The information technology (IT) industry is taking a problematic trajectory, with major corporations running on business models that heavily rely on gathering personal data and manipulating user behavior.
If left unchecked, this “surveillance capitalism business model” poses an important threat to liberal democracies, providing further tools for repression to autocratic regimes, and threatening the quality of life of consumers.
To address this complex issue, a multifaceted approach must be deployed, involving pressure from civil society, alternative technological development, and regulatory responses, a doctoral thesis by Marvin Landwehr of the University of Siegen in Germany says.
The paper, titled “Surveillance Capitalism and two Cases of Currency Innovation”, explores the dominant business model behind the world’s largest free Internet services, highlighting their “devastating societal spillover” and exploring some of the solutions to address these issues.
The rise of surveillance capitalism
According to the report, the IT industry is taking a concerning direction, especially considering the rise of surveillance capitalism. Surveillance capitalism refers to a business model where companies profit by collecting and analyzing vast amounts of personal data from individuals, often without their explicit consent, and then using that data to influence user behavior for commercial gain.
The problem with surveillance capitalism lies in several aspects. For one, surveillance capitalism collects extensive personal data which are then used to manipulate and steer consumers’ behavior towards specific actions or purchases without their awareness. The model also prioritizes profit over user welfare, leading to exploitative practices such as monetizing user data without adequate compensation or consent.
Furthermore, the extensive gathering and analysis of personal data can undermine democratic processes by enabling targeted political messaging, manipulation of public opinion, and erosion of privacy rights. Finally, companies that excel in surveillance capitalism often achieve significant market dominance, creating monopolistic conditions that hinder competition and innovation.
In light of the rise of surveillance capitalism, the paper outlines suggestions for citizen education and resistance, highlighting the need of continued discussion and exposure of the extent of surveillance and political and other behavior manipulation.
The paper also formulates a set of technological considerations, stressing the need to design technology that decentralizes data ownership and communication. It notes that existing technologies can support alternatives to surveillance capitalism, citing key innovations including open source software, which allows for transparency, collaboration and building upon existing code; application programming interfaces (APIs), which facilitate adversarial interoperability and portability, encryption, which is crucial for safeguarding user privacy; and peer-to-peer (P2P) systems, which can bypass central control, offering alternatives in situations with power imbalances or risks of coercion or censorship.
The paper notes that while blockchain is a relevant technology that adheres to the theme of decentralization, their fundamental limitations, including issues relating to energy and the scalability, disqualify it in this case. Instead, the report recommends the use of post-blockchain distributed ledger technologies (DLTs), citing the examples of IoTA and Hashgraph in particular.
On the regulatory front, proposals include enforcing informed consent and promoting adversarial interoperability to combat user exploitation and monopolies.
The Case of Facebook Digital Currency
The paper then connects this discussion to two currency case studies. The first case study examines Facebook-backed digital currency project Diem, noting that while the firm presented a currency with an architecture that uses a blockchain variant and despite claims of decentralization, Diem shared the orientation of surveillance capitalism to a large extent, boasting an architecture that was prone to use payment data to fuel consumerism.
The second case study examines a Community Supported Agriculture (CSA) project in Germany, experimenting with alternative currencies within a sustainable agriculture framework. In the Luzernenhof case study, the report notes several innovation gaps, particularly in making these properties accessible through software for other CSAs and enabling cooperative distribution and accounting for alternative food networks. Moreover, it suggests exploring DLTs other than blockchain and centralized databases to align with community values of sustainability in future software design.
The thesis builds on previous work by Harvard Business School professor Shoshana Zuboff who has warned in her books about how tech giants are mining user data, analyzing them and selling them for predictive purposes, arguing that surveillance capitalism is hindering autonomy, eroding democracy, and fostering societal inequality.
For Zuboff, Google, Facebook, and increasingly Microsoft have emerged into three paradigmatic cases of surveillance capitalist companies. Rather than the previous model of selling hardware or software for use, they have all come to demonstrate a model in which they provide users services in return for appropriating their data.
Featured image credit: Edited from freepik