Passport Video

Episode 2 – “Winner Takes All”

Host Niall Ferguson tells the story of how a decentralized, not-for-profit worldwide web shape-shifted to become a highly profitable network controlled by a tiny elite selling our attention for billions of dollars to the world’s advertisers.

AIRED: 3/16/2020 | EXPIRES: 3/17/2024 | 00:55:37
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♪♪♪ -Connectivity is a human right.

-Many of the details being spread online are simply not true.

-False claims -- There was no knife like many online blogs are saying.

-The fake news -- [ Gunshots ] -You may have been startled or confused by what you've seen online recently -- fake news... -This has got to stop. -...extreme views... -They are not compatible with our culture.

They hate us.

They don't want to be Americans.

-...polarization, information wars, an epidemic of trolling and so-called hate speech.

All of this has been made possible by one thing -- the exponential growth and exploitation of online social networks.

-We believe that connectivity is a human right and that connectivity can't just be a privilege for some of the rich and powerful.

It needs to be something that everyone shares.

-To Mark Zuckerberg and the other youthful architects of this hyper-connected world in their campus-like Silicon Valley offices, we're witnessing the birth of a truly decentralized global community where we're all equipped to speak truth to power.


You could be forgiven for thinking just the opposite, that these global networks are enriching a tiny elite by enticing the rest of us to give up our privacy in ways that could actually undermine democracy.

♪♪♪ In this episode, I'm going to show you that the history of the Internet illustrates the working of the most important law of history... ♪♪♪ ...the law of unintended consequences.

It's also the story of one of the key laws of network science.

♪♪♪ In network economics, the winner takes nearly all.

♪♪♪ ♪♪♪ -This is the story of how a decentralized, not-for-profit network shape-shifted in just a few years to become highly centralized and highly profitable for a tiny elite.

♪♪♪ Yet the rise of a few big tech companies has created new empires, enormously enriching their founders.

Why did this happen?

The answer is that the empire builders of Silicon Valley understood something the rest of us didn't -- that the Internet couldn't stay decentralized forever.

Sooner or later, a few nodes in the network would become superhubs.

The rise of the network platforms illustrates one of the fundamental laws of network science -- To those that have shall be given.

♪♪♪ In a blog to commemorate Facebook's 15th birthday, Mark Zuckerberg outlined how networks like his were designed to empower people, to create a more open and connected world where traditional hierarchies like governments, the media, and religions could be challenged.

♪♪♪ Zuckerberg was just repeating the message of the early Internet pioneers, that their revolutionary invention had challenged the existing systems of mass communication, like TV networks, which concentrated power in central hubs.

At their most radical, they believed that cyberspace would be outside the power of big top-down corporations and even governments.

This old, hierarchical order could be swept aside, and in its place, a more decentralized online world would emerge populated by netizens.

♪♪♪ One man who's known Silicon Valley since its idealistic early days is Eric Schmidt.

Between 2001 and 2015, he built Google into the hugely profitable business it is today.

♪♪♪ -When the people who put it together, young, idealistic people without a notion of commercial or security concerns put it together, they imagined a world that was highly connected, that shared information, that you could sit at home and look at pictures in the Louvre, that you could explore Tiananmen Square and so forth, and it would all be wonderful.

♪♪♪ -This dream was realized.

We really visit Paris on our smartphones if we want.

♪♪♪ But that's not what the Internet is mainly for.

Let's face it.

Somewhere along the line, the cool, new network that connected computers became about making money through advertising.

♪♪♪ Within the space of 20 years, a few giant network platforms came to dominate online business.

These digital empires are as powerful as any organizations in human history.

And billions of us all over the world have become their subjects.

♪♪♪ How and why this happened becomes a lot clearer when we look to the past.

♪♪♪ History has often seen collisions between centralized hierarchies and decentralized networks.

♪♪♪ In the 16th and 17th centuries, the printing press empowered dissident religious networks in Europe to challenge the Catholic Church.

♪♪♪ For centuries, a multitude of small, independent presses ensured that printing remained a remarkably democratic and decentralized communication technology.

♪♪♪ At the beginning of the 19th century, people still communicated between continents by writing letters that were delivered sometimes weeks later.

♪♪♪ But after the engineer Isambard Kingdom Brunel's Great Eastern laid the first transatlantic cable in 1866, it was possible to relay information telegraphically across the Atlantic at the rate of eight words a minute.

This was the 19th century's version of the Internet.

[ Beeping ] -Other methods of communication were slow and tedious.

The telegraph was the only means of rapid communication.

♪♪♪ -The telegraph network splendidly served the strategic purposes of the great European empires.

They also handsomely enriched those at the top of the Victorian social hierarchy.

For it wasn't governments that built the global telegraph network.

It was businessmen like this man, John Pender, a risk-loving Scotsman.

♪♪♪ Buying up emerging cable companies was Pender's life's work, and the more lines were acquired by his Eastern Telegraph Company, the more valuable his network became.

By the time Pender died in 1896, he owned 1/3 of the entire global telegraph system.

These were the undersea arteries of Queen Victoria's empire, which brings us to an important lesson in network theory.

♪♪♪ [ Train horn blows ] Railroads, telegraphs, and later telephone and radio had network structures in which all the connections led to central nodes or hubs which controlled the flow of goods or information.

-This is information. May I help you?

-As a result, these networks tended to come under quite concentrated ownership.

♪♪♪ Men like John Pender were the beneficiaries of a simple and powerful truth -- The more you have, the more you get.

This is the network law known as the Matthew effect.

♪♪♪ The universal properties of what has become known as the Matthew effect have been studied by network physicist László Barabási.

-Once we realized that real networks have these major hubs in them, right, what is the origin of these hubs, and how do they become as big as they are?

-'For to everyone who has, more will be given, and he will have abundance.

But from him who does not have, even what he has will be taken away.'

-It's called the Matthew effect after the Bible of Matthew to say, effectively, the more you have, the more you will have.

The more friends you have, the more likely that I will be introduced to you.

The more links a website has on the World Wide Web, the easier it is to find it, hence the more likely I will connect to it.

-The Matthew effect works to create superhubs within a network.

Because of something called preferential attachment, not all nodes are created equal.

The more edges or links a node has, the more it's likely to get as new nodes join the network, because when you join Twitter, you're much more likely to follow Donald Trump with his 62 million followers than to follow, well, me.

The problem with centralized power structures is that they can be very easy to attack or take over.

♪♪♪ Control the central hubs, and the rest of the network is yours.

Destroy the central hub, and the network is done.

-[ Speaks Russian ] -During the Cold War, the fear that American communications might be paralyzed by a well-targeted Soviet nuclear strike led Pentagon scientists to begin thinking about a different kind of network.

♪♪♪ In 1964, the RAND Corporation began developing a decentralized computer-to-computer communication system.

♪♪♪ The result was the Advanced Research Projects Agency Network, ARPANET.

[ Beeping ] Precisely because this network was designed with no central hubs, it would be much more difficult to attack.

-A forthcoming involvement is this powerful computer network, experimental network that's going to come into being in its first form about a year... -On the 29th of October, 1969, the first message was sent on a prototype network from a computer at UCLA to a second network node at Stanford University.

ARPANET was the direct precursor to what we know today as the Internet.

Yet ARPANET was not the first computer network, nor the most ambitious.

♪♪♪ Buried deep in a Moscow archive is the wonderful story of the Internet that never was, the 'InterNYET,' if you like.

♪♪♪ The Soviet Internet was called the O-G-A-S, OGAS, and it was the brainchild of Viktor Glushkov at the Institute of Cybernetics in Kiev, Ukraine.

The aim was to solve the information bottlenecks that were causing the Soviet Union's planned economy to fall behind its American free-market rival by creating a nationwide neural network.

There were to be 20,000 local terminals and 300,000 operators communicating in real time.

♪♪♪ By 1965, it was ready to go.

But it never launched.

Glushkov's system was simply seen as too costly by the Soviet finance ministry.

In 1970, the OGAS was turned off.

On the other side of the Iron Curtain, the American creators of the Internet faced no such opposition.

Considering it started life as a defense project, the Internet evolved beyond government control with amazing speed.

What the pioneers of Silicon Valley came up with was just the opposite of the centralized systems of the Industrial Age.

The Internet and the World Wide Web built on top of it were decentralized by design.

In theory, at least, all nodes were equal.

There was no central hub in control of the whole system.

♪♪♪ -The key thing about this is that the people who were building this did not have a notion that there would be these companies.

They did not have a notion of business, and in fact, until 1991, it was against the rules to build a business on top of the Internet.

-In fact, many of the Internet's early enthusiasts were intent on creating a network that would be free from all government controls, hence the appeal of cyberspace to libertarians like John Perry Barlow.

As for making money, dude, the whole idea was just to connect the world.

♪♪♪ -Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind.

On behalf of the future, I ask you of the past to leave us alone.

You are not welcome among us.

-So begins 'A Declaration of the Independence of Cyberspace' by John Perry Barlow, poet, essayist, and lyricist for the Grateful Dead.

Echoing the U.S. Declaration of Independence, Barlow declared the advent of a global social space, a world that all may enter without privilege or prejudice.

♪♪♪ The early nonprofit ethos of the Internet did not last long.

-The first thing I'd like to do is give you a business update on Apple, and the news is really positive.

We just reported our third-fiscal-quarter profits for the quarter ending in June of over $200 million.

♪♪♪ -The makers of hardware and software for personal computers led the gold rush.

♪♪♪ But it was a lot less clear how to make money from a website, no matter how cool.

♪♪♪ With the dot-com crash that started in March 2000, the euphoria of Web 1.0 gave way to a struggle for survival.

-A lot of the real turmoil right now can be found in the smaller start-ups, the dot-coms.

That's really what's roiling the markets right now and people's lives, as well.

-Nearly $800 billion of shareholder value up in smoke., the site for barbecue lovers, is dot-gone. are now considered by analysts to be in critical condition.

-It would appear that, yes, the dot-com gravy train has ended.

♪♪♪ -Somehow, Internet companies had to make money instead of just burning through investors' cash, but how?

What was the business model?

It was Google that came up with the answer.

-Every successful start-up has to have a couple big breakthroughs.

In Google's case, we had the notion of Search, and we had much better Search because Larry Page invented a better algorithm.

But we had another idea, which was a form of auction around advertising.

And when we entered the market with Search and then what is called a Dutch auction, the revenue just started flowing in.

♪♪♪ -Google had struck gold.

When people came to Search, they could also be shown ads.

And the more they searched, the more they revealed what they might want to buy.

The key was to become a network platform -- in other words, a giant magnet for Internet users.

♪♪♪ Antonio Garcia Martinez played a key role in turning Facebook into the most profitable social network of them all.

-Most people don't realize, when they do a Google search, or when they load almost any page or app, there is an auction being held in their attention, effectively.

And whether it be around the keyword that they enter in the search query or whether it be all the data that's known about them that exists online, within literally 100 milliseconds, bid requests go out to ad exchanges saying, 'This person has showed up. What do you want to bid for an ad?'

An auction is held, and you're shown an ad billions of times a day, right, and that is -- Yeah, that's the open market in human attention that effectively pays for most of the Internet.

Let's walk through a simple example.

You Google 'Ford dealer in Sacramento' or 'divorce lawyer in Atlanta.'

On the other side of that, there are hundreds of thousands, millions of advertisers who are effectively bidding on that keyword.

I'm willing to pay $1 per click for someone who searched for 'Ford dealership in Sacramento.'

That ad is shown, assuming the ad is relevant, and then you click on it.

You're effectively forcing the advertiser to pay $1.

-Mr. Zuckerberg, are you doing enough to protect your users' privacy?

-Where Google had led, Facebook followed.

-There will always be a version of Facebook that is free.

-Well, if so, how do you sustain a business model in which users don't pay for your service?

-Senator, we run ads.

♪♪♪ -The crucial difference was that Google simply enabled people to find things they'd already decided to buy, whereas Facebook allowed advertisers to send targeted messages to users reflecting the preferences that they'd already revealed through their Facebook activity.

After ads were seamlessly integrated into the news feed on the mobile-phone app, Facebook was on track to reap massive profits, propelled forward by the explosive growth in smartphone ownership.

-One of the things that my team built was a lot of the technology that actually joins your online activity to your presence on Facebook in that weird, magic way where you go and look at a certain product, and that product shows up in your feed.

It's really about the joining of all the data that exists in the world to those who actually own the eyeballs, which is, you know, Google and Facebook.

-Facebook's key insight was to extract information that would enable advertisers to target the individuals most likely to buy their products.

♪♪♪ Stanford computer scientist Jure Leskovec is an expert in mining data to predict our future behavior, not only from our past actions, but also from the structure of our social networks.

-So the idea would be that if you say you have some network, right, and, I don't know, maybe it looks like this, then you could say, 'If I know this person and that person bought the product, so maybe I should recommend that same product to these two other people.'

It's almost like, you know, birds of the same feather flock together.

-Remember, that's lesson number one from network theory -- the idea of homophily, that people with similar personalities or skin color or attitudes tend to gravitate towards each other.

-So if you are my friends, and you have just made an action, maybe I'm likely to make an action.

And what social networks allows you to do is to say you don't only have to make a decision about -- based on myself, but you can know who my friends are, and my friends tell you a lot about who I am, as well.

-By accumulating these insights from our social connections, the network platforms can work out what we want to buy before we even know it ourselves.

♪♪♪ It was the final brilliant idea that would destroy the libertarian dream of a decentralized, not-for-profit World Wide Web.

♪♪♪ Slowly but inexorably, Amazon grew to be number one in e-commerce.

Rather more swiftly, Google became the dominant player in search, and at lightning speed, Facebook won the race to be number one in social media.

The winners took all.

To them that had was given.

But perhaps we shouldn't have been so surprised.

After all, it's not the first time we've seen monopolies form in what's supposed to be a deregulated, highly competitive market.

It's not the first time that promises of power to the people turned into a reality of fortunes for the few.

♪♪♪ In 1927, Fritz Lang made the epic silent-cinema classic, 'Metropolis.'

♪♪♪ The film depicts the downfall of a hierarchical order of the hands of an insurgent network.

The proletariat toiling in their subterranean factories rise up against the wealthy elite living it up in their penthouses.

It was a powerful metaphor for the inequalities of industrial capitalism.

Lang said the film was inspired by his first visit to New York.

To his eyes, the skyscrapers of Manhattan were the perfect architectural expression of a chronically unequal society where those at the top were able to accumulate unimaginable fortunes.

This was the age of the so-called robber barons.

The banker J.P. Morgan created this opulent library in New York.

Then there was Andrew Carnegie in steel, John D. Rockefeller in oil, Cornelius Vanderbilt in railroads... ♪♪♪ ...and Jay Gould in railroads and telegraphs.

More than any of his contemporaries and competitors, Gould exemplified the rapacious spirit of the era.

And this was where he lived -- Lyndhurst Mansion, his summer retreat on the Hudson River in New York.

It was indeed a gilded age.

♪♪♪ A brilliant financial mind and a ruthless operator, Gould played the market by cornering stocks and manipulating prices, cajoling politicians into turning a blind eye with bribes and backhanders.

♪♪♪ During the 1870s, Gould built a vast railroad empire.

At one time, he controlled 17 major railroads, 1/4 of the American network.

[ Clock ticking ] But it was Gould's domination of America's telegraph network that helps us understand better how today's Internet empires behave.

First, Gould bought up smaller firms, in many cases just to put them out of business.

After destroying almost all his competitors, Gould then won the big prize.

In 1881, he wrested control of the telegraph company Western Union from his old rivals, the Vanderbilts.

By then, Gould had established himself at the center of America's largest communications network, the spider at the center of a telegraphic web.

♪♪♪ Nothing could better illustrate the reality of network economics.

The companies that control the network are themselves controlled by a tiny, fabulously wealthy elite.

The rise of the telegraph giant was paralleled by the emergence of huge media corporations.

What Gould was to telegraphs, William Randolph Hearst was to newspapers and magazines.

♪♪♪ In the course of his career, the man who inspired the movie 'Citizen Kane' founded or acquired 42 major city newspapers.

♪♪♪ Hearst and Mark Zuckerberg have more than one thing in common.

They both dropped out of Harvard.

They both considered political careers.

And just as Facebook has been criticized for providing a conduit for fake news... ♪♪♪ ...Hearst too was frequently condemned for his papers' so-called yellow journalism, sensational stories that bore only a casual relationship to the facts, not to mention the placement of advertisements in close proximity to attention-grabbing headlines.

-Newspapers are delivered to homes.

-At the height of Hearst's powers, 1/4 of all Americans read a Hearst paper every day.

-And they are read everywhere.

-Astonishing as that figure is, it pales into insignificance when you consider that around 90% of all searches worldwide are on Google, over 70% of American adults use Facebook, and more than 40% of U.S. online retail commerce is on Amazon.

But the big tech companies aren't just big because of the Matthew effect.

Like the robber barons of the gilded age, they're also big because of the way they've gobbled up potential competitors.

[ Cash registers dinging, beeping ] As Facebook's former chief security officer, Alex Stamos has seen up close how the largest tech companies voraciously buy up their competition.

♪♪♪ -These companies have an incredible power to look at the ecosystem and to pick who the winners and losers are likely to be and to pick those guys out well before they can compete.

In the long run, I'm not sure that's great for consumers.

♪♪♪ -Facebook has bought out more than 76 companies... ♪♪♪ ...Amazon, more than 100, and Alphabet, the umbrella company of Google, more than 200.

♪♪♪ In the years 2010 and 2011, big tech's rate of company acquisition was more than one a week.

♪♪♪ Jay Gould would be proud.

So it was that a network that was decentralized by design ended up being dominated by a handful of network platforms.

They may not be run like the old industrial corporations, but they are fundamentally hierarchical in character.

Just consider how much power over Facebook is concentrated in the hands of just one individual.

Mark Zuckerberg owns just enough of the key B-shares to be guaranteed more than 50% of voting rights.

[ Men speaking indistinctly ] -Zuckerberg used to end Facebook meetings with a half-joking exhortation, 'Domination!'

♪♪♪ Now it's world domination he aspires to.

As markets in the West reach saturation, so growth has to come from less developed parts of the world.

♪♪♪ In many countries in Africa, Facebook has been pushing its Free Basics and Flex services, which give people cheap smartphones and free connectivity, as long as they use the Facebook app.

It's a brilliant idea -- complete control over people's access to the Internet and, therefore, control over new markets for advertisers to sell to.

The problem is that in some parts of the world, Facebook's empire building is running into serious trouble.

♪♪♪ As founder and chairman of Econet Wireless, one of Africa's largest and most successful telecoms companies, Strive Masiyiwa is responsible for building much of the physical infrastructure on which the African Internet depends.

I'm fascinated by the attempts by some of the American tech companies to accelerate Internet penetration in Africa and in other emerging markets, and Facebook's one of the companies that's doing this.

-We believe that connectivity is a human right and that connectivity can't just be a privilege for some of the rich and powerful.

It needs to be something that everyone shares.

-Facebook is seen more as a bully on the African continent, particularly by the mobile operators and even the governments.

Now, Facebook comes along and says, 'It's going to be free.'

-You're not just helping the people who don't have access to the Internet today.

You really are improving the world for everyone else, too.

That really is the thing that drives me -- connecting the world, giving everyone a voice.

-What do I say to my customer who believes that it's free, but it's not, because Facebook has something to sell in an ad-revenue model outside of what we're seeing?

Facebook likes to present a narrative that it's philanthropy.

It's not. They treat these people as customers.

-Despite Facebook's efforts, their Free Basics program has now been banned in a number of key countries, such as Egypt and India.

♪♪♪ People are beginning to realize that, despite all the talk of building a global community, Facebook, with its 2.4 billion users, is in many ways more like a virtual empire.

♪♪♪ -The big companies are acting as quasi-governments.

They run intelligence teams.

They run teams that decide what is acceptable speech.

They run huge shops whose entire job it is to censor speech.

And so they are acting as governments without the democratic legitimacy and without the transparency that we expect from democratic governments.

-So it's perhaps not surprising that the historical figure Mark Zuckerberg most admires is one of the greatest emperors in history... [ Crowd cheering ] ...the first Roman emperor, Augustus Caesar.

♪♪♪ 'Basically, through a really harsh approach, he established 200 years of world peace.

But it didn't come for free, and he had to do certain things.'

♪♪♪ That phrase, 'certain things,' covers a multitude of sins.

As Strive Masiyiwa says, the network platforms may present themselves as philanthropists, but what they really care about is the natural resource on which their empires depend.

♪♪♪ In the new network empires, there's only one commodity that counts, and that is data.

♪♪♪ Their business models increasingly center around harvesting users' data, and that in turn means maximizing user engagement, because the more time you spend on Facebook, the more ads you're likely to see, and the more lucrative data about your personal preferences you're going to generate.

♪♪♪ That means that social-media companies and other network platforms will only survive and thrive if they can keep us hooked.

In 2009, Facebook came up with this brilliant way to captivate our helpless brains with hits of dopamine -- the like button.

♪♪♪ You may not realize it, but every time you like or comment on a post, you're giving the network platform some of your data.

♪♪♪ Do you think that people, engineers working at the big tech companies, consciously knew that they were setting out to create addicts?

-Certainly, in some cases, I think people were intentionally trying to drive up engagement.

In some cases, people were just trying to build a product that people liked.

Until a couple years ago, there was very little idea of people could like our product too much.

-One way of thinking about data in the modern economy is to call it the new oil.

These two valuable commodities, one pumped out of the ground, one pumped out of us, have been the bases of economic revolutions, and each one became the foundation of enormously profitable monopolies.

♪♪♪ -John D. Rockefeller, the world's richest man, could boast of a feat unequaled by the best golfers, a score that scarcely exceeded his age.

-It's data derived from our online-shopping preferences that's made Amazon's Jeff Bezos one of the Rockefellers of our time.

And yet there is one rather crucial difference.

It wasn't oil that Rockefeller was pumping, and however avaricious his business practices, he still had to pay for the land where he drilled.

♪♪♪ Today, we might think we're getting free services from the network platforms, but in fact, we're paying for these services with our data.

We're living in a situation where nearly everything that we do is generating data.

Whether we know it or not, even in the supposed privacy of our own homes, we cannot escape the data harvesters.

-Improved styling constantly adds to the ease and grace and gaiety of American living.

And what of the kitchen of tomorrow?

-♪ Kitchen of tomorrow is calling me ♪ -This was the future once, but today, our dream kitchens aren't just automated.

♪♪♪ -Alexa, I'm home.

♪♪♪ Lights turn on.

The temperature is being set to a comfortable 71.

-This fully connected show home demonstrates just how much data we now produce.

It's not just when we're using our phones or laptops.

These days, the Internet of Things means that our household appliances are generating data, too.

-No matter where you go in your home, you'll always have a voice assistant to talk to.

♪♪♪ -One of the world's leading experts on big data and its uses is Stanford University computational psychologist Michal Kosinski.

-We are now leaving digital footprints almost at all times.

Our phones are constantly with us.

Our geographical location is recorded.

You know, pitch of our voice and what we're saying is increasingly recorded not only by our smartphones but also by our smart home devices such as Alexa or Google Home.

♪♪♪ -It's very convenient to give orders to your electronic servant, but just remember that she's your assistant and their spy.

-Humans were influencing humans in the past.

Now computers are entering the game.

Now, the difference is that a computer, computational salesman, can know you much better than a real human salesmen could ever know you.

A computer can read all of your e-mails that you have ever sent, can look at all of the website that you have ever visited, websites that probably you even forgot you have seen in the past, and use this information to extract data about you, to extract your intimate traits.

-If data is the new oil, then we're the wells being pumped.

♪♪♪ And data extraction isn't confined to your home.

Neighborhoods and whole cities are being reconfigured so that every move is recorded by tiny hidden cameras, and every keystroke is registered by public Wi-Fi pods, like these in New York.

♪♪♪ Vast streams of data are being uploaded, but where does it all go?

When people talk about 'the cloud,' what do they mean?

♪♪♪ This is what the cloud actually looks like.

Ashburn, Virginia, just outside Washington, D.C., is the unofficial data capital of the world.

To those in the know, it's referred to Data Center Alley.

♪♪♪ They say that more than 70% of the world's Internet traffic passes through here.

♪♪♪ Google, Microsoft, Facebook, and Amazon all support their rapidly growing cloud-computing needs by taking stakes in the high-security data banks that dominate this landscape.

♪♪♪ It's the biggest privately held horde of data in all of history.

Apply today's computing power and machine learning to all this data, and you have a formidably powerful tool.

♪♪♪ We all know that artificial intelligence, computer-based networks that can learn from vast quantities of data far faster than humans, has the potential to revolutionize our lives.

The question is, will this be for good or bad?

Here at the Massachusetts Institute of Technology's Media Lab, some of the brightest minds in computer science are weighing up how big data and artificial intelligence will change the world.

♪♪♪ Media Lab researcher Professor Alex Pentland runs a project in Dakar, Senegal.

♪♪♪ Using data generated not from social-media posts and Google searches but from banking networks and telecoms companies, he's exploring how cities can be designed to be more efficient.

♪♪♪ -Using that data, you can figure out where the bus lines ought to be to make things work better.

You can figure out how to best do public health, because, of course, people moving is the way infectious disease propagates.

You can figure out how to do electrification, because a lot of it's not electrified.

You can figure out sanitation better.

That's what we're building in Senegal, a system that allows you to take this aggregate data and use it for these public goods in a safe way.

♪♪♪ -In this way, big data is now being used all over the world to make our roads less congested and our trains and planes run on time.

♪♪♪ That's the good news.

♪♪♪ What's the bad news?

♪♪♪ One person who's consistently warned about the dangers of misusing big data is A.I. pioneer Rosalind Picard.

♪♪♪ -The number-one fear there is the surveillance technology, technology that listens to your voice or looks at you when you're in your private home.

Let's say that you're on your smartphone, and you're watching the speech of the political leader, mm, and the political leader's saying something that you don't agree with, and you're smirking, or you're scowling, and you let it watch you.

Suppose that they had location turned on, and it notices that in this village, everybody's scowling.

-[ Shouting in native language ] -And in this village, everybody's nodding and smiling.

[ Crowd cheering ] A good person might actually try to help the village that's unhappy.

But a person who is only consumed with his own power might decide to get rid of that village.

♪♪♪ -More than any other country, China has truly grasped the potential of big data for control, leveraging its power in service of the ruling Communist party.

Already, an ambitious plan known as Xue Liang, 'Sharp Eyes,' is being rolled out in Chinese cities like this one, Chongqing.

♪♪♪ The goal is to connect the security cameras that already scan the city with private cameras in apartments and offices and integrate them into an all-enveloping surveillance system.

♪♪♪ The name of the project is taken from the Communist slogan, 'The masses have sharp eyes.'

♪♪♪ It's a throwback to the founder of Communist China, Mao Zedong's, attempt to get citizens of the People's Republic to spy on one another.

♪♪♪ The whole point of surveillance in totalitarian regimes is to prevent dissent of any kind from challenging the rule of the party.

♪♪♪ In George Orwell's '1984,' the hero, Winston Smith, falls victim to the telescreen, the principal instrument of totalitarian surveillance.

'It is,' Orwell writes, 'an oblong metal plaque like a dull mirror which formed part of the surface of the wall.

The instrument could be dimmed, but there was no way of shutting it off completely.

♪♪♪ The telescreen received and transmitted simultaneously.

Any sound that Winston made above the level of a very low whisper would be picked up by it.

Moreover, so long as he remained within the field of vision which the metal plaque commanded, he could be seen as well as heard.

You had to live, live, from habit that became instinct in the assumption that every sound you made was overheard and, except in darkness, every move was scrutinized.

♪♪♪ It was terribly dangerous to let your thoughts wander when you were in any public place or within range of a telescreen.

♪♪♪ To wear an improper expression on your face was itself a punishable offense.

There was even a word for it in Newspeak.

'Facecrime,' it was called.'

♪♪♪ For most of my life, ever since I read Orwell as a teenager, I thanked God that I didn't live in Airstrip One enthralled to Big Brother.

It was shortly after the actual year 1984 that I paid my first visit to the Soviet Union and found that a significant proportion of humanity was in precisely that situation.

♪♪♪ In the days of the Cold War, it seemed like the big distinction between the West and the East was that you could say what you liked in New York or London, whereas in Moscow or here in East Berlin, you had to be careful.

The chances were always quite high that you were under surveillance, maybe a microphone in the hotel room or just an acquaintance working for the secret police.

♪♪♪ When the Berlin Wall was torn down, many believed it would spell the end of the surveillance state.

♪♪♪ Not many people foresaw the rise of surveillance capitalism.

♪♪♪ Today, this has become our version of Orwell's telescreen: smartphones and other devices supplying the network platforms incessantly with data about us.

In the West, this information's used primarily to sell to us, but it would be wrong to think that only the Chinese are under surveillance.

We are, too.

-Everybody's going to have to choose their poison.

Are they choosing to be part of the Chinese Internet, where companies will enforce the will of multiple governments, and there's a lot less chaos, but all of that information can be used for for the national security benefit of the People's Republic, or are you part of the American Internet, which is much more the Wild West, much more chaotic and less predictable, but also, then you hopefully have some protection against the U.S. Government and from the companies themselves.

♪♪♪ -There are two possible futures facing Western democracies.

In one, Orwellian levels of surveillance are left in the hands of a few giant corporations.

In the other, we figure out some way of limiting the power of these companies so that our privacy and our democracy are adequately protected.

-It's funny. I'm usually in favor of less regulation, but here, I don't think there's -- I think there's zero regulation, and we need some.

Right now, in the United States, the company that gets the data acts as if they own your data.

I personally feel like each person should own their own data.

-But how exactly do we achieve this?

An alternative solution is taking shape in Europe, which in recent years has acted as the real regulator of the big tech companies, introducing tough new rules on competition, privacy, and data protection.

♪♪♪ -This European privacy law is actually a good thing.

It says, 'You have to establish fundamental rights of people over this sort of data,' and some of the worst practices, like these long agreements for use of data, are just clearly bad.

[ Bell tolling ] -If you really want to protect your data, the place to live is here in Estonia, the tiny Baltic country which has pioneered strict privacy laws.

-They have the principle that data only exists in one place -- the place it's collected.

And so you can see what's being done with your data.

You can complain about it.

In fact, there's a mandatory 3-year jail sentence if you use data incorrectly.

♪♪♪ -Giving us more control over our data is one thing.

Reining in or breaking up the monopoly powers of the network platforms is another challenge altogether.

-Because car companies face a lot of competition, if they make a defective car, it gets out in the world, people stop buying that car. They'll buy another one.

Is there an alternative to Facebook in the private sector?

-Yes, Senator. The average American uses eight different apps to communicate with their friends and stay in touch with people, ranging from texting apps to e-mails.

-Which is the same service you provide.

-Well, we provide a number of different services.

-Is Twitter the same as what you do?

-It overlaps with a portion of what we do.

-You don't think you have a monopoly?

-It certainly doesn't feel like that to me.

-Okay. [ Laughter ] -Lawmakers have long struggled with how best to rein in over-mighty corporate interests.

In the late 19th century, this is what critics thought of John D. Rockefeller's Standard Oil and its excessive power in the U.S. economy.

Today, proponents of antitrust in Washington, D.C., refer to Amazon, Facebook, and Google as Standard Commerce, Standard Social, and Standard Data.

But is that the right analogy?

-As long as there's hyper-competition among the various network platforms, I don't think we need to worry.

Today, anyone can start up a website.

Anyone can get indexed by Google.

There's no barrier to entry, and without a barrier to entry, it's hard to see how there's an antitrust problem.

-It's easy to see why Google might take that view, but for some in Silicon Valley, the idea that the network platforms face real competition is a stretch.

-It is very difficult now to create a competitor to one of these companies, right, partially because the technical barrier to entry to compete with Google and Search now is so spectacularly high that you could never raise enough venture capital to go do so.

-Google's motto used to be, 'Don't be evil,' but I think we'd be nuts just to rely on the big tech companies to behave themselves.

The increasing concentration of power in the hands of a few companies, the exploitation of our personal data, the erosion of our privacy -- These are the prices that, up to now, we've been prepared to pay in return for the services the network platforms provide.

What if the very existence of the network platforms has created another even greater threat to national security?

In the next episode, we'll turn to the geopolitics of the networked world.

It used to be authoritarian regimes that were supposed to be in danger from the Internet, but these days, it's democracies that are under threat from undemocratic forces that have understood better than us how to use and abuse the network world to exercise their power.

♪♪♪ -To order 'Niall Ferguson's Networld' on DVD, visit ShopPBS or call 1-800-PLAY-PBS.

This program is also available on Amazon Prime Video.

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