Four centuries after the East India Company set the trend for corporate resource extraction, most of the world is now in the grip of unbridled corporate power. But corporate power is on the cusp of achieving ‘quantum supremacy’ that social movements in the digital age need to understand in order to shift gears in their struggles. The quantum shift here comes from ‘network-data’ power; the ingredients that make up capitalism’s digital age recipe.
Contemporary capitalism is characterised by the accumulation of data-as-capital. Big Tech, as digital companies are collectively known, use the ‘platform’ business model, which leverages the combined force of Internet connectivity (Metcalfe’s law, that a network’s value comes from the number of its connections) and algorithmic intelligence (what IBM refers to as Watson’s law, the competitive advantage accruing from out-learning everybody else through cognitive computing).
The platform model provides a framework for interactions in the marketplace by connecting its many ‘nodes’ – consumers, advertisers, service providers, producers, suppliers and even objects – that comprise the platform ecosystem, constantly harvesting their data and using algorithms to optimise interactions among them as a means to maximise profit.
The platform model emerged as a business proposition in the early 2000s when Internet companies offering digital communication services began extracting user data from networked social interactions to generate valuable information for targeted advertising.
It is estimated that by 2025, over 30% of global economic activity will be mediated by platform companies, an indication of the growing ‘platformisation’ of the real economy. In every economic sector, from agriculture to predictive manufacturing, retail commerce and even paid care work, the platform model is now an essential infrastructural layer.
Amazon, for example, does not merely sell products, but is now essential to retail commerce, akin to what electricity was to the factories in the early twentieth century.
Corporate power is on the cusp of achieving ‘quantum supremacy’ because of its ‘network-data’ power; ingredients that social movements in the digital age need to understand in order to shift gears in their struggles.
Control over data-based intelligence gives platform owners a unique vantage point – the power to shape the nature of interactions among member nodes. Practices such as Amazon’s segmenting and hyper-targeting of consumers through price manipulation, Uber’s panoptic disciplining of its partner drivers, and TripAdvisor’s popularity ranking algorithm of listed properties, restaurants and hotels are all examples of how such platforms mediate economic transactions.
The accumulation of data that feeds algorithmic optimisation enables more intensified data extraction, in a self-propelling cycle that culminates in the platform’s totalising control of entire economic ecosystems.
The intelligence advantage may thus be characterised as an ‘intelligence premium’, rather like the ‘innovation premium’ enjoyed by the first-mover firms in the pre-digital era. In the quest to acquire and retain this ‘intelligence premium’, platforms assert de facto ownership rights over their members’ data, steadily squeezing out the competition and eventually achieving vertical and horizontal integration.
Amazon for instance, is no longer an online book store, and was perhaps never intended to be. With intimate knowledge about how the market works, Amazon is a market leader in anticipatory logistics (‘Fulfilled by Amazon’) and business analytics (AWS). Not only has it displaced traditional container-freight stations in port cities, it has begun to look increasingly like a shipping company!
The dynamics of an intelligence economy have led to large swathes of economic activity being controlled by a handful of platform monopolies.
Studies suggest that in a matter of a couple of decades, platform monopolies have overtaken oil, automobile and financial corporations in market capitalisation. Today, platform-based business models account for seven of the world’s top eight companies ranked by market capitalisation. The pan-global platform corporation, with its DNA of data-based intelligence, has replaced the trans-national industrial corporation as the Leviathan of our times.
Enter, the intelligent corporation
As the dominant form of economic organisation in the capitalist world order, the corporation has always wielded power, not just in the market but also in political and socio-cultural realms. The rise of the ‘intelligent corporation’ defined by the political economy of data capital has produced qualitative shifts in the exercise of corporate power, including the following:
a) From dominating the market to becoming the market
Like its predecessor, the intelligent corporation also aims at complete market domination. In platform-based capitalism, local business models based on intimate contextual knowledge are completely displaced by the data-based intermediation of marketplace and social transactions.
It is by eliminating these disparate pockets of capital accumulation that platform owners maximise their profits. For example, the contextual knowledge of neighbourhoods that determined competitive advantage and the distribution of returns for traditional taxis is rendered meaningless when Uber, the ride-hailing corporation with its algorithms for intelligent routing, enters the picture. The intricate knowledge of local agrarian conditions and intuition about local markets no longer matters in the aggregation led by farming-as-a-service platforms.
The intelligent corporation also goes a step further, moving beyond ‘dominating the market’ to ‘becoming the market’. Integrating across business lines, these companies both operate a platform (that is, run the marketplace and its rules) and promote their own goods and services on it. This places them in direct competition with the businesses that use their infrastructure, and creates a conflict of interest.
The intelligent corporation goes a step further, moving beyond ‘dominating the market’ to ‘becoming the market’
For example, Amazon uses its product marketplace data to consolidate its private labels, launching high-demand products at prices that undercut third-party sellers. It is also known to use its AWS data to guide decisions about which start-ups to invest in, which to acquire and which to simply wipe out.
Similarly, Google has manipulated search results to prioritise its own services. In India, ride-hailing platforms Uber and Ola have been reported to prioritise the cabs that they own or have leased over those of partner drivers; food-delivery platforms have been accused of unfairly discriminating against partner restaurants in order to prioritise their own ‘Cloud Kitchens’.
As Lina Khan, who specialises in US competition law, has observed, in addition to the traditional risks of discrimination and lock-in recognised in the legal scholarship on the governance of essential utilities, businesses dependent on platform infrastructure also face that of appropriation. This is because the platform owner can harvest data-based intelligence about their business practices and deploy it against them.
In this new strategy for acquiring market power, long-term market monopolisation is privileged over the ability to break-even in the short run. The ecosystem that a platform seeks to capture has room only for one winner with the wherewithal to forgo immediate profits and invest in business integration (through aggressive acquisition) and systematic data-layer development. Other competitors are destined to fall by the wayside.
As Derek Thompson, staff writer at The Atlantic, wryly put it, ‘If you wake up on a Casper mattress, work out with a Peloton before breakfast, Uber to your desk at a WeWork, order DoorDash for lunch, take a Lyft home, and get dinner through Postmates, you’ve interacted with seven companies that will collectively lose nearly $14 billion this year’. The spectacular crash and burn of WeWork in its IPO may be a sign of things to come, but the race to beat the competition is only intensifying.
(b) From cheap labour to freedom from labour
In the capitalist economy, the key contradiction is between capital and labour. Capital is in a perennial quest for freedom from labour through labour-substituting technological advances and territories to shift production to reduce labour costs. In the intelligence economy, capital seems to have come very close to realising its primordial pursuit.
Using 360° surveillance, the intelligent corporation creates a self-optimising ecosystem, manipulating each node, expanding its captive network, accumulating data capital, and entrenching its dominance. It is able to achieve a global operational footprint with few assets and a minuscule employee base.
Think Uber. Uber drivers are not considered to be employees in most places where the company runs its business. With a god’s eye view of the city and its roads, the customers and the driver, Uber takes over city transport, often without owning a single taxi. Passing off the liability to the driver, who must take a high-interest loan to acquire a vehicle to become Uber’s coveted ‘partner’, the corporation extracts from the driver more than just labour time.
The overall demand for labour seems to be shrinking in the intelligence economy. As The Economisthighlights, ‘in 1990, the top three car manufacturers in Detroit had between them revenues of $250 billion, a market capitalisation of $36 billion and 1.2 m employees. In 2014, the top three companies in Silicon Valley had revenues of $247 billion and a market capitalisation of over $1 trillion, but just 137,000 employees’.
In on-demand and micro-work, the platform business model and its attendant algorithms, create perpetual competition among individual workers, fragmenting them and preventing them from collectively organising or unionising for their rights. In traditional labour-intensive manufacturing and services sectors, data capital is slowly but surely effecting far-reaching transformation.
Projections show that automation based on artificial intelligence (AI) will eventually displace labour. It is estimated that over 40 per cent of the global workforce will lose their jobs in AI-led disruption of manufacturing over the next 15–25 years.
A limited number of high-paying jobs may open up for individuals with advanced skills in the development of data and AI technologies. But most of the labour force will end up in low-paid, personalised service work. For countries in the Global South, the challenge will be especially pernicious. As rising wages erode the comparative advantage of labour in these economies, the shift to AI technology is likely to trigger a re-shoring trend, whereby factories are relocated to richer countries that offer more sophisticated infrastructural support for deployment of AI systems.
According to the World Bank, over two-thirds of the workforce in developing countries are likely to lose jobs. It is not clear how these changes will shift gender segmentation and hierarchies in labour markets. However, going by current trends, women seem to be the first to lose their jobs in this transition, with a reversal of both pay and status gains.
(c) From accumulation by dispossession to planetary-scale time–space enclosure.
Capturing previously non-commodified time and place has always been a central strategy of capitalist expansion. In the intelligence economy, we are witnessing a new phase of such ‘primitive accumulation’ – through ‘data dispossession’. The expropriation of data from everyday social exchanges through the platform business model is comparable to the expropriation of natural resources for capitalist production in a previous age.
The pervasive data extraction by platform companies has transformed data-mined social interaction into a factor of production, just as invaluable a resource as land for the creation of goods and services. The centralisation of wealth and power today, derives from an unprecedented quality and scale of dispossession.
The dynamic of data dispossession is self-propelling. It is now well understood that platforms aggressively pursue a strategy of locking-in users, offering instant gratification in exchange for data and making it costly for them to leave a platform.
The expropriation of data from everyday social exchanges through the platform business model is comparable to the expropriation of natural resources for capitalist production in a previous age.
The Chinese ‘super-platforms’ WeChat and Meituan-Dianping combine news, entertainment, restaurant reviews, food delivery and ride-hailing, along with cross-cutting applications such as payment systems and digital wallets, demonstrating a ‘stickiness’ that is almost addictive.
Relentless data mining not only transforms social interactions through their commodification. ‘Smart’ network-data ecosystems go a step further. They create the brain that allows the end-to-end capture of the entire production process. Alibaba’s blockchain based dairy connects producers in New Zealand to consumers in Beijing, creating a seamless supply chain. Similarly, Alibaba’s ET Agricultural Brain entrenches corporatised farming cultures in Asia, acquiring farm landsremote controlling farm-based activities through AI technologies for real time monitoring.
Capital is thus able to straddle the dimensions of time and space, to create a new marketised framework for agricultural value chains with potentially adverse long term consequences. As GRAIN, an organisation working to support small farmers and bio-diversity, observes, such farm-to-fork cross border consolidation by Big Tech not only enfeebles traditional livelihoods, but could also edge out local agricultural economies in Asia.
When participation in the platform on the platform owner’s terms becomes de facto the only choice for economic actors, data extractivism is normalised. Similar to the predatory practices of historical colonialism, the platform tactics of the intelligent corporation function as a neo-colonial project. The difference is that this time around, rather than European companies, the US and Chinese platform companies are in the driving seat.
Facebook Zero, under the guise of providing subsidised Internet connection to marginalised groups, has essentially focused on opening up untapped data markets in the Global South. The electronic World Trade Platform, an Alibaba initiative, is an effort to mine intelligence about previously unexplored markets in African countries by building digital and data capacities of small and medium enterprises (SMEs). The Digifarm platform being piloted in Kenya by the leading telecom operator, Safaricom (launched by Vodafone), is in effect an attempt to enclose valuable data about agricultural practices and credit behaviour of smallholder farm households in order to build financial services around its mobile money system ‘M-PESA’.
A profoundly unsustainable exploitation of the natural world accompanies the rapid inroads of the intelligent corporation. Take the case of the vast ecological footprint of the online food-delivery sector. According to a 2018 study published in the science journal Resources, Conservation and Recycling, door-to-door fast-food delivery in China accounted for a nearly eightfold jump in packaging waste in just two years, from 0.2 million tonnes (2015) to 1.5 million tonnes (2017).
This has coincided with the exponential growth of the sector in the country, where the number of customers using food-delivery platforms has gone up from zero in 2009 (when the first delivery app (Ele.me) appeared) to 406 million by the end of 2018!
The loss of self-determination for individuals and communities in these new intelligence-based modes of production reflects an asymmetry in power that was previously impossible. This is the route through which the brand-new corporation colonises bodies and nature, takes control of production and social reproduction, and intensifies accumulation on a global scale.
Just as imperialist capital accumulation impoverished the colonies, the territories from which data is extracted by Chinese and US global platform companies find themselves locked into the low-value parts of the new economic order.
As the 2019 edition of UNCTAD’s Digital Economy Report highlights, in the market capitalisation value of the world’s 70 largest digital platforms, those in the United States and China have a combined share of 90 per cent, compared to a mere 1 per cent in Africa and Latin America.
(d) The ‘deep corporate’ and the death of the social contract.
It is no secret that in the digital era, the deep state has had a makeover. Edward Snowden’s revelationswitness testimonies from China’s Uighur-dominated Xinjiang have exposed the dark workings of the contemporary military–industrial complex, the unholy nexus between Big Tech and the state. Trade justice activists have constantly pointed to the ‘hidden hand’ of Silicon Valley and Chinese corporations using their governments to bat for their interests, reducing policy decisions to executive fiats for entrenching their power.
Deliberative democracy itself is under the threat of extinction as intelligent corporations tentacles extend into the heart of public life.
But what is only recently coming to light is the rise of the ‘deep corporate’ – the extension of the ‘Kraken’-like tentacles of intelligent corporations into the heart of public life. The subsuming of social life by platform capitalism has distorted the political space thanks to the echo chambers of the automated public sphere.
The contagion of mispropaganda and informational warfare in political campaigning has become impossible to contain in a public sphere determined by algorithmic filters. In this scenario, deliberative democracy itself is under the threat of extinction.
Public–private partnerships (PPPs) in digitised welfare systems pose a serious threat to the social contract. In 2012, the South Africa Social Security Agency entered into a partnership with a company developing digital payments solutions to manage its welfare distribution. Exploiting its access to the banking details of welfare recipients, the company started making unauthorised deductions from beneficiary accounts towards loans and financial services of its sister concerns. The state found itself severely constrained in taking punitive action against the company, which threatened to walk away with the entire database if the contract was terminated!
With the archetypal ‘good consumer’ becoming the deserving citizen, citizenship is thus dislocated from political claims. The ‘deep corporate’ acquires the formal authority to mediate the social contract.
Living with the intelligent corporation
We are living through a phase in capitalism that is marked by extreme market concentration, unprecedented inequality in wealth and the declining share of labour in global income; a state of affairs that has led even the IMF to express caution. It is no coincidence that this period of intensified economic injustice has coincided with the rise of platform capitalism and its real-world vehicle, the intelligent corporation.
What does living with the intelligent corporation mean?
First, as this essay has shown, what is new about this phase of capitalism that has spawned the intelligence economy is a deeply qualitative shift. Datafication and data capital transform the way capitalist ‘accumulation by dispossession’ happens. ‘Intelligencification’ makes plausible a planetary-scale colonisation and commodification of everyday life by the new corporation in ways previously impossible. Both nature and caring bodies are trapped in a planetary enclosure insofar as everything and everybody can be turned into data.
Second, ‘intelligencification’ feeds off and emboldens the financialisation apparatus that runs the neoliberal economy. Through the perverse confluence of data and finance, the intelligent corporation universalises and naturalizes its authority, destroying the marketplace of things and ideas.
Third, through data extractivism, the intelligent corporation ravages sociality, taking the ideological project of neoliberalism all the way to the expropriation of the political. This is a deep take-over, an ‘ontological encroachment’ of human subjectivity.
Where does all this leave us?
As UNCTAD has highlighted, the pace of concentration of market power is extremely worrying. Consider this: Amazon’s profits-to-sales ratio increased from 10 per cent in 2005 to 23 per cent in 2015, while that of Alibaba increased in just four years from 10 per cent in 2011 to 32 per cent in 2015.
Policy-makers across the world are struggling to reform their legacy laws to rein in the intelligent corporation. Even the domestic governments of powerful US and Chinese platform corporations are struggling to contain their excesses.
The US Federal Trade Commission (FTC) is currently investigating Amazon and Facebook for abuse of market dominance while the US Justice Department is probing Google. The state of California is facing massive resistance from Uber and Lyft to its new regulation for labour rights of ‘gig’ workers, with the two companies currently leading a USD 60 billion ballot initiative to extricate themselves from employer’s liability.
In November 2019, the state administration for market regulation in China had to hold a meeting with Alibaba and other online retail platforms about their strong-arming of third-party vendors, in violation of existing regulations to curb anti-competitive conduct.
In countries where the domestic platform economy is fledgling/nascent, the situation is even worse. Often, the legal–institutional frameworks for governing corporate platforms are completely absent. For instance, Nigeria does not offer adequate legal protection to SMEs and consumers in its emerging digital commerce market. Similarly, platform workers in domestic work in the Philippines, tourism in Indonesia, and transport in South Africa are not covered under existing labour laws.
Critics of the industrial transnational corporation (TNC) have long shown how the de-territorialisation and de-nationalisation of their business operations creates a crisis of corporate governance. The virtual or online and global nature of the intelligent corporation has exacerbated this problem. The loopholes of pre-digital taxation laws based on a physical presence in a given country have been effectively exploited by platform companies to escape tax liability, through profit shifting to low-tax jurisdictions.
Similarly, when faced with liability for unfair market practices in overseas markets, it is very easy for platform companies to shift liability to their parent company outside the jurisdiction. For instance, Uber in South Africa resorted to the defence that its partner drivers were employees of the parent company headquartered in the Netherlands and not the South African subsidiary, in order to evade its liabilities under existing labour laws.
The lack of binding international regulations governing cross-border data flows has also aided rampant data extractivism, similar to the gap in global rule-setting on TNCs’ human rights obligations.
The enormous political clout of intelligent corporations has reached deadly proportions for democracy and politics. In the United States, for instance, when Amazon was looking for a site to house its new headquarters, city governments went into a tizzy, kowtowing desperately in the bidding process, as they wagered their hopes on Amazon HQ2 reviving their moribund local economies. One city even offered Jeff Bezos a permanent mayorship!
The intelligent corporation has had even greater success in casting the invisible net of discursive power to distract detractors than the industrial corporation. This is partly because of the persuasive power of the Californian ideology. Libertarian founders in the early tech era were able to package an unwavering commitment to personal liberty and economic freedom as freedom from regulation, placing a blind faith in the Internet’s inherent democratic potential.
Even the Chinese tech companies, with a different genealogy of a state-backed, hyper-nationalistic capitalism, have deployed a pared-down version of this neoliberal economic vision in their appeals to global audiences. For instance, in his plenary intervention at the 2018 World Trade Organization (WTO) Public Forum, Jack Ma, founder of the Alibaba group and the e-World Trade Platform initiative, observed that leveraging the digital opportunity for small businesses, women, and young people, especially those in developing countries, was about fewer rules and freer digital trade.
While capitalism’s inroads into development philanthropy is by no means new, Big Tech’s global giving scope and ideological prowess takes the depoliticisation of development to new levels.
More recently, in the wake of malpractice lawsuits brought against Big Tech by their own employees, exposes about founding CEOs who have enjoyed a godly status, and public disenchantment with multiple revelations of clandestine data mining and algorithmic gaming, the early sheen seems to be wearing off.
Alphabet (Google’s parent company) can no longer use its‘Do the right thing’ motto without irony. Facebook has been forced to switch to the ‘too big to fail’ defence from the ‘protector and defender of the freedoms of the global community’ line. Alibaba may not be able to proclaim its commitment to SME development in Africa for much longer.
The façade has crumbled. And this rupture in the discursive hegemony of the intelligent corporation in which we are currently situated is the right moment to mount a collective challenge.
So, resist we must, so that the wealth of data and of networks can be appropriated and used to create a just and humane society. This means taking the intelligent corporation by the horns, and forging a movement that is able to grapple with the ethical–political boundaries of digital intelligence.
Taming the Leviathan and reclaiming the planet
Given the enormous economic and political clout of the modern corporation in the age of data, unshackling people and the planet from corporate power is an urgent task.
Struggles against the extreme unfairness of the global trade and intellectual property regime by transnational social movements have shown the necessary connection between the agenda for development justice and the dismantling of corporate power. Building alliances among movements has become a vital strategy in halting TNCs’ inexorable plunder.
The trade justice movement against corporate globalisation, the environment movement’s quest for sustainable development, feminist struggles to reclaim the body and the sphere of social reproduction from capital, and workers’ struggle against the intensified squeeze on labour and the dismantling of social protection in neoliberal globalisation are inspiring examples in this regard.
Transnational civil society has painstakingly built alliances and solidarities across these movements to expose corporate excess, bringing pressure on the UN for a global binding treaty on TNCs’ human rights obligations in the face of near-insurmountable odds.
In the digital age, as corporate power assumes indomitable proportions – with tech CEOs carving out data dominions that they rule over – current frameworks of power analysis and action may not go very far. A concerted and coherent strategy is urgently needed in order to enable a more equitable distribution of the gains of data-based intelligence.
The Digital Justice Manifesto released in November 2019 by the Just Net Coalition – through a process of strategic and sustained dialogue between digital rights, trade justice, feminist, environmental, labour, and human rights groups and activists – outlines such a roadmap. As the Manifesto underlines, we need immediate action along three broad fronts to reclaim digital power from the intelligent corporation:
(a) wresting back ownership of our personal and collective data and intelligence by instituting an economic rights framework for data resources.
(b) governing taking back critical platform infrastructures from private hands and running critical platform infrastructures as public utilities.
(c) enforcing a local-to-global governance model for digital and data infrastructure that supports local economies and democratic self-determination of collectivities, preventing the enclosure of entire market and social ecosystems by a centralised intelligence.
The governance of tech infrastructure must enable the flourishing of disparate local economies and multiple platform models against the totalising impetus of global intelligence capitalism.
In other words, the governance of tech infrastructure must enable the flourishing of disparate local economies and make room for multiple platform models to function (co-operatives, social enterprises, public etc.) challenging the totalising impetus of global intelligence capitalism.
Neoliberal globalisation and financialisation have led to profoundly unequal societies. The impunity of the TNC has been central to this dynamic.
Social movements have placed several creative proposals to counter this: mandating charter renewal every five years overturning the principle of corporations’ perpetual legal existence; taxing stock trade on the basis of the holding period to contain excessive financial speculation; placing a cap on the individual assets of founders/CEOs and so on.
‘Intelligencification’ demands a new frontier for resistance. The power of the intelligent corporation must be contained through tactics small and big in political and cultural realms. A new wisdom about the governance of data must be explored for a truly emancipatory future for all.
ABOUT THE AUTHORS
Anita Gurumurthy is a founding member and Executive Director of IT for Change. Anita works on digital economy and society issues, with a focus on the political economy of development. She writes regularly on the digital connection to social and gender justice.
Nandini Chami is Deputy Director at IT for Change. She is engaged in policy research and advocacy at the intersections of digital policy, development justice and gender equality. Her research interests are data justice, inclusive platform economies, and gender and digital trade.
If you are enjoying State of Power, please consider making a donation. No amount is too small. Your contribution will ensure our independence and sustain the Transnational Institute into the future.
The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.