Ten powerful corporations — Microsoft, Apple, Facebook, Google, Amazon, Verizon, AT&T, Comcast, Oracle and IBM — are racing to gain more knowledge and data than anyone has ever had.
The goal is to know in detail the behavior, desires, and dreams of every single person.
This trove of data represents an immense prize for its owners, in money terms the most valuable asset yet conceived.
Daniel Mongan
That’s the take of Daniel Mongan, a partner at Leech Tishman in New York.
In All You Can Pay: How Companies Use Our Data to Empty Our Wallets (Nation Books, May 2015), Mongan and Anna Bernasek show how companies use what they know about you.
Big data and powerful analytics allow companies to analyze and predict your needs and behaviors, and to shape them.
Simultaneously the mass market is collapsing into ever tinier pieces where consumers are segmented more and more finely.
Where the two trends collide, the big corporate players will know the most they can charge for every single purchase, and extract all you can pay.
The ability to understand everyone on a granular level, in real time, and simultaneously to control what each person is able to see, shifts the balance of power to a handful of powerful corporations.
Mongan and Bernasek (they are husband and wife) are directors of The Integrity Partnership, a consulting firm in New York.
Mongan argues that with data mining and the loss of individual privacy, corporations will gain the upper hand over consumers. Is there any chance that the technology will level the playing field — giving consumers as much power as corporations?
“Many people believe that is what is going to happen,” Mongan told Corporate Crime Reporter in an interview last week. “We are writing this book because we think that is not going to happen.”
“The old idea, the New Age idea, the wonderful technology idea that with the Internet we are going to make everything into a mass market, we are going to be able to see the price of whatever we want around the world in real time, the consumer is going to be incredibly powerful. And that has happened in part. You can go on the Internet and shop for prices and get deals that you might not otherwise have been aware of.”
“It’s my personal experience that the best deal for things is not always on the web. The reality is that companies are pretty clever about not getting chewed up by consumers figuring out who has the lowest price. They are pretty smart about figuring out how to sell their products at a profit without having to sell it at the lowest common denominator.”
“There is some evidence that consumers have been more empowered. And there is more than some evidence that we live in a world where what we are predicting has not yet come to pass on a mass scale. There are small examples of everything we have talked about, but no big example of where you have really sewed it up and taken everything from somebody who is in a tough spot.”
“The reality is that Google is building data centers that cost hundreds of millions of dollars as if they were buying potato chips. They are just building and building and building. Google is a very powerful company, very well capitalized, and investing in physical infrastructure like crazy. They also are investing in mental infrastructure. They are hiring scientists and engineers, the smartest people they can find. And they are hiring them by the thousands. There are 55,000 people working at Google today. And a bunch of those guys would score pretty high on a genius test.”
“The poor consumer can go to Google and look for products. We can search the web. But we are way outgunned by the technical expertise, the financial and physical scale of the data giants. There are about ten companies that have an enormous global scale in data. And consumers are just not going to be able to keep up.”
“We are not saying that companies are going to hold a gun to your head, although that is possible. There are some bad scenarios that are possible. But we are really talking about a scenario where you just take a little bit more from people. It’s calibrated to the person. And that has never been done before. And it’s being done now, but it’s at a relatively infant stage.”
Mongan says the really bad effects of the system that are being set in place haven’t hit yet. When will they hit?
“If we don’t do anything — if we continue to use Facebook and Google and press all of those ‘I accept’ buttons, ten years from now it is going to look different,” Mongan says. “I don’t think the world is going to be upside down. I don’t think we are going to live in some dystopian society. But the world will look different. People will be more stressed, they are going to find it harder to be middle class. And there are going to be a handful of winners — fortunes on a scale that have not previously existed.”
What should be done about this?
“People need to be conscious about what is going on. As an aside, my wife has this great quote from the head of a big supermarket chain who is quoted telling his investors that with his data systems and their plans, the shelf price in the supermarket is going to be irrelevant, because they are going to tailor everything to the individuals. It will have a shelf price. But between your frequent buyer benefits and your instant discounts, we are going to be able to particularize that price in the supermarket to our individual customers. And we will be able to make a bundle.”
“It’s on the radar of the people in the know. It’s on the radar of people who want to make a lot of money. Not all of them are going to be successful, because it is not easy. But it is technically possible and there are some people who are well positioned to win.”
Let’s say you were advising policy makers on what to do. What would you advise?
“Europe is about five years ahead of us,” Mongan says. “There is much more awareness in Europe about this issue than there is here. And there is much more general discomfort with the corporate accumulation of power in a small group of companies — about ten companies.”
“In Europe, so far, they say — we are going to regulate. You can do this and you can’t do that.”
“That is a fundamentally flawed approach. There has to be some regulation, as with any market. There have to be some rules of the road. But you are not going to solve this problem by regulating what people do. The technology is so fast and dynamic that almost anything that you put off limits can be worked around.”
“A really good example is in the United States, we have put health care records off limits. That sounds great. But if you take any comfort in that, you are probably in for a shock. The other records of your health condition — your web searches, your emails, and other information which reveals pretty accurately what is up with you — are not protected. And they can be datamined, exploited and shared in ways different from your formal health records.”
[For the complete q/a transcript of the Interview with Daniel Mongan, see page 29 Corporate Crime Reporter 6(12), February 9, 2015, print edition only.]