Internet shopping e-commerce applications eBay, Amazon, AliExpress. Photo: iStock
Mobile phone applications for e-commerce websites eBay, Amazon, and AliExpress. Photo: iStock

Digital advertising forms the architectural and historical backbone of the Big Data ecosystem. The advertising industry was also intimately connected to the larger commercialization process of the Internet in the mid- to late 1990s. Digital advertising signified the absorption of the global digital commons into the irresistible commodification process of turnover rates, market share, and behavioral monitoring.

From targeted banner ads to ROI (return on investment) tracking tools, pay-per-click, and profile-driven disintermediation, the online advertising industry has evolved with the overall increased sophistication of data leveraging and brokerages. The industry therefore nicely showcases the development of artificial intelligence and other emerging technologies like the Internet of Things (IoT).

Made in the image of the market

Back in the 1990s, as the commercialization of the Internet was in its nascent stage, and there was no clear indication of where it was heading. But there were some hints.

The United States applied a deregulatory approach, driving the large-scale integration of hardware and software services through market terms. Increased bandwidth, the proliferation of personal computers, and the diversification of software all played into the boom of the Internet in the late 1990s.

Yet resisting such commercialization was the community of content producers who saw the Internet as a decentralized platform for global communication. Indeed, the open-source platforms that formed the backbone of basic Internet and browsing protocols at the time represented a strong counterforce to the proprietary-driven model embraced by the nascent Internet companies.

Fast-forward 20 years and it is clear that the Internet today is made in the image of the market.

What started out as an open-source dream for commons-based peer production has become mired in reality. To some optimists, the communications revolution was a chance to disconnect politics from private monied interests, establish a new production model not beholden to surplus extraction, and reduce the marginal cost to practically zero.

Yet the foundations of the Internet meant that companies had to get smart in where they produced value. The real key was applying a business model similar to one found in other media sectors.

Just as newspapers and broadcast made the bulk of their revenue by selling viewers to advertisers, the nascent digital titans of the Internet realized that data was key to profit. What better way to connect advertisers to consumers than to offer a service for free on the front end while extracting value through data analytics and algorithmic processing on the back end?

Google forever changed the history of the Internet in 2000 when it introduced AdWords, the first online keyword bidding system. Departing from its previous business model, the company’s gross revenue shot up that year, and its overall revenue from AdWords continues to grow each year.

The Internet has become foundational to the way we think, make sense of the world, and navigate the difficulties of life. Yet its precise commercial form also made it easy to manipulate our choices and influence our decisions. And once locked into place, the incentive structures of the market are difficult to change externally.

This means that while we have immense freedoms in our lives due to connectivity, we are not free to change collectively the structure of the political economy.

A commodity by any other name?

The idea that data is the new oil is commonly articulated in popular opinion. Yet this perspective mischaracterizes how companies actually use data and how a services-driven, informational economy functions.

As an end product, oil can be used anywhere. It can fuel cars, planes, industrial equipment, and military ships and vehicles. Data, however, does not have such a universal utility. Data sets, in contrast, must be specially tailored to the algorithm that processes them. An algorithm that successfully completes tasks with one set of data becomes useless with another.

The distinction is important to highlight, for economic reasons.

Personal data is just that – personal. Whatever commodification process it undergoes is intimately interwoven with the subject that generates it. So while in the 19th century the commodification of labor (that is, wages) was linked to the emergence of mass industrial production, in the 21st century, the commodification of personal data has become a new fuel for economies through the widespread proliferation of digital advertising and direct marketing.

As data subjects, our behavioral predictability follows the patterns of our online activity. And our online activity follows the algorithms, the services, the platforms, and the content that form the material basis of the Internet.

We see what algorithms know we want to see; receive what algorithms have tailored for us.

If economic modernity operated as the famous “iron cage,” then whatever we are witnessing today is operating as the digital echo chamber.

If we are not to be locked in and manipulated, we must all re-evaluate our relationship to the data we give up, be more educated on how the digital algorithms work, and become more responsible in how we approach our digital future.

Olena Mykhalchenko

Olena Mykhalchenko is a Fulbright and Edmund S Muskie Scholar, focusing on the intersection of artificial intelligence and human rights, the future of work in the gig economy, and the social impact of Industry 4.0. Currently she is a consultant at Datamize, advising on data privacy and algorithmic ethics.

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  1. Wow that was odd. I just wrote an incredibly long comment but after I clicked submit my comment didn’t appear. Grrrr… well I’m not writing all that over again. Anyways, just wanted to say fantastic blog!

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