Fort Report: Google 2.0
Last year, I sent a letter to search engine giant Google, challenging them to maintain proper protections for children's online privacy. I was inspired by twenty-three child and privacy advocacy groups, who, in April, 2018, filed a complaint with the Federal Trade Commission (FTC) arguing that Google’s YouTube online video and advertising network systematically collected data on the online habits of tens of millions of children under the age of 13 and sold that data to marketers in violation of the Children’s Online Privacy Protection Act (COPPA).
This week, Google and its subsidiary YouTube agreed to pay a record $170 million to settle allegations that YouTube illegally collected personal data on children without parental consent. While a $170 million fine is a drop in the bucket to Google, it is ten times larger than all previous COPPA fines combined.
To maintain its online search, advertising, and media dominance, Google collects vast amounts of data on our preferences, our friends’ preferences, and the sites we visit, while monitoring our daily conversations. By last measure, the market cap of Google was over $800 billion.
To be fair, we agreed to Google’s Faustian bargain: Our privacy in exchange for their promise of convenience. We did not, however, give Google permission to track and monetize our children. You’d think that Google would implicitly understand this. It seems to be in the nature of monopolies’ chase for quarterly profit, however, to lose sight of protections for the people they are intending to serve. This might be due to a fundamental misunderstanding of capitalism itself.
In his signature book, The Wealth of Nations, “the father of capitalism,” Adam Smith, articulated how free-market capitalism operates through an “invisible hand” to lift all boats. You may not have heard of Smith’s other major work, The Theory of Moral Sentiments. In it, the famed Scottish economist and philosopher articulated the necessary pre-condition of humane values essential to a properly functioning market. All over the world, we see examples of capitalism devoid of Smith’s moral sentiments.
In our American experience, we naturally accept that the private market system accelerates possibility and opportunity for human well-being and flourishing. We also recognize that the “free” market can be distorted, manipulated, stacked, unfair. Herein lies the tension. As some economists have noted, in the long run, the market takes care of all problems. The famous economist John Maynard Keynes retorted: Yes, but, in the long run, we are all dead. Thus, a regulating moral force (properly informed government) is needed to ensure that the market operates fairly.
Healthy competition births innovation. To its credit, Google won the public's trust in the free marketplace of ideas, not through stifled competition. Like the robber barons of old, however, Google lost sight of the Smithian sentiment of “sympathy,” which keeps Smithian “self-interest” in check. In the robber baron era, children were exploited through factory sweatshops. While it is more subtle and sanitized, in today’s big tech era, a new form of monopolistic exploitation of children has emerged: the tracking of their online behavior for profit.