The dynamic process of capitalism in providing for human needs and wants relies on pricing that which has value. Pricing facilitates exchange. It internalizes the multiple values meaningful to buyers and sellers.
The internet, like markets, provides for the needs and wants of its users. It creates goods which have value. Who, then, gets to price these goods and who gets to buy them?
Should internet platforms be regulated as markets often are to protect consumers from exploitation?
On the one hand, the goods provided by internet platforms to its users are price-less – they are free. The users of such platforms are free riders. Use of platforms is undisciplined, not subject to the usual market rationality of price elasticity with an opportunity cost to the user only of how the time spent in consumption could be alternatively spent. Consumption of what internet platforms offer is a pure intangible value play; there is no cash nexus between provider and consumer.
So what is the business model at work?
As with television and radio, the internet takes advantage of electromagnetic waves. It uses electromagnetic technologies to provide convenient “entertainment,” “infotainment” and social connectivity with which to attract an audience. Platforms sell attractions to pay for the time spent absorbing their content in order to obtain suppliers of consumer preferences and personal data. Access to those preferences and data can then be priced and sold by the platforms as a “good” desired by certain specially interested purchasers.
Those who consume the free goods provided by the platforms are actually suppliers of what the platforms sell in order to make profits. The value which users of platform services provide is 1) the potential to purchase goods and services for cash and 2) the data they provide to the platform about their likely purchases and other actions they are disposed to take. The platform sells this value to their real customers – advertisers and others seeking to exploit collected user data. The cash proceeds received by the platforms from their customers is not shared with the suppliers of the potential spending preferences and other data which the platforms sell.
The data provided to the platforms by those who use them is a new form of wealth which can benefit many companies and others, such as political actors and issue advocates.
In a recent speech, Microsoft CEO Tim Cook took pains to point out features of this new wealth which raise ethical issues of responsible conduct on the part of platform companies.
His full remarks can be found here.