Dollarocracy (42 page)

Not much of this has come to pass in the United States, primarily because this euphoria was based on an unrealistic and romantic view of the potential for digital technology to trump powerful economic interests.
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But this line of thinking appeals to a deep-seated American attraction to the romantic idea that technology can produce sweeping positive change and allow Americans to bypass the messy business of making actual political change.
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And this line of thinking is directly pertinent to American elections because it fueled perhaps the single most important justification for the 2010
Citizens United
ruling.
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The five justices who voted to allow unlimited spending on elections started with the dubious and absurd proposition that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” They acknowledged, however, that for that proposition to be credible, two conditions were imperative: (1) the “third-party” groups unencumbered by much regulation could not coordinate their “independent” spending with the campaigns of the candidates they favored, and (2) all spending had to be reported quickly and fully so that the public could know who was bankrolling the election campaigns.

If those two conditions were not met, the case for unlimited spending not being an open invitation to corruption and a disaster for the electoral system was mortally wounded. In view of the dismal inability of the Federal Election Commission to collect satisfactory and accurate information or enforce its own modest rules—and there being no reason to believe matters would
improve once a few billion more dollars entered the fray—what could possibly have possessed the Court to be so sanguine?

The Internet, of course. “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters,” Justice Anthony Kennedy wrote in his majority opinion. “This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”
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If we take the five members of the Supreme Court at their word, their single-handed radical overhaul of the American election system would have been indefensible prior to the Internet. At the very least, no Internet, no
Citizens United.

Many public interest organizations, like the Sunlight Foundation, have done yeoman's work in using digital technologies to shine as much light as they can on campaign contributions and the ads they pay for. But with so much secrecy, election laws with Swiss-cheese-style loopholes, and a lack of rigorous enforcement of the rules that do exist, the cumulative effect of the public interest community's Internet work has been comparable to the proverbial piss in the ocean.

Why has the Internet failed to live up to the vision of its celebrants, and to its assigned role by the U.S. Supreme Court? Why, in fact, is that premise absurd? There are two core structural factors that were largely unanticipated in the 1990s that have come to significantly undermine the democratic bias of digital communication, its many virtues notwithstanding.

First, the digital revolution has not rendered giant corporations clumsy dinosaurs on their way to extinction with a gigantic asteroid of competition and consumer empowerment. In grand irony, the Internet has arguably become the greatest generator of monopoly power in the history of economics. Everywhere enormous firms all ranking among the most valuable in the world—Google, Apple, Amazon, and Microsoft, with eBay and Facebook not far behind—have monopolistic domination of huge digital markets often equal to or greater than what John D. Rockefeller enjoyed with Standard Oil in the Gilded Age. As
The Economist
put it, the Internet invariably generates “quasi-monopoly” through “winner-take-almost-all markets.”
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The reasons for this development have been spelled out elsewhere and derive from network economics, the capacity of digital communication to collapse space, patents, standards,
and, with time, good old barriers to entry with the enormous capital requirements of cloud computing.
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The significance of this digital monopoly capitalism for our argument is twofold. There is the general issue of Dollarocracy versus democracy: this much-concentrated economic power and wealth inequality are invariably dangerous for the survival of credible self-government. And then there is the issue of how this new kind of economic power translates into political power. Given the titanic power these firms have in the overall global economy, their political power should soon approach untouchable status under Dollarocracy, if it is not there already. This is especially true for policy debates directly affecting the direction of the Internet, where a number of crucial issues are in play, ranging from copyright law, network neutrality, community broadband, and the digital divide to taxation, antitrust, and, arguably most important of all, privacy. The old saw in politics is that if you're not at the negotiating table when deals are being made, you're what's being served. The main seats at the digital policy negotiating table are occupied by these giants, and few others are in the building or even know the deliberations are occurring. The results will likely be policies that serve their interests—or what they hash out among them when they have conflicts—not necessarily anyone else's.

Specifically, the Internet giants have set their sights on the lucrative political market, and they can imagine much of the $10 billion plus and counting to be spent on forthcoming elections ending up in their coffers. Google, Facebook, Twitter, Microsoft, and Yahoo!, for starters, all have extensive divisions devoted to working with politicians and third-party groups to solicit their business. Moreover, political online spending is seen as an increasingly permanent feature of American life, not just for elections.
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“Google, and Google's competitors in the advertising market, really see political advertising from both sides of the aisle as a revenue opportunity,” said Rob Saliterman, the former George W. Bush White House official who heads Google's Republican political ad team. “The industry, in general, has progressed by leaps and bounds from 2010.”
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These firms are assuming cornerstone positions in the money-and-media election complex; they will likely join and eventually supplant the commercial broadcasters as steadfast foes of any reform that might jeopardize that bloated cash cow.

Second, back in the 1990s the advertising industry feared and most Internet users rejoiced that the Internet appeared impervious to commercialism. Procter & Gamble CEO Edwin Artzt had the “chilling thought that emerging technologies were giving people the opportunity to escape from advertising's grasp altogether.”
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Who on earth would sit through a lame ad on a computer or click on some banner ad? In 1998, Google founders Larry Page and Sergey Brin dismissed the idea that their search engine should be supported by advertising. “We expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of consumers,” they wrote. “The better the search engine is, the fewer advertisements will be needed by the consumer to find what they want.”
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It didn't quite work out that way. Traditional TV-style advertising may not work online, but with the development of “cookies,” which allowed marketers to surreptitiously track and collect previously unimaginable and unprecedented amounts of data on individual Internet users, a rather new form of targeted, or “smart,” advertising has emerged. The era where people could be anonymous on the Internet has ended, though that point has still not been fully appreciated. Internet giants like Google and Facebook collect mountains of data on those who visit their sites and use this data to attract advertisers that can target their advertising with unprecedented precision at consumers with specific demographics.
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The key development is “real-time bidding,” whereby advertisers place ads for their targeted audience that will find them immediately regardless of the Web sites they are on and follow them wherever they may go. Growing by leaps and bounds, this is expected to be a $100 billion global market by 2015 or so—much of it in the United States—and come to account for 34 percent of
all
advertising by 2017. It accounted for 12 percent in 2012.
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In short, the world is in the midst of a fundamental reformation of advertising.

To address this new world, and to take advantage of cookies themselves, Internet publishers are increasingly “personalizing” their Web sites so that different users get different content at the sites depending upon what their personal data tell about them. Already Google search results for the same entry generate different responses for users depending on their extensive Google profile. Click on a major news site, and different people get different headlines and stories depending upon their demographics. Former Google
CEO Eric Schmidt noted that individual targeting is “so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them.”
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The age of people sharing a similar digital experience or having a serendipitous experience online is fading, with all that loss suggests. We now experience a “filter bubble,” as Eli Pariser put it.
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Jeffrey Rosen wrote that “a world of customized ads, news, and politics is one where advertisers, publishers and politicians rank and differentiate us. They evaluate us not as citizens but as consumers, putting us in different—and often secret—categories, based on the amount of money they predict we'll spend or the votes they predict we'll cast.”
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This leads directly to another core development of the Internet. Recall back in the day when the Internet was going to level the information playing field and provide an almost incomprehensible wealth of political information to people. It was arguably the loudest and single most important claim about the Internet. The truth was out there if people took what would be the little time necessary to look for it. This claim is certainly the basis for the Supreme Court's blasé confidence that the Internet could shine such a powerful light on corruption resulting from campaign contributions that it could render the practice utterly unthinkable to participants. In practice, this requires the existence of truly great democratic journalism to make certain this information is accurately unearthed and made accessible and intelligible.

That there is a wealth of material online of considerable value to a person's political education is undeniable; likewise, that social media like YouTube and Facebook offer extraordinary opportunities for everyday people to distribute material of their choosing is also true. A 2012 Pew Internet and American Life study found that two-thirds of adults using Twitter and Facebook do so in part to conduct civil and political activity.
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But, regrettably, the record demonstrates that these new opportunities are not sufficient to spawn democratic journalism or vanquish Dollarocracy.

The emerging digital notion that there are different types of journalism for different types of people is problematic to begin with. The idea that one person gets stories about movie stars, another about sports, and a third about
a particular ideological take on only those world events that support their ideology is a radical departure from traditional notions that democratic journalism must provide a common understanding for citizens to draw from if there is to be effective self-governance. “As it becomes clear that you click on certain ads when you read certain kinds of articles,” Rosen noted, “sites will give viewers different news based on the value of their predicted responses.”
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This commercially driven citizenship is dubious enough, but the problem runs deeper.

The real problem is that the Internet has not solved the existential crisis of journalism discussed in
Chapter 7
; it has made that crisis worse. The Internet gives the illusion of an information rainforest, with sufficient riches to make any remotely sentient being an informed citizen. But in terms of actual serious reporting—collecting and sifting through information to make sense of it—the Internet is closer to an information desert, at least as far as popular political journalism is concerned. Real democratic journalism means paid working journalists with editors and fact-checkers and competing independent newsrooms that are accountable for their work who exhume matters of public life and governance necessary for self-government. Even the much-vaunted citizen (i.e., unpaid) journalists depend heavily on full-time journalism to be effective. We are sometimes told that a world with no paid journalists is a world where we are all journalists, as if this were some sort of great revolutionary accomplishment. Wrong. It is a world where there are no journalists, or at least none that anyone in power has reason to fear.

The reason journalism does not exist online is simple and returns to the point made in
Chapter 7
: there is hardly any money to pay for it. It was bad enough when Craigslist took classified advertising away from newspapers and when display advertisers found they had new options beyond journalism in the digital world. But the emerging targeted, personalized, and real-time—aka smart—advertising has all but terminated any notion that journalism can be commercially viable online, at least with advertising support. This is because advertising no longer supports specific Web sites or content. It is increasingly placed through ad networks or exchanges, dominated by the likes of Google and AOL, which place ads for clients to reach specific demographic profiles on thousands of Web sites simultaneously in real time. “Now specific audiences are bought through advertising exchanges,”
The Economist
noted,
“and the advertising will run anywhere the audience happens to be. This is more effective.”
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“Up to 80% of interactive ads are sold and resold through third parties,” one industry source reported, “and advertisers don't always know where their ads have run.”
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