by Vili Lehdonvirta cloud empires is a wonderful book. As the title suggests (and the fashionable chatty subtitle indicates just in case), the subject is the political power of the big digital platforms/gatekeepers and more specifically how, in their essential regulatory capacity , they regularly take on more state activities – but doing so without motives of public service (rather than profit) and without accountability: “The internet was supposed to liberate us from powerful institutions. … Then they delivered something different – something that still looks a lot like the government, except this time we couldn’t vote.
The book begins with the origins of the internet and digital platforms, including early libertarian hopes. The first section concerns platforms as economic institutions. One of the objectives is the functioning of online labor markets, including mTurk, but also the use of oWork/Upworker as a case study; the platform has become increasingly internally regulated as it has grown, setting a minimum wage, among other things – of $3 an hour, reflecting the globalization of online work. Another chapter is about privacy and its total erosion as platforms increasingly grapple with the need to enforce online social order at scale.
The theme of this first section is the transition from libertarian optimism about no control to a series of non-territorial but nonetheless tightly regulated platform domains, with platforms setting their own rules within their own jurisdictions – the sole responsibility being the ability of people to Pars. You could say that Albert Hirschman’s “exit” is the only option as neither voice nor loyalty have traction, and even that is limited by the power of network effects. The output should be collective to be effective.
The second section concerns the political power of platforms. It begins with a wonderfully astute chapter on cryptocurrencies, emphasizing (it has always been clear to me but apparently not to others) that they are not “trustless”, but simply displace trust. And yet many or most are inherently untrustworthy (to use At Onora O’Neill’s framing). “The crypto elite that run these organizations are, in any case, less accountable to people than conventional financial and regulatory elites.” Founders can be downright sincere and kind, and they can even come across as giving voice to their communities, but by writing the take-it-or-leave-it code, they’re imposing dictatorship. (And have clearly not read any of the vast literature on incomplete contracts….) Other authors such as Laurent Lessig I drew the comparison between the code and the law, but I found the social science perspective here very useful.
Another chapter examines how platforms have undermined traditional public institutions of healthcare and education. Neither rigs nor construction workers have any incentive to invest in training or a long-term relationship, and in the US, at least, that casual workforce has to rely on GoFundMe campaigns to cover medical bills. “Internet empires undermine the mechanisms of building and maintaining human capital in industrial society.” What will the essential social safety net look like in the platform economy?
The final chapter brings together the threads of the argument that platforms usurp the traditional nation-state. “Silicon Valley technologists only reinvented the economy in the sense that, through trial and error, they rediscovered much of what states already knew. Instead of revolutionizing our social order, they reimplemented it with computer code. Algorithms are bureaucracy. (And indeed, much of traditional statecraft depended on technology – including classification and data collection, behavior monitoring). The book argues that states have simply relinquished some of their former territory of control through outsourcing, ceasing to collect data internally. In addition, digital platforms have advantages – they are fast and efficient, and (closely) provide excellent service.
So what to do? The book advocates for a bourgeois online revolution to build collective agency that will empower digital platforms. I must say that the previous chapters do not give me any optimism that could be effective. My prescription would be for democratic states to regain lost territory through a combination of rule-making on online activity and improving the efficiency of traditional bureaucratic states. Although I’m not too optimistic about that either.
All this does the book essential reading. I have a few quibbles (for example, I would disagree that platforms are effective central planners), but maybe I’m wrong. The book is firmly rooted in Vili’s work and wider literature on digital platforms, spanning economics, sociology and political science, while being highly readable with plenty of examples and case studies. A strong recommendation.
