[...] It demonstrates how deeply entrenched the largest internet companies and their surveillance model is with the profit system. They’re just in the bone marrow of modern capitalism — of our modern political economy. To go after that is basically going after the whole system, in a way. It would require that sort of organizing campaign.

Or to put it in terms of media analysis: no significant economic interests wish to open up critical public examination of the surveillance model of capitalism, so that means none of our political establishment — Republicans or Democrats — has any incentive to go there. Those few journalists who remain have little to work with from the official sources they rely upon, so the matter dies. It is no longer “news.”

Most of the people who designed the internet didn’t want it to be a commercial medium, and that’s why they made it that way. The problem with that for capitalism was that it didn’t make for a very successful commercial model. In the 1990s, there was endless talk of locating the “killer app,” the digital goose that would lay the golden eggs. Capitalists knew the internet was changing everything, but it seemed resistant to commercial exploitation. By the middle of the 1990s, Madison Avenue and the corporate community realized that if they were going to really have the internet be the nervous system of modern society, they had to make it advertiser friendly, they had to make it profit friendly. They had to commercialize it, and the crucial thing to doing that was introducing the capacity and the protocols for surveillance, knowing who exactly is online, everything about them. That began in earnest in the late 1990s and changed the entire logic of the internet — turned it on its head in many respects.

[...] here was a technology that conceivably could give corporations infinitely more power over consumers, not simply to advertise products, but to make sales. But that required wrestling away people’s ability to maintain their privacy, and doing so without their awareness of what was being done to them.

This movement was led, appropriately enough, by Procter & Gamble. The key was to find a way of tracking people’s internet activity so you could know who they were, where they were, and you could collect data on them. It didn’t begin all at once. It wasn’t an overnight 180-degree turn, but that process was underway by the mid-nineties, and then it was expanded to where we are today over the next decade.

The great Internet monopolies of Amazon, Apple, Facebook, Google (Alphabet), and Microsoft are different. They are global firms and do not depend upon government licenses for the market power. At the same time, they have extremely close relations with the US government and much of their work relies upon research and innovations first developed under military auspices. In just two decades, these five firms have conquered capitalism in an unprecedented manner. If you look at the largest companies in America today in terms of market value, the top five companies in the United States and the world in terms of market value are, in no particular order, Microsoft, Apple, Amazon, Google, and Facebook. They’re the top five companies in the world in terms of market value. It’s astonishing what a dominant role they play. They blow everyone out of the water and they are growing at breakneck speed.

I think that ten of the top twenty-four corporations in the US are internet companies, and fifteen of the top forty. The number of internet firms drops off sharply once you get past the top forty. There is not much of a middle class or even upper middle class in digital capitalism.

[...] these companies then undertake this very close surveillance, which then becomes available to the highest bidder for commercial purposes.

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[...] alongside this centralization of control there is also the fact that journalism itself is dying. The internet hasn’t caused its death, but it has accelerated it, and eliminated any hope for a successful commercial news media system that can serve the information needs of the entire population.

The roots of its decline stretch back decades. For the first hundred or so years in American history, newspapers were heavily subsidized by the federal government, in order to encourage a rich array of news media. No one at that time thought the profit motive operating in the “free” market alone would be sufficient to provide the caliber of news media the constitution required. This was done primarily through free or nominal distribution of newspapers by the post office — almost all newspapers were distributed by post in the early republic — and also by printing contracts handed out with the explicit intent to help support different newspapers, by branches of government. In combination, the annual government subsidy of journalism as a percentage of GDP in the 1840s would be worth around $35 billion in today’s economy.

By the late nineteenth century, the commercial system consolidated whereby advertising provided the lion’s share of the revenues, and the state subsidies declined in importance and, in many cases, disappeared. Publishing newspapers, building journalism empires, began to generate massive fortunes while continuing to provide owners with immense political power. This is the context in which professional journalism — purportedly nonpartisan, opinion-free, politically neutral and fact-obsessed — was spawned in the first few decades of the twentieth century.

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The basic problem is that the giant internet companies — especially Facebook and Google — are taking away the advertising money that would’ve traditionally gone to some newspaper or journalism-producing entity. But Facebook and Google aren’t using this money to invest in more journalists or news reporting.

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This looked like the transition, say, in the year 2000, that we would slowly be seeing. It wasn’t clear we would lose commercial journalism. But what happened with the surveillance model is that no one buys ads on a website. You don’t go to the New York Times and say, “Hey, I want to buy an ad,” and hope and pray my target audience comes and looks at your website and sees my ad. Instead, you go to Google or Facebook or aol , and you say, “Hey, I want to reach every American male in this income group between the age of 30 and 34 who might be interested in buying a new car in the next three months,” and aol will locate every one of those men, wherever they are online, and your ad will appear on whatever website they go to, usually straight away. They will find them.

That means the content producers, in this case the news media, don’t get a cut anymore. Those advertising dollars used to subsidize most of their work. Now, if they do get an ad on your site, they get much less for it, and they only get it for those users who are in the target audience of the person placing the ad, not everyone who goes to their site. If you and I were to go to the same site, we’d get different ads, probably, working for different products. The amount of money that the actual website gets is infinitesimal compared to what it would be if they got the whole amount, like in the good old days.

The commercial model’s gone, which is why journalism’s dying, why there are very few working journalists left. No rational capitalist is investing in journalism because of its profit potential. To the extent they invest, it tends usually be some hedge-fund douchebags buying dying media and stripping them for parts, or some billionaire like Jeff Bezos buying the Washington Post or Sheldon Adelson buying the Las Vegas Review-Journal, always at fire-sale prices. The point of the exercise in these instances is to use the newspaper to shape the broader political narrative to the owner’s liking, with very few other voices in opposition. That is hardly a promising development for an open society.

Exactly. It is a long-term phenomenon but surveillance digital technologies have enhanced its power by orders of magnitude. So in 2012, Obama did wonders with this approach in galvanizing his supporters and shaking them down for contributions. It only took another election cycle for these technologies to turn to the dark side: instead of trying to locate and cultivate potential supporters, use the power of this technology to demonize your opponent and undermine support for your opponent. This has proven to be the most frightening development by far.

No, I don’t think that can work. These markets tend toward monopoly. They’re easy to capture because you get tremendous network effects, which basically means that whoever is bigger gets the whole game, because all the users have tremendous incentives to go to the largest network. All the smaller networks disappear. When social media was starting up, there was initially great competition between Facebook and Myspace and one or two others. But pretty soon, once everyone starts going to Facebook, no one’s going to Myspace, because Facebook has so many more people on it. When you’re on social media, you go where everyone is. So all the other ones disappear and Facebook is all alone, and they’re left with a monopoly. That’s a network effect. McDonald’s hamburgers never got that. You didn’t have to go to McDonald’s to get a hamburger. You could go to other places still, so Burger King and Wendy’s can compete with them.

When you combine that, then, with traditional concentration techniques in capitalism, the massive barriers to entry — Amazon, Google, Microsoft, all five of these companies have to spend billions and billions of dollars annually on these enormous server farms and computer farms and their cloud, and in the case of Amazon, they have huge warehouses — that, along with network effects, pretty much precludes any lasting competition. So the idea that you can break up companies like that into thirty or forty smaller parts and have competitive markets doesn’t make any sense. These are natural monopolies, so to speak.

So that leaves two reforms. One is, you let them remain private, but you regulate them like the phone company was in America for a long time, AT&T. You let them make profits but hold them to public regulations, in exchange for letting them have a natural monopoly. To me, it doesn’t take much study to see that this is not realistic. These are huge, extremely powerful entities. The idea that you’re going to regulate them and get them to do stuff that’s not profitable to them — it’s ridiculous. Do you think you’re going to take on the five largest companies in the world and have that be successful? There’s no evidence to suggest that.

The other option is to nationalize them or municipalize them. You take them out of the capital-accumulation process, you set them up as independent, nonprofit, noncommercial concerns.

That’s probably the case. But, ironically, what I’m proposing hasn’t always been associated with the anticapitalist left. One person who wrote on this exact subject was Henry Calvert Simons, a laissez-faire economist from the University of Chicago, who was Milton Friedman’s mentor. He opposed the New Deal. He lived in the mid-twentieth century. Not a fan of labor unions or social security — a pure, free-market capitalist. But he wrote widely that if you have a monopoly that can’t be broken into small bits, the idea that you can regulate it is nonsense. This monopoly is not only going to screw over consumers, it’s going to screw over legitimate firms, legitimate capitalist enterprises, because it’s going to charge them higher prices. He said, the only thing you can do if you believe in capitalism is nationalize them. Take them out of the profit system. Otherwise, they’ll completely distort the marketplace and corrupt the system into crony capitalism. I think that’s true, whether you believe in capitalism or, like me, you are a socialist.

But as difficult as it may seem today, this is going to be an unavoidable fight. Cracks in the façade like the Edward Snowden revelations and the Cambridge Analytic scandal are chipping away at the legitimacy and popular acceptance of these monopolies, but we have a long way to go. The place to begin is to identify the problem and talk about it and get it on the table. Don’t assume the issue cannot be raised because there is no ready-made functional alternative in hand. In unpredictable and turbulent times like these, issues can explode before our eyes, but it helps if we lay the groundwork in advance.

Once you start talking about taking the center of the capitalist economy and taking it out of capitalism, well, then I think you’re getting, like you said, you’re getting to very radical turf, and that’s exactly where we’re pointed — where we have to be pointed.