August 18

Will tech companies eventually do right by consumers?

Regulation be damned

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Despite the introduction of regulation in the form of The GDPR and The EU and ICO flexing their punitive muscles by handing out record fines for data protection infractions, the conduct of companies such as Cambridge Analytica, Facebook and Google has raised doubts in the minds of consumers regarding the importance product and service industries attach to the value of long-term customer relationships.

Since the development of customer data sets facilitated the rapid growth of the Direct Marketing industry – the first marketing revolution to challenge the supremacy of brand advertising, businesses have focused on developing LTV though CRM – almost as much as they have acronyms). Good Customer Relationship Marketers have always understood, appreciated and respected the value of personal data. The world that Google and Facebook created had gone beyond the commoditisation of data. It sees data as a natural resource to be mined and exploited in return for access to advertising, email and social media tools. If you have seen the TV Series, Deadwood, you know that a goldrush-type scenario has a few winners and a lot of losers.

Consumers are either aware of the ‘mutually-beneficial’ trading relationship they have with media and tech giants or are blissfully unaware that every open, like, share, follow, comment, purchase, location, click and digital interaction is harvested and sold to the highest bidder. And let’s not forget that Alexa and Siri are a furtive presence at some of the more intimate moments of our lives. Just think about that for a second. My daughter has a boyfriend called Alex. You only have to mention his name in front of Alexa to be interrupted by her confession that she couldn’t comply or apologise for not understanding the question. I also have students who are briefed to mention a remote/exotic holiday location for the first time in front of Facebook and then count the seconds, minutes and hours before ads on that location start popping up in their timeline. Just how much do the really know? How much do they hold back on what they know in case it freaks us out. Remember when IBM Watson crushed the long-term human champions of Jeopardy in a head to head contest, IBM slowed the AI system down so as not to embarrass the vanquished.

Mind reading AI

Amazon, who spend $22 billion a year on customer and product service R&D each year, declare that their ambition is to “Know what you want even before you have thought of it!” The thing is, it’s not a slogan. It is a fact. They know more about your buying habits than you do. You only order a new can of aftershave when it runs out on what appears to you to be an ad-hoc basis. Their investment in Machine Learning and IoT looks deeper. It finds patterns and will eventually ensure the product arrives in time so that you never, ever, ever, ever run out. It will also notice when you run out of time. As Jim Morrison of the Doors said, “No one gets out of here.” We all shuffle off this mortal coil eventually. Amazon’s AI system will continue to string structured and unstructured data together about you even in the afterlife. Ever wondered what happens to all that data you have been busy generating and uploading? The content we “own” is, in reality, licenced. It is stored and encrypted on the cloud and our friends and family will have no right to access after we die.

Don’t get me wrong, I am fully prepared, while there is globally warmed breath in my body, to delegate repetitive and boring chores to my digital avatar in the hope of digital immortality, but is having your data mined posthumously and for all of eternity good for humanity?

Think of it this way. Millions of little everyday chores get delegated to a company that sucks up more and more data while employing fewer and fewer people. The same company makes billions out of our collective data while offshoring the income to a tax-free account. At some point, the substitution of capital for labour has become so prolific that few of us are working and can afford the goods. The data dries up. The credit boom runs out of headroom. Even Amazon becomes a thing of the past.

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Blockchain unlocks the value chain

At some point, we will both end up on the shores of lake mutually-assured-big-data-destruction. Isn’t it time, we shared in the good fortune of Page, Brin, Zuckerberg et al? Can they not afford to actually pay us relative to the effect our data has on their bottom line? I post a picture of me on holiday. Someone sees it, likes it and eventually ends up booking the same break. It is not beyond the forecast potential of Quantum Computing, blockchain, UGC and Waze-esque apps to see the development of a mutually beneficial network relationship that rewards me for being an unwitting salesperson? What use is Google without all the people who are mugged for their content on a daily basis?

At some point the demigods of digital will have to change their business models. Between that unicorns do exist moment and now, we are way off the pace in terms of regulation. The fact is the EU is the only regulatory body with the cajones to take on the likes of Google.

To big to worry about fines

In July 2018, the EU fined Google $5.1 billion dollars. Do you know what for? Because they had been found guilty of abusing their power in the mobile phone market. The antitrust fine accused of them of favouring their own search results in favour of its own services. Do you know how much they turned over in 2018? According to Statista, $136.22 billion dollars. So, they can probably have fun making legal appeals against the findings for decades/centuries/millennia and still be in profit.

The prequel to this relatively inconvenient fine was the puny $122 million fine Facebook received in 2017 for providing misleading information during its 2014 acquisition of What’s App. They claimed they couldn’t automatically match Facebook and what’s App User identities. They lied. They probably laughed too. They stumped up $19 billion for What’s App. When you put it context, £122 million looks less punitive than it first appears.

Mind you, the EU compliance team were probably busy in 2017. They fined Google $2.7 billion for giving its shopping service an illegal advantage in search results.

I expect the list of mega-fines imposed by the EU to grow until companies adopt a more ethical and sustainable approach to corporate social responsibility. They know the value of our collective data. They don’t have a business without us. They have built something that is so powerful it can influence election results, shape opinion and culture and influence the decision-making processes of billions of people.

Time to stop and think for a nano-second 

The power to target on a one-to-one basis at such scale and in real-time is a phenomenal technological achievement that regulation has yet to fully understand. It was a dream that came with a prescient warning in a book, The One to one Future written in the early 90s by Martha Rogers and Don Peppers. This thought-provoking polemic introduced the concept of a technology-generated discontinuity.  The shift form mass to micromarketing was an emerging dream. Don predicted that “communications and information technology now on the near horizon would totally eliminate the underlying basis for mass marketing itself.” He actually delivered that message to admen whose career depended on mass marketing for a very lucrative living. They were smart enough to go out and acquire direct marketing agencies. Some of them went on to invest in digital agencies. None of them had any idea of what they were getting into.

The reason for this short-sightedness is not a lack of vision. They and we are simply being overtaken by events. This launch timeline tells its own story:

  • 1976 Apple
  • 1994 Amazon
  • 1998 Google
  • 2003 Facebook

Life is nothing like it was in 1976, the year we discovered that CFC’s (Chloro-fluorocarbons used in Aerosol Cans) were damaging the Ozone layer. Now we have NASA’s “Earth Now” app which displays real-time global satellite data of our planet’s vital signs. I just checked. I wish I hadn’t.

The aforementioned companies have spent the intervening years building and developing our emerging one-to-one world, but it was 2007 that saw it become a reality. In 2007, the following long-term one-to-one game changers slipped into reality while bankers were busy initiating a full-scale global meltdown:

  • Apple – introduced the iPhone
  • Hadoop – helps Yahoo run clusters of 1000 machines
  • GitHub – enables developers to write and collaborate on software development
  • Bitcoin – Satoshi Nakamoto conceives the digital currency and payment system
  • Google – releases Street View and Android
  • Amazon – launches Kindle
  • Airbnb – concept developed
  • Plantir Tech – uses AI to find needles in the biggest Big Data haystacks
  • IBM – start building Watson to push the envelope on deep question answering
  • Intel – introduces non-silicon materials into microchips
  • Netflix – introduces video on demand via the internet
  • AMD – introduces quad-core technology
  • Adobe – introduces AIR cross-platform environment for mobile devices
  • Dropbox – improves synchronised data storage and file transfer capability

Taken individually, these breakthroughs are significant markers, together they facilitated a hyper-acceleration in technological development. For the first time in history technology is outstripping human adaptability. Not since Darwin first suggested that evolution is about survival of the most adaptable have we needed to realise that what got us here, won’t get us there.

There?

There is a point in the future described by Ray Kurtzweil as the Singularity. According to Kurtzweil ‘s interpretation of Moore’s Law, the Singularity is a potentially extinction-facilitating event in which AI outstrips human capacity to understand or control it. The due date is 2045 and it may turn out to have epidemiologically fatal consequences. We are not even sure AI will like us.

What an Eton mess

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As recent political upheavals have indicated, we are not intellectually, institutionally or collectively equipped to embrace the opportunities of this hyper-accelerated world. Eton and Harrow have spawned a generation lacking the wherewithal the govern in a data-driven world where facts get in the way of one’s ability to start a World War on a whim.

Even the biggest corporations are realising they need to work together to solve the really big problems in business. Meanwhile politicians are fighting the same old bipartisan wars of old. Round and round in ever decreasing circles they go while the world has realised it needs to move on without them.

Advances in mix and match mobile communications, Big Data and service technologies and human problem-solving genius have created disruptive business models such as Uber and Airbnb and Netflix, but it has also ushered in globalised abuse of customer data (Cambridge Analytica) and Fake News (Facebook). Precision targeting, unregulated lies and billions of vested-interest dollars now have the potential to smash economies and put the bricks and mortar businesses that employ the majority of workers out of business. Currently unfettered, they appear to have the power to bring diplomacy and democracy in the Western world to breaking point.

The point is, the rate of progress continues to accelerate at a pace we cannot comprehend, let alone manage, and is in danger of getting away from us completely. We need to take a moment to rethink the fundamental relationship between business, government, technology and humans. We need to plan, create an deliver a combinatorially innovative environment designed, as George Monbiot suggests, to enable everybody to flourish. The fact that we now have trillion-dollar companies while food banks are growing is manifestly absurd. The fact that billions of people use smartphones to make sense of the world while politicians have become the grotesque demigods of spin, obfuscation and bullshit isn’t the way forward.

Small is the big idea

99.9% of all businesses in the UK are SMEs. They are not focusing on AI, IoT and AR. They are simply trying to put sales on the table, improve customer service and make sufficient profit to keep the lights on. Between them and success, stride the tax-dodging tech giants. Sir Martin Sorrel once described the likes of Google and Facebook as the, “Frenemy.” He called them the F word because they grow on benefits that are not available to SMEs. They dominate the attention spans of time-poor consumers. Our in-boxes and browsers stuffed to the gunnels with irrelevant digital litter. The agencies spewing out this hit and miss content are already being replaced by crowdsourcing platforms and UGC collectives. 20% of the digital workforce is already productively embedded in the gig economy. Smarter agencies are meshed into the client’s business canvas model where they share risks and rewards equally. Less is the key to more.

I am losing your mind

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I have spent decades training digital marketers to realise that they key to success is to work out how to spend as little as possible to gain more than you ever thought possible when you started the planning process.

The client reduces investment waste while iteratively optimising ROMI. The customer sees fewer irrelevant ads and the communications they see are relevant to context, time, place, channel, budget and moment. Seems fair.

The drive to automation is not the answer. We need to make UGC part of the process and we need to pay consumers for their contribution to the acquisition, conversion and retention process.

Blockchain has the chance to help us to develop a universally reciprocal network of technology companies, brands, consumers and facilitating intermediaries. A properly regulated, monitored system that is guaranteed to deliver a mutually beneficial micro-attributed model. It may well facilitate the end of those too big to fail banks as we know them. It may put an end to the abusive practice of Corporate tax avoidance. It may be the key to new levels of hyper-productivity and sustainability.

Some parts of the world have a plan

China has a plan to change the economic and societal value chain, moving beyond heavy industries towards information-intensive infrastructure. It plans to reduce the wealth gap between urban and rural areas and become integrated into the global community. That sounds like a plan that may have avoided the destruction and division of Brexit.

This is a screen grab form the day after the Brexit referendum in 2016.

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The day after! FFS. Not much has changed in the intervening years.

Time to play the long game

The future isn’t east v west in a hyper-competition free for all. It is a world where harnessing the hyper-accelerative forces of data, technology and human resources could help us evolve as a species that understands the significance of life on the only planet we know. And we need to do that before AI does it for us or the planet kicks us out of the house.

Life after monopoly

It’s not about who has the most money. It’s about a world of creativity and collective equanimity in which the power of the many is derived from the flourishing of each individual’s potential. Sooner or later, the tech giants must join the ranks of the SMEs in paying their fair share of the tax burden. They could effortlessly support a more productive and sustainable narrative. We cannot benefit from hyper-tech acceleration without them. They don’t have a business without us. Governments cannot invest in infrastructure, education and health without being able to collect tax.

Imagine a business model where the owners and the staff are partners? You only have to make customers and regulators partners to complete the model. It sounds a bit like John Lewis plus. Note: I am not talking about a loyalty card that gets you a piece of gluten-free cake when you have spent over a billion pounds. I want a share of the action in return for my more-than-a-mere customer contribution. If I tell a friend or share a review that gets a new sale, I get a kickback. If technology makes this process automatic, the potential for mutual gain is infinite. Imaging that I use a new Sebo hoover at home. I sends data about the use to a central repository. A prospective customer looking for a new hoover sees the semi-autonomous review and subsequently makes a purchase. The system attributes a value to my contribution and I get a reward added to my JL pot. I have pots parked with all the brands I use. A blockchain pot bank becomes an asset that can be developed, traded, cashed-in, shared, exchanged anywhere in the world. What goes around, comes around.

I am not saying playing fair will be easy. As a concept, it will be utterly alien to most CEOs and owners. But boundless greed is not good. Gordon Gekko was a fictional composite of the kind of arseholes who brought about the banking crash of 2007 and the subsequent collapse of the global economy. The very same year, more creative and collaborative forces were turning on the hyper-acceleration engine that offers such extraordinary potential, Unfortunately, the process is in danger of leaving us floundering in its backwash.

Small gives big a lot to think about

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I am sure there will always be mega-corporations but they take too much credit for the origination of progress in the world. The vast majority of the working population works in SMEs that are far better at thinking and acting on their feet. For them, necessity is the long-term mother of invention. For big corporations, necessity means keeping the shareholders happy is the short-term obsession. SMEs are the power behind hyper-acceleration but they also share an unfair proportion of the tax burden. They need to find ways to work together with customers, intermediaries and regulators to take on the giants. Maybe then, the too-big-to-pay-much-tax tech companies will learn the value of doing right by their customers and learn to do the right thing before it becomes a matter of regulation.