Since last year’s Cambridge Analytica scandal, countless pundits, analysts, and tech experts have argued persuasively that major tech companies like Facebook should pay consumers for their data. A handful of forward-thinking business leaders are on board with the idea — just a few days ago, tech reporters discovered Microsoft’s plans to build a new “Data Dignity” team, whose areas of research include enabling consumers to buy and sell their data. Lawmakers are catching on as well. For example, at the federal level, a bipartisan group of U.S. Senators has drafted the DASHBOARD Act, which would require social media companies to disclose the value of consumer data.
These proposals are headed in the right direction. For years, consumers have been happy to hand over mountains of personal data in exchange for access to so-called “free” web services like email and social networking. Our personal data has helped companies like Facebook, Google, and Amazon become some of the richest in the world. However, while the biggest corporations of years past spent the vast majority of their income providing living wages to human workers, the tech-driven giants of today spend only a small fraction of that amount on labor (and wages are falling).
These businesses aren’t just hoarding consumer data — they’re hoarding the economic value that data represents, and they’re keeping their margins high by cutting wages and headcount wherever possible. This inefficient allocation of resources must be addressed, either by government regulation, or by the tech companies themselves. But where government intervention would likely be punitive (read: breaking up tech companies), a proactive response from the tech industry could prove to be a remarkable opportunity in the long run, and considerably less painful in the short run.
As it stands, the gluttonous behavior of today’s tech giants (Microsoft notwithstanding) has the potential to shut countless future workers out of an increasingly vital AI economy. In the worst case scenario, these companies will exacerbate income inequality around the world, precipitating the birth of a permanent global underclass.
Fortunately, all is not lost. As more and more jobs are automated out of existence, these companies could leverage the value of consumer data to create a new job market. In fact, paying consumers for their data might be the first step towards building a healthy AI economy where automation can co-exist with new forms of income and a thriving middle class. What’s more, this emerging AI economy could facilitate the creation of new income streams for workers that reward them for their expertise and unique knowledge, in addition to their data (far from a new idea).
Building a sustainable digital economy
We live in a world where the rapid progression of artificial intelligence and automation technologies is threatening to radically reshape our global economic systems, potentially eradicating millions of jobs in the process. These technologies offer incredible efficiencies that could very well eliminate most manual labor within our lifetimes, alongside many white collar jobs. Some new opportunities will spring up as a result, but that may not be enough to provide jobs for the 40% of workers who could be affected in just the next 15 years. This could result in millions of workers robbed of job opportunities and forced to rely on a universal basic income or some other form of government assistance.
This is all being accelerated by leading tech companies, who tend to be among the biggest innovators in AI and automation. For these giants, the elimination of human workers isn’t a “bug” in their increasingly automated business processes. It’s a feature. A March 2018 piece from the New York Times points out that businesses like Google and Facebook spend only about 5 to 15% of their income on labor. For more traditional players like Walmart, the share is closer to 80%. The AI economy is accelerating income inequality, and with only a handful of alternatives to our usual system of runaway capitalism, a revolution is all but inevitable.
The data market is still in its infancy, so it may not seem like a pressing issue now that today’s social networks only generate a few dollars per user at most, and that today’s businesses are far from achieving full workforce automation. However, over the long term, consumer data compensation could mean the difference between a sustainable future economy and a technological dystopia in which millions are permanently excluded from real job opportunities. Leaders in AI and automation have a moral imperative to find ways to integrate more people into the digital economy. Our industry must transition away from playing the role of modern day robber barons and work to build socially responsible platforms that reward people for their data, expertise, and skills.
Data is a resource, and data production is labor. With today’s tech companies deriving so much of their value from what is essentially unpaid labor, these companies have effectively enriched themselves by creating a form of digital serfdom. Data compensation is about more than fighting income inequality, or even just doing what’s right. It’s about mitigating the economic harm caused by our industry’s ruthless “winner take all” approach to consumer data. Royalty driven systems that pay people for the data that drives automation are not charities. They are integral to making the system work.
The efficient allocation of resources
In thinking about this subject, it’s helpful to return to British Nobel Prize-winning economist Ronald H. Coase’s seminal 1960 article, “The Problem of Social Cost.” In it, Coase asserts that “the economic problem in all cases of harmful effects is how to maximize the value of production.” That is to say, when confronting economic scenarios in which one party causes harm to another, the only way to truly ameliorate those effects is to create “an efficient allocation of resources” that maximizes the value of production — ensuring a healthy economic system for all. By creating a system in which consumers’ data-generating labor is entirely uncompensated, our industry is not only failing to maximize the value of that production, we are deliberately diminishing it.
If companies like Google and Facebook were really focused on ensuring their long-term success, they would be falling over themselves to pay consumers for their data to stave off the rise of a global underclass. After all, Google and Facebook want to live in a world where there are billions of people who have the time and resources to use their products, browse their advertisers’ offerings, and make the occasional purchase. Likewise, Apple wants to live in a world where millions of people can afford to continue purchasing the next slightly different version of the same iPhone every two years.
However, these industry leaders are actively working to build a future in which vast swaths of today’s global consumer class will be permanently underemployed or unemployed — replaced by AI systems and automation — and also trapped in the indentured servitude of uncompensated data production. For modern companies dealing in technology and consumer data, true corporate social responsibility means consciously working to build and sustain an economic system that rewards all who participate in it, not just a lucky few who sit at the top. Paying consumers for their data today could play a crucial role in helping shape a sustainable, equitable new AI economy — one that’s rich enough to support a robust consumer class for generations to come.
Because if we don’t upgrade capitalism for the AI economy, we might as well kiss capitalism goodbye.
This article originally appeared in VentureBeat.