Sad Ignorance About The Value Of Facebook And Google

It’s entirely true that Facebook and Google are worth large amounts of money. It’s also true that some goodly portion of this comes from their aggregation of the data we so freely give them. That isn’t though, the same statement as that the data itself has value. Sure, that could be true but it could also be true that it’s the aggregation which produces the value, the data itself being worth near nothing.

And, you know, that probably is the truth, it’s the information which is valuable, not the data.

Whenever a technological revolution brings upheaval to the world, it initially benefits the small number of people at its forefront to the detriment of others.

When the industrial revolution brought about the birth of mass production, it led to thousands of skilled, independent workers losing their trades and much of their livelihoods, facing either unemployment or less-skilled work in the new factories, with the loss of autonomy that entailed.

In time, as the law and society caught up with the pace of change, people started achieving protections: workers’ rights, limits to the number of hours that could be worked, improved safety in the workplace and more.

It might now be clear to all of us that the industrial revolution was overwhelmingly a good thing for the world and for our standard of living – but it took decades of pressure and action for government to make sure those benefits were widely – if not evenly – shared.

All of which is entire bollocks to start with. Who, for example, were the people who benefited from the early days of the Industrial Revolution?

Moreover, there is another very important group who benefited
mightily from North American slavery: consumers of machine
made cotton textiles, from peasants in Belgium able for the first
time to buy a rug to London carters to Midwestern pioneers who
found basic clothing the only cheap part of equipping a covered
wagon. Slave-grown cotton could be produced cheaply, yes, but
the cotton-growers did not collude and so sold their cotton at prices
that incorporated only a normal rate of profit. Cotton could be spun
and woven by machines at amazingly low prices, yes, but British
factories did not collude and sold their garments at prices that
incorporated only a normal rate of profit.

It’s the consumers who benefit that is. No government intervention required to make this happen either, rather, the absence of government imposed monopolies is what makes it happen. Who benefits from Facebook and Google? Us, we consumers.

There is, of course, more:

It is clear that in the aggregate, our personal information – even relatively innocuous details such as our browser search history – is worth a vast amount of money. Alphabet, the parent company of Google, has come to be valued at more than $720bn in the space of 20 years, with most of that derived from its advertising and information efforts. Facebook, which has just celebrated its 14th birthday, is still worth more than $475bn, even after taking a pummelling all week.

Super. So, what is it that is valuable? The data of our browsing habits? Or the aggregation and processing of it? Clearly, it’s not actually the data is it? We give it away in return for the services. We thus don’t value the data at all that much. After aggregation and processing it creates those large sums of value. It’s thus the aggregation and processing creating the value. At which point we’d probably think that it should be the people doing the aggregating and processing who get that value. Which they do so all is copacetic.

Despite the huge value created by our data, we have handed it over in exchange for little more than the services these companies provide.

And what do we value those services at? More or less than the data we don’t value? Who is gaining from this, we or they?

So, for example, Facebook is worth some $500 billion. There are 2 billion users, close enough. Note that value is the capitalisation, not the annual income. Do we value the very existence, as users, of Facebook at $250 each? I’m absolutely certain that I save more than that in a year through the use of IP phone calls over the system.

As Jason Furman has pointed out, sure the Walton family has some $100 billion as a result of Walmart. And US families save $250 billion a year as a result of the existence of Walmart. Who is winning here?

That is, our correspondent has entirely misunderstood who it is that benefits from this technological progress stuff, this capitalism and markets even. It’s we consumers who do. As with those Satanic mills providing stockings for the working girl, today’s rapacious capitalism gives us the knowledge of the globe plus the ability to speak to it. This is “little more”?

Jeez, can’t these people get with the program? Even understand who gets rich off this capitalist hunt for gelt and pilf? Us? It’s all there in Adam Smith after all, the benevolence of the baker etc.