court testimony of an Amazon manager reveal that Amazon can demand that contractors bar particular drivers from its delivery force. It directs and tracks drivers’ routes. And Amazon is the sole client for many contractors.

The leverage Amazon holds over its delivery contractors was at the heart of bankruptcy proceedings for one such company, Tenet Concepts, last year in Fort Worth. Tenet formed in 2015 just to serve Amazon. The retailer paid a flat rate for each of Tenet’s delivery routes, which the contractor used to pay 300 employees, records show.

Read the whole thing.

I've added this to my list of articles relevant to virtual feudalism.

The coming regulation of big tech? Yikes! We're not ready.

Kyle Langvardt and Alan Z. Rozenshtein, Sen. Hawley’s Bid to ‘Disrupt’ Big Tech, Lawfare, Sept. 4, 2019. From the conclusion:

We see five important takeaways from this trio of proposals.

First, they are willing to directly intervene in how technology companies design and operate their services. This is a striking change from what’s gone before, but it’s also a natural evolution of technology regulation. In the early days of the internet, the government took an intentionally hands-off stance. The past few years have seen increased regulation, but it took the form of empowering other actors—specifically, users—to act. Consider SESTA/FOSTA (and other attempts to limit Section 230 immunity); rather than regulating platforms directly, these laws authorize private litigation that pressures companies to improve their policies. Or consider data-privacy laws like the California Consumer Privacy Act (and the law that inspired it, the European General Data Privacy Regulation), which largely operate through a notice-and-consent process meant to empower users to control how their data is being used.

The Hawley proposals are much blunter. They identify certain practices and design features as harmful, and then they either ban them or attach penalties to them. No more infinite scrolls. No more loot boxes in kids’ games. Megaplatforms that violate new FTC standards on “political bias” in content moderation will be left to drown in potentially ruinous litigation over third-party content.

It is remarkable to see such measures come from the desk of an otherwise typical deregulatory conservative. The willingness of Hawley and his co-sponsors to regulate a leading economic sector at such an intimate level reveals a deep disillusionment with the current state of affairs and a lack of faith that anything but drastic measures will suffice. It also suggests they think they have found a ripe political target.

The second lesson is that regulation is hard. ...

Third, it’s dangerously easy for politics to obscure the bipartisan stakes. For example, Republicans are doing their best to make content moderation look like a partisan issue based on unfounded claims. Sen. Hawley and others have alleged, without any real basis, that lefty Californians at Google and Facebook use content moderation to undermine conservative views they disdain. This unsupported paranoia distracts from the copious evidence of general arbitrariness in platforms’ policies, in terms of both their application and the platforms’ tendency to change their policies seemingly on a whim….

A fourth observation: Any attempt to directly regulate how technology companies design and operate their products will raise serious First Amendment challenges. ...

Such arguments point out the tensions inherent in the current expansive trend in First Amendment doctrine, which can sometimes seem to protect almost everything tech giants do. But the practical realities suggest this can’t be right—does the First Amendment really require the government to jump through tiers-of-scrutiny hoops any time it wants to regulate the largest and most powerful companies in the world? Whatever concerns one might have about the Hawley measures specifically, there is probably some role for the kind of direct design regulation that Hawley has proposed. How First Amendment doctrine will accommodate that role remains unclear.

Finally, although it is virtually certain that none of these bills will get a Senate vote, let alone become law, it is a mistake to write them off as stunts (even if Hawley is particularly good at trolling the technology industry) or as the clueless rantings of the techno-illiterate. It is wiser to take them seriously, even if not literally, and consider their potential (at least in better-drafted form) to expand an often-stagnant discussion around tech policy in a new and dramatic direction.

Hawley—at 39, the youngest member of the Senate—is clearly knowledgeable about and comfortable with technology, and he has been squinting at the technology industry since he was Missouri’s attorney general. The Hawley measures have many flaws, but they are not behind the times. Instead, their most fundamental provocation is that they attempt to think ahead to an unsettling future. American scholars and legislators are used to assuming that free speech and the free market walls off software from design-based regulation and that software design is unregulable by nature. Whatever their other problems, the most provocative aspect of the Hawley bills is that they challenge this laissez-faire consensus. …

The Hawley proposals—expansive, invasive, constitutionally uneasy—show just how hard it will be to reconcile big tech with the premises of a free society. The bargain with today’s attention merchants has concentrated a stunningly inappropriate amount of power in the hands of a small and unelected group of individuals. The Hawley proposals envision a public regulatory platform big and aggressive enough to match that power. One thing is for certain: It won’t be pretty.

While you're at it, take a look around the corner at  Virtual Feudalism in the Twenty-First Century and Denmark has appointed an ambassador to Silicon Valley...

Virtual Feudalism in the Twenty-First Century

A new working paper by me and Abbe Mowshowitz. Title above and abstract below. Download at Academia.edu: https://www.academia.edu/40251657/Virtual_Feudalism_in_the_Twenty-First_Century.

Abstract:  Computer-based mediation and brokerage, coupled with the expanding role of information technology in a globalized economy, has political, social, managerial, and economic consequences which manifest themselves in the virtual organization. Virtual organization is founded on the separation of requirements from the ways in which requirements are met. One result of this separation is a weakening of personal, political, and business loyalties. Absent a sense of loyalty to persons or places, virtual organizations distance themselves—both geographically and psychologically—from the regions and countries in which they operate. This process is undermining the nation-state, which cannot continue indefinitely to control virtual organizations. A new feudal system is in the making, in which power and authority are vested in private hands but which is based on globally distributed resources rather than on possession of land. The evolution of this new political economy will determine how we do business in the future. This paper explores these issues by presenting three fictional scenarios each centered on a different person.

Denmark has appointed an ambassador to Silicon Valley...

... and Silicon Valley, of course, is not a sovereign country. It is a loose collection of powerful tech companies in Northern California.

Adam Satariano, The World’s First Ambassador to the Tech Industry, NYTimes, September 3, 2019:

Casper Klynge, a career diplomat from Denmark, has worked in some of the world’s most turbulent places. He once spent 18 months embroiled in reconstruction efforts in Afghanistan. For two years, he led a crisis management mission in Kosovo.

Yet Mr. Klynge, 46, says his toughest foreign posting may be the one he has now: as the world’s first foreign ambassador to the technology industry.

In 2017, Denmark became the first nation to formally create a diplomatic post to represent its interests before companies such as Facebook and Google. After Denmark determined that tech behemoths now have as much power as many governments — if not more — Mr. Klynge was sent to Silicon Valley.

“What has the biggest impact on daily society? A country in southern Europe, or in Southeast Asia, or Latin America, or would it be the big technology platforms?” Mr. Klynge said in an interview last month at a cafe in central Copenhagen during an annual meeting of Denmark’s diplomatic corps. “Our values, our institutions, democracy, human rights, in my view, are being challenged right now because of the emergence of new technologies.”

He added, “These companies have moved from being companies with commercial interests to actually becoming de facto foreign policy actors.”

Note that after two years on the job he has"never met with Mark Zuckerberg of Facebook or Sundar Pichai of Google or Timothy D. Cook of Apple." A bit further on: "Denmark is emblematic of the many small countries that are grappling with technology’s effects on their societies and are frustrated by an inability to meet with, let alone influence, the companies causing that disruption." This sounds like a job for Charlie Keil's GOOD, (Global Organization of Democracies) which is tilted toward the world's smaller democracies.

See also, this post,  Tech Firms Are Not Sovereigns, Sept. 27, 2018. See as well this passage from The New World Order of Virtual Feudalism (scan down the page a bit), an article which I had originally ghosted for Abbe Mowshowitz:

A major consequence of multinational organization is that corporate interests no-longer coincide with the interests of a particular nation-state. The alignment invoked in the infamous assertion from the 1950s that "what's good for General Motors is good for the nation" no longer obtains. General Motors' good needs to be counted up in many nations and, for example, what's good for a General Motors plant in Mexico may not be good for a General Motors workers living in the United States, who may in fact lose their jobs to that Mexican plant.

In the world of virtual feudalism more and more economic activity falls outside the jurisdiction of nation states.  [...] The boundary between public and private organizations and institutions is dissolving. We are moving into a world of institutions of various sizes having overlapping and even conflicting jurisdictions and mandates, a world reminiscent of the feudal world where individuals negotiated their way through duties and powers emanating from a diffuse network of duchies, kingdoms, churches, guilds, towns, manors, and empires.

Tech Firms Are Not Soverigns

This is a very important issue: Andrew Keane Woods writing at Lawfare:

Technology firms are extraordinarily powerful. They control vast sums of money. They serve unprecedentedly large customer bases—in some instances, larger customer bases than any nation on earth (Facebook now has over 2 billion users). Tech firms implement rules on their platforms in a law-like manner, often in ways that are as consequential or more than any law on the books, and they regularly resist state regulatory efforts. This has led a number of people to suggest that tech firms are sovereigns (and, often, sovereign in ways that large firms before them were not).

I disagree, and this essay explains why. Even if we can agree that tech firms play all sorts of state-like functions, it is not helpful to think of them as sovereigns. This is neither a descriptively accurate nor a normatively desirable way to approach the central regulatory challenge of the global internet. It frames the key regulatory challenge—and the central power struggle—as between states and tech firms, when in fact it is a struggle between states.

The question is not can states pursue their goals vis-à-vis global tech firms, but rather: which states and how? This essay does not set out to address these questions—for a start at that, see my article, “Litigating Data Sovereignty,” forthcoming in the Yale Law Journal. Rather, this short essay provides reasons to be skeptical of claims that tech firms are sovereigns—either on their own or as compared to other large firms like Walmart or Coca-Cola.

Comments are very welcome.

Cf. See this post, Will Trumpism Usher in the Kind of Dystopian Future Depicted in Some Science Fiction?, which presents Abbe Mowshowitz's concept of virtual feudalism.

King Trump Assembles His Court

I was struck by a passage in a NYTimes editorial for 12.12.16, “Flawed Choices for the State Department”. It was primarily about the choice of Exxon Mobile CEO for secretary of state (and secondarily about John Bolton as deputy), noting that he “knows scores of world leaders”. I was particularly struck by this paragraph:

Steve Coll, author of “Private Empire: ExxonMobil and American Power,” wrote in The New Yorker that in nominating Mr. Tillerson, Mr. Trump would be “handing the State Department to a man who has worked his whole life running a parallel quasi state, for the benefit of shareholders, fashioning relationships with foreign leaders that may or may not conform to the interests of the United States government.” He added that “the goal of Exxon Mobil’s independent foreign policy has been to promote a world that is good for oil and gas production.”

I was particularly struck by the phrases “parallel quasi state” and “Exxon Mobil’s independent foreign policy”, for they reminded me of the concept of virtual feudalism that my friend and colleague Abbe Mowshowitz developed back in the 1990s.

He wrote a book about it, Virtual Organization: Toward a Theory of Societal Transformation Stimulated by Information Technology (PDF); here’s a passage from the publisher’s blurb:

Computers mediate between individuals by providing channels of communication in the form of messaging systems; they act as brokers in matching buyers and sellers, employees and employers, resources and work processes, and so on. The social significance of computers as mediators and brokers has tremendous political and economic consequences. For managers, these consequences manifest themselves most clearly in the virtual organization, which is founded on the separation of requirements, for example, inputs such as components, from the ways in which requirements are met, or satisfiers, for example, suppliers and distribution networks. Separating these elements allows managers to switch easily from one way of meeting a requirement to another. Used systematically, switching brings huge increases in productivity but it also weakens traditional loyalties. Absent a sense of loyalty to persons or places, virtual organizations distance themselves from the regions and countries in which they operate. This process is undermining the nation-state, which cannot continue indefinitely to control virtual organizations. A new feudal system is in the making, in which power and authority are vested in private hands but which is based on globally distributed resources rather than on the possession of land. The evolution of this new political economy will determine how we do business in the future.

The result, Abbe argued, is that the world will evolve to a condition where nation-states are gravely weakened relative to the power of large transnational corporations. The result will be a neo-feudal world ruled by a global oligarchy of business elites and their government cronies at the expense of an immiseration global peasantry, many of whom are desperately trying to cling to illusions of middle class life.

Is President-Elect Donald Trump now in the process of using cabinet appointments as a ruse to assemble the Lords and Ladies to the court of His Royal Highness, King Donald, First Emperor of the World?

While other rich men have been elected President (e.g. Franklin D. Roosevelt) none have had the wealth or worldwide business interests that Trump has. How will he separate his foreign policy from his business interests? As a preface to an enumeration of these business interests, Libby Nelson of Vox notes:

The most positive outcome of these entanglements could be that Trump pursues win-win deals that enrich both the country and himself. But these same relationships could lead him to act and react in ways that distort the economy, tilting it in favor of his own interests, and changing the United States’ foreign policy to benefit him rather than the country. It could also distort the economy, rewarding allies at the expense of other companies, stifling growth.

Even if the worst-case scenario doesn’t come true, Trump has clearly demonstrated he has little interest in meaningfully separating his businesses from his presidency. Because many Trump businesses bear the Trump name, the president-elect will be aware of where his interests are even if he hands the reins of the business to his adult children, as he’s said he will do.

Has he in effect chosen Tillerson as his Baron of Oil and Fossil Fuels? His cabinet is fast filling up with business executives and business-friendly politicians. In addition to Tillerson we’ve got the following executives:

• Andrew F. Puzder, CKE Restaurants, Secretary of Labor
• Linda McMahon, World Wrestling Entertainment, Small Business Administration
• Steven Mnuchin, Goldman Sachs, Treasury Secretary
• Wilbur Ross, WL Ross & Co., Commerce Secretary
• Betsy DeVos, Windquest Group, Secretary of Education

How will these people address one another in meetings of the Cabinet Court? Lord Andrew? Dame Linda? Sir Steven? Your Highness?

Who is going to be Court Jester?

* * * * *

Before Abbe wrote his book he asked me to ghostwrite an article about virtual feudalism. He was unable to find a publisher for it, so I’ve reprinted it at New Savanna. I organize it around capsule accounts of the lives of three people and accompanying commentary, Molly Mckenna: The Corporate Lord and the Impoverished State, Robert Wong: New Loyalties and Citizen Action, and Jarvis Roosevelt: Whither Liberty and Justice for All?

Will Trumpism Usher in the Kind of Dystopian Future Depicted in Some Science Fiction?

Has the election of Donald Trump as President made a dystopian future more likely? (If you wish, skip over the accumulated preliminary matter and go straight to "The New World Order of Virtual Feudalism".) As that dystopian future hasn't been advancing as quickly as I'd imagined in the original article, I've changed the dates, leaving the old ones behind, but crossed out.

* * * * *

The NYTimes has just published a piece in which Teresa Tritch recalls an essay Andy Grove published in Bloomberg Businessweek in 2010: "According to Mr. Grove, Silicon Valley was squandering its competitive edge in innovation by failing to propel strong job growth in the United States." That critique reminded me of a piece I'd published here too and a half years ago, but which I wrote back in 1997. I'm bumping that to the top of the queue, along with the short preface I gave it in 2013.

* * * * *

Over at Crooked Timber they’re having a discussion of the software SNAFU that’s occurred in the rollout of Obamacare. As anyone in the software biz knows, that’s just how it is with large software projects. The thread title suggests something more interesting and far more sinister: Neo-Liberalism as Feudalism.

That title reminded me of the work of Abbe Mowshowitz, whom I met when I was on the faculty at The Renssalaer Polytechnic Institute back in the previous century. He was interested in how the deployment of computer technology was creating virtual organizations that, he believed, would lead to a virtual feudalism:

Absent a sense of loyalty to persons or places, virtual organizations distance themselves—both geographically and psychologically—from the regions and countries in which they operate. This process is undermining the nation-state, which cannot continue indefinitely to control virtual organizations. A new feudal system is in the making, in which power and authority are vested in private hands but which is based on globally distributed resources rather than on possession of land. The evolution of this new political economy will determine how we do business in the future.

Here’s an essay I ghosted in Abbe’s name back in '97 but which, alas, never got published. The ideas are his, the prose mine.

* * * * *

The New World Order of Virtual Feudalism

One might imagine that, in 2020 2030 a person could be brought to trial on criminal charges in a court convened by a private corporation under provisions granted by the United Nations. What is perhaps more difficult to imagine is a world in which such an institutional arrangement is the solution to a pressing problem, and that a wide range of individual and corporate actors would agree to such an arrangement. At the moment we live in a world where criminal prosecution is primarily a power of nation-state authorities, with the United Nations being an organization created by states and having no direct power in the private sector. This imaginary trial thus violates fundamental distinctions governing our political life.

Yet I believe that such arrangements are not only possible, they are inevitable. New actors -- most noticeably, large multinational corporations -- have come to dominate the world's advanced economies. Increasingly these organizations are operating in a seamless global marketplace. Ironically, as the marketplace becomes global, the great nation states and empires are fragmenting into smaller and smaller units. Large companies have more wealth and power than small states. These developments conjure up visions of the brave old world of medieval feudalism, in which the role of the nobility will be played by corporate executives assisted by employee-vassals who rule over legions of latter day serfs.

Day by day the emerging new world order looks like a virtual feudalism. In thus talking of feudalism I am not, however, asserting that our immediate future holds a regression to the distant past, though there may well be regressive elements. Rather, I think that we are increasingly living in a world which exhibits patterns of social organization and action characteristic of feudal societies, such as fragmented authority, private security arrangements, and a highly permeable boundary between private and public activity. This feudalism is "virtual" because these patterns reflect non-territorial organizational arrangements made possible by information technology rather than being rooted in the customs of land ownership and tenancy which existed in medieval Europe.

To get a feel for this future let us consider the life of three different individuals who are born in the current world and move into middle-age as virtual feudalism unfolds.