THE GLOWING AMBITIONS OF FACEBOOK, Google, and Amazon—their sci-fi fantasies about everlasting life, their drones, their virtual realities—distract from the core basis for their dominance. These companies are our primary portals to information and knowledge. The tech monopolists take the bounty of the Internet, that decentralized mess of words and images, and turn it into something approachable and useful.
Organizing knowledge is an ancient pursuit. Those who toiled in this field over the centuries—librarians and bookstore owners, scholars and archivists—were trained to go about their work lovingly, almost worshipfully. A professional code implored them to treat their cargo as if the world depended on its safe transit through the generations. The tech companies share none of that concern. They have presided over the collapse of the economic value of knowledge, which has severely weakened newspapers, magazines, and book publishers. By collapsing the value of knowledge, they have diminished the quality of it.
It’s commonly argued that they don’t really deserve blame for this demise. According to this strain of conventional wisdom, it was inevitable that the price of knowledge would evaporate in the presence of the Internet. That narrative casts these companies as innocent bystanders, when, in fact, they were active, brutal accomplices. To build their empires, they targeted the weak economic underpinnings of knowledge and they knocked them right out. It was Jeff Bezos who pioneered this approach, even before the Internet had begun to truly take form—and he chose the most unlikely starting place.
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BOOKSTORES PLAY AN INDISPENSABLE ROLE in our capitalist system. They are an employment program for failed graduate students; they show how low margins and bake-sale profits will not defeat the spirit of entrepreneurship. Anyone who has browsed the literary theory aisle or studied the analytics for Russian novels can surely see how the road to the economy’s commanding heights begins with bookselling. Perhaps it took a visionary to understand the untapped profit potential of the book. And to be sure, only Jeff Bezos could see how the ancient technology of inking words onto deceased vegetation was the ideal vehicle for winning the Internet, a gambit for dislodging and then surpassing Walmart as the king of retail.
You might think that only an intellectual would be deluded enough to have such faith in bookselling. But that’s not quite Bezos. Though he will occasionally tout a book he finds stirring, the literary and political power of his wares have never really transfixed him. In fact, he didn’t especially care for the objects that would launch him on his way to fortune: “I’m grumpy when I’m forced to read a physical book because it’s not as convenient. Turning the pages . . . the book is always flopping itself shut at the wrong moment.”
When he first pondered Amazon in 1994, he was a hotshot at a boutique hedge fund. He had the logic-clad mind of a trained engineer, the faith of a spreadsheet fundamentalist. At that early date, he understood that the Internet was going to remake the world. It was an insight that didn’t strike most of his elders on Wall Street as very likely, though his own hedge fund was keen to invest in Web sites. Bezos and his boss, an eccentric computer scientist called David Shaw, even kicked around the idea of creating an “everything store”—a site that would serve as the mother of all intermediaries between the world’s manufacturers and its customers.
But Bezos methodically studied the possibilities for commerce on the burgeoning medium, and considered that big idea a few steps early. Before consumers would shop at an everything store, they needed to acclimate to online shopping. He went searching for the ideal gateway product. The key would be to find a business that could easily be mastered by a small, underfunded operation—that would quickly build the trust of consumers, that didn’t require traveling the world to source inventory, that would allow for low-cost experimentation. After meticulous analysis, he decided that books—not office supplies, not music, not socks—were his best play. After all, you never returned a book for being ill fitting, and books were sturdy enough to order without anxiety about their getting crushed or jostled in transit. Bezos quit his job, packed his Upper West Side apartment, drove to Seattle, and started the firm he would eventually name Amazon.
The allure and power of the Internet are due to its infinitude. More than any physical space, it is all-inclusive, inexhaustibly capacious. Bezos intuited this, too. He called his new company the “Earth’s Largest Bookstore.” And in that description, there was the essence of the everything store. At first, this was a powerful ruse. Amazon didn’t have shelves or warehouses, just a relationship with the big distributors. This was the first of thousands of smart choices that made Bezos’s initial empty promise of gargantuan size into a self-fulfilling prophecy.
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JEFF BEZOS HAD ARRIVED at a core truth: The world stood on the cusp of a knowledge boom, a nuclear explosion of information that would remake economies. Indeed, this is what the Internet (and Bezos) has brought to pass. Knowledge has never been more abundant, never more central to the creation of wealth. Bezos even had a vision, however underdeveloped, that this revolution would birth a new style of firm: the knowledge monopoly.*
There have been various stabs at coining a term to capture the dominant role of Google, Amazon, Facebook, and Apple. Mark Zuckerberg has called his company a “utility,” perhaps unaware how the term is historically an invitation for invasive regulation. But there’s something to his suggestion. In the industrial age, utilities were infrastructure that the public deemed essential to the functioning of everyday life—electricity and gas, water and sewage. In the end, the country couldn’t function without them, and the government removed these companies from the vicissitudes of the market, leashing them to publicly appointed commissions that set their prices.
In the knowledge economy, the essential pieces of infrastructure are intellectual. With the inexhaustible choice made possible by the Internet comes a new imperative—the need for new tools capable of navigating the vastness. The world’s digital trove of knowledge isn’t terribly useful without mechanisms for searching and sorting the ethereal holdings. That’s the trick Amazon—and the other knowledge monopolists—have managed. Amazon didn’t just create the world’s biggest bookstore; it made its store far more usable, far more efficient, than browsing the aisles of a Barnes and Noble or cruising a library’s card catalog. And beyond that, Amazon anticipated your desires, using its storehouse of data to recommend your next purchase, to strongly suggest a course for navigating knowledge.
This is the strange essence of the new knowledge monopolies. They don’t actually produce knowledge; they just sift and organize it.* We rely on a small handful of companies to provide us with a sense of hierarchy, to identify what we should read and what we should ignore, to pick informational winners and losers. It’s incredible economic and cultural power that they have amassed because of a sudden change in the strange economics of the commodity they traffic in, a change they hastened.
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ADAM SMITH, it’s fair to say, didn’t anticipate Jeff Bezos. When the Scotsman first sketched the workings of capitalism, he had plenty to say about land, labor, and capital. Those were the fundamental elements of markets, and they became the bedrock concepts of mainstream economics. Knowledge never entered deeply into Smith’s thinking about trade. And for nearly two hundred years, the discipline of economics barely entertained the possibility that knowledge might really be the necessary ingredient for growth.
But Jeff Bezos was born into a world obsessed with knowledge. After World War II, the American elite began to define itself on the basis of its brains, not the happenstance of its daddies. That’s why Ivy League universities came to require standardized tests as the basis for admissions. Those universities, once finishing schools for the rich, fully remade themselves as “knowledge factories,” in the words of the University of California’s midcentury chancellor, Clark Kerr. The government considered research—the production of knowledge—a worthy recipient for massive infusions of cash. Washington poured money into science and social science, practical engineering and wonderfully impractical theorizing alike.
Economics might not have had much to say about knowledge, but knowledge was dictating the trajectory of the late-twentieth-century economy. The sources of growth were increasingly intangible—the manipulation of symbols, the collection and exploitation of data, the invention of formulas and theories. Put differently, wealth was more likely to be hatched from computer code, a television series, a patent, a financial instrument. King Knowledge even determined the fruit of the soil. Take Monsanto, which produces the seeds that account for 80 percent of all corn and 90 percent of all soybeans grown in the United States. What Monsanto possesses, what it ferociously hoards, is the genetic traits of these seeds. Its comparative advantage isn’t factories, but laboratories.
Of course, economists could plainly see what was happening, but they didn’t quite know what to make of the change, at least not at first. Knowledge was a flummoxing thing to the dismal scientists. It was different from all other goods. People paid for cars and buildings because those goods were scarce. Or they had a quality that Paul Romer, the economist who has thought hardest about knowledge, called “rivalry”—if I own a shovel, you can’t own that shovel, too. Such rivalry can never be the case for knowledge. Yes, it takes a lot of money to engineer a new seed or to fund a lengthy work of investigative journalism. But once the recipe is complete and the article is published, it can be copied for free, or nearly free.
If left to the devices of the market, the price of knowledge would quickly collapse, destroyed by the ease with which it could be freely copied. But the government doesn’t permit this collapse. One of its primary economic responsibilities is preserving the value of knowledge. It shelters the creators of knowledge from the rigors of the competitive marketplace, granting them a temporary state-sponsored monopoly in the form of patents and copyrights. Intellectual property is an ancient tradition, so venerable that James Madison pushed for its enshrinement in Article I, Section 8, of the U.S. Constitution. This canon of law is meant to balance two inimical concerns. On the one hand, it creates conditions that foster creativity and innovation. Who would pour her life into a creation if some knockoff artist could get rich off an effortless facsimile? On the other hand, the law eventually phases out the monopolies (although Disney manages to keep extending the terms of copyright law to keep Mickey Mouse under its tightest control). Knowledge is too important to remain the eternal possession of any company or individual. We know that future achievements must build on past ones; that monopolies, over the long run, drain the creativity from an economy.
This system worked well enough over the years, despite the overly aggressive defenses that Hollywood and the music industry often mounted to protect the sanctity of their possessions. But modernity also posed a challenge to these protections. Long before the Internet, copying had slowly implanted itself as a fact of modern life. Generations that can recall analog existence will note that VCRs, Xerox machines, and cassette tapes made mimesis an everyday thing. Still, those technologies were limited. Duplicating a movie or curating a mixtape entailed time, hassle, expense.
With the Internet, those impediments disappeared entirely. Any college kid with bandwidth could download more or less every song in recorded history, without spending a penny. And even that example understates the full ramifications of new technologies. Cory Doctorow, an early pioneer of the cyber-frontier, has fairly described the condition this way: “We can’t stop copying on the Internet, because the Internet is a copying machine. Literally. There is no way to communicate on the Internet without sending copies. You might think you’re ‘loading’ a web page, but what’s really happening is that a copy is being placed on your computer, which then displays it in your browser.”
It didn’t take long for the implications of this to terrify the entertainment industry. Panic washed over the music moguls, as Napster, Grokster, and other newfangled sites smashed their business to pieces. The recording behemoths blindly sued whoever they could. (Absurd lawsuit: George Clinton, of Parliament-Funkadelic fame, was sued for sampling himself.) This torrent of litigation seemed ominous at the time, the beginning of a chilly new age of control. But, in the end, it was a hopeless defense of a doomed model.
The culture had changed. Once an underground, amateur pastime, the bootlegging of intellectual property became an accepted business practice. Sites like the Huffington Post liberally plucked the best paragraphs of news stories, with a grudging link back to the original item. Google scanned every book it could find. Apple’s advertisements preached, “Rip, Mix, Burn—After all, it’s your music.” Larry Lessig, a law professor who served as a chief champion of this new era, declared: “The defining feature of the Internet is that it leaves resources free.”
We could portray the changes as a matter of piracy—and there was surely a lot of that. But that wasn’t the significant development. Media accepted the economic collapse of knowledge, as if it were as irresistible as the weather. Newspapers and magazines remade their business strategies to accommodate change. Since the birth of newspapers and magazines, publishers had recovered their costs by charging readers to buy their creations. Even if the purchase price didn’t cover the costs of reporting and publishing, it was a major source of revenue and crucial to advertisers. Madison Avenue regarded a paying subscriber as an engaged reader worth the effort to reach. But that thinking didn’t mesh with the Internet. Stewart Brand famously issued the nostrum “Information wants to be free.” To charge for information was to walk away from a historic business opportunity. The Internet gifted media with unprecedented scale. It was a superhighway to a world of readers that would never dump a quarter into a newspaper box, let alone pay the hefty charge for home delivery. No direct mail campaign, no television advertising, could equal the marketing potential of the Internet. “Value is derived from plentitude [sic],” Wired editor Kevin Kelly counseled, advice that was adopted on the widest scale.
This was a conscious change, but newspapers hadn’t entirely understood how they were abandoning an old tenet of their business. Media had long followed a venerable strategy that suggested that profit could be found in the bundling of products—the way Microsoft Office jammed consumers into buying Excel with Word, though they may not have had any need for a spreadsheet. That’s what newspapers and magazines were: bundles of articles. For print, the strategy worked well enough. Readers might want only the Washington Post sports section, but they couldn’t buy that alone, so they paid a heftier fee for foreign coverage, local news, and the rest of the obligatory package. But with the advent of Web pages, the bundle vanished as a strategy. Online newspapers and magazines ceased to exist primarily as an anthology of articles. There were no subscriptions to buy; and readers quickly habituated to jumping from site to site, link to link. Pieces came to exist as their own untethered entities—back when she was with Google, Marissa Mayer called them the “atomic unit of consumption for news,” flourishing or sinking on their own. “Each individual article,” Mayer said, “should be self-sustaining.”
This was, on the surface, a boon for knowledge. Never before had it been possible to learn so much, to acquire such valuable material, and at no cost. Such exponential growth couldn’t be captured with statistical precision. But there were suggestive numbers. By the year 2002, our digital storehouse of knowledge was suddenly larger than humanity’s analog cache. And that was just the Internet’s infancy. Between 2006 and 2012, the world’s information output grew tenfold. Serious analysts, without a hint of hyperbole, compared it to the emergence from the Dark Ages.
This abundance of free material, however, created a new form of scarcity—with so much to read, see, and hear, with the unending web of links, it became almost impossible to grab an audience’s attention. David Foster Wallace called the condition Total Noise. With it, our reading became peripatetic, less focused. Back in the seventies, Herbert Simon, the Nobel-winning economist, took these inchoate sentiments and explained them rigorously: “What information consumes is rather obvious. It consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention.” The poverty of attention, the inability to hold a reader’s attention for sustained time, that’s the crucial concept. It’s an existential problem for producers of knowledge—and a source of strain and confusion for consumers of it. Navigating the vastness of the Internet can feel like getting marooned in the middle of the ocean, both terrifying and sublime in its overwhelmingness.
This condition has grievously wounded old media, which has spent more than a decade searching for a plausible strategy to regrip its audience, a war on the poverty of attention. But the very factors that squeeze these companies—the wealth of knowledge, the scarcity of attention—have fueled the rise of the new informational monopolies. These companies take the massive, ever-growing blob of knowledge and impose order on it. Amazon organizes retail into a coherent, usable marketplace, to make no mention of it being the largest, most trafficked bookstore in human history; Google culls the entirety of the Web so that we have some sensible progression for considering its offerings; Facebook provides a directory of people, as well as a method for managing social lives. Without these tools, the Internet becomes unusable. “Searching and filtering are all that stand between this world and the Library of Babel,” the science writer James Gleick has argued.
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THE BIG TECH COMPANIES didn’t just benefit from the economic collapse of knowledge. They maneuvered to shred the value of knowledge, so that old media would come to helplessly depend on their platforms. There was a precedent for this strategy. When Apple created the iPod, it created a device with the capacity to hold thousands of digitized songs—ideal for amassing pirated music, which was flowing freely at that moment. Steve Jobs could have easily designed the iPod to make it inhospitable to stolen music. But he initially refused to build the iPod so that it would block unlicensed content. At the same time Jobs’s device enabled piracy, Jobs himself decried digital thievery. He was playing a cunning game: After helping push the music business to the brink, he would save it and come to dominate it. Eighteen months after creating the iPod, he debuted an online store, iTunes, that became the place where a vast percentage of all music was purchased. In the face of piracy, enfeebled producers lay prostrate in front of their new savior, even if Apple dismembered the once profitable album by selling individual songs for ninety-nine cents. From the wreckage Apple helped create, it built a new monopoly—60 percent of digital downloaded music is sold through iTunes—although streaming services have begun to weaken its decade-long grip on the business.
It’s sometimes hard to grasp the pecuniary motives of the big tech companies, because they strike such an idealistic pose. There’s no doubt that they believe in their own righteousness, but they also practice corporate gamesmanship, with all the established tricks: lobbying, purchasing support in think tanks and universities, quietly donating money to advocacy groups that promote their interests. The journalist Robert Levine has written, “Google has as much interest in free online media as General Motors does in cheap gasoline. That’s why the company spends millions of dollars lobbying to weaken copyright.” Google and Facebook penalize companies that don’t share their vision of intellectual property. When newspapers and magazines require subscriptions to access their pieces, Google and Facebook tend to bury them; articles protected by stringent paywalls almost never have the popularity that algorithms reward with prominence. Google, according to documents that have surfaced in lawsuits against the company, is blunt about using its power to bend the media business to its model. Jonathan Rosenberg, the vice president of product management, told company brass in 2006 that Google must “pressure premium content providers to change their model to free.” It’s a perfectly rational stance. The big tech companies become far more valuable if they serve as a gateway to free knowledge, if they provide a portal to an open and comprehensive collection of material.
Amazon doesn’t quite preach the same gospel, but it shares the same basic approach. It deflated the price of the books that it sells and made implicit arguments about their value. By unilaterally setting the price of the e-book at $9.99, far lower than paper, Bezos falsely implied that the cost of producing a book resided in printing and shipping, not in intellectual capital, creativity, and years of effort. Bezos implicitly argued that technology would continue to drive prices lower over time, an argument that had the effect of making his opponents in book publishing that resisted such deflationary pressures look like greedy enemies of the reader. In truth, revenue from books was of secondary concern to Bezos. The profit margin on each copy of Zadie Smith or Robert Caro it sells hardly matters in the scheme of things. What counts is addicting readers to its devices and site, so that Amazon becomes a central fixture in their lives, an epicenter of leisure and consumption—exactly the same aspiration that Google and Facebook harbor.
They are getting ever closer to that goal. Amazon, Google, and Facebook are now the primary bundlers of articles, books, and video. They are the ones that create a usable, coherent product from its disparate parts. Their business model is infinitely better than the one it displaced. Google and Facebook don’t pay for any of the articles that they present to the consumer, and their scale of offerings is infinitely larger than anything the old media companies could ever muster. They are, after all, organizing the entire output of humanity.
Of course, this is not an innocent activity—even though the tech companies disavow any responsibility for the material they publish and promote. They plead that they are mere platforms, neutral utilities for everyone’s use and everyone’s benefit. When Facebook was assailed for abetting the onslaught of false news stories during the 2016 presidential campaign—a steady stream of fabricated right-wing conspiracies that boosted Donald Trump’s candidacy—Mark Zuckerberg initially disclaimed any culpability. “Our goal is to give every person a voice,” he posted on Facebook, washing his hands of the matter. It’s galling to watch Zuckerberg walk away from the catastrophic collapse of the news business and the degradation of American civic culture, because his site has played such a seminal role in both. Though Zuckerberg denies it, the process of guiding the public to information is a source of tremendous cultural and political power. In the olden days, we described that power as gatekeeping—and it was a sacred obligation.