25-06-2022

SaTurDay, June 25, 2022
5
Ben Tarnoff
One weekend in September 1995, a
software engineer made a website. It
wasn't his first. At 28, Pierre Omidyar
had followed the standard accelerated
trajectory of Silicon Valley: he had
learned to code in seventh grade, and was
on track to becoming a millionaire before
the age of 30, after having his startup
bought by Microsoft. Now he worked for
a company that made software for
handheld computers, which were widely
expected to be the next big thing. But in
his spare time, he liked to tinker with side
projects on the internet. The idea for this
particular project would be simple: a
website where people could buy and sell.
Buying and selling was still a relatively
new idea online. In May 1995, Bill Gates
had circulated a memo at Microsoft
announcing that the internet was the
company's top priority. In July, a former
investment banker named Jeff Bezos
launched an online storefront called
Amazon.com, which claimed to be
"Earth's biggest bookstore". The
following month, Netscape, creator of the
most popular web browser, held its initial
public offering (IPO). By the end of the
first day of trading, the company was
worth almost $3bn - despite being
unprofitable. Wall Street was paying
attention. The dot-com bubble was
starting to inflate.
If the internet of 1995 inspired dreams
of a lucrative future, the reality ran far
behind. The internet may have been
attracting millions of newcomers - there
were nearly 45 million users in 1995, up
76% from the year before - but it wasn't
particularly user-friendly. Finding
content was tricky: you could wander
from one site to another by following the
tissue of hyperlinks that connected them,
or page through the handmade directory
produced by Yahoo!, the preferred web
portal before the rise of the modern
search engine. And there wasn't much
content to find: only 23,500 websites
existed in 1995, compared to more than
17m five years later. Most of the sites that
did exist were hideous and barely usable.
But the smallness and slowness of the
early web also lent it a certain charm.
People were excited to be there, despite
there being relatively little for them to do.
They made homepages simply to say
hello, to post pictures of their pets, to
share their enthusiasm for Star Trek.
They wanted to connect.
Omidyar was fond of this form of online
life. He had been a devoted user of the
internet since his undergraduate days,
and a participant in its various
communities. He now observed the rising
flood of dot-com money with some
concern. The corporations clambering on
to the internet saw people as nothing
more than "wallets and eyeballs", he later
told a journalist. Their efforts at
aLex hern
Asking people to be nice on
Twitter makes people nicer
on Twitter, the company has
announced, hailing the
success of an experiment
that prompts users to
reconsider tweets that might
be hurtful or offensive. Since
2020, the social network has
tried to encourage users to
be more considerate of
others, by algorithmically
spotting posts that appear
aggressive or mean-spirited
and prompting users to
consider whether they want
to send them, asking: "Want
to review this before
tweeting?"
Now, in a study coauthored
with Matthew
Katsaros at Yale Law School,
Twitter researchers say the
ebay's German headquarters in 2006.
commercialisation weren't just crude and
uncool, they also promoted a zombie-like
passivity - look here, click here, enter your
credit card number here - that threatened
the participatory nature of the internet he
knew.
"I wanted to do something different,"
Omidyar later recalled, "to give the
individual the power to be a producer as
well as a consumer." This was the
motivation for the website he built in
September 1995. He called it
AuctionWeb. Anyone could put up
something for sale, anyone could place a
bid, and the item went to the highest
bidder. It would be a perfect market, just
like you might find in an economics
textbook. Through the miracle of
competition, supply and demand would
meet to discover the true price of a
commodity. One precondition of perfect
markets is that everyone has access to the
same information, and this is exactly
what AuctionWeb promised. Everything
was there for all to see.
The site grew quickly. By its second
week, the items listed for sale included a
Yamaha motorcycle, a Superman
lunchbox and an autographed Michael
Jackson poster. By February 1996, traffic
had grown brisk enough that Omidyar's
web hosting company increased his
monthly fee, which led him to start taking
a cut of the transactions to cover his
expenses. Almost immediately, he was
turning a profit. The side project had
prompts do indeed work to
encourage a change in
behaviour - and that the
change sticks around long
after the prompt was shown.
"We found that out of
every 100 tweets where
users were prompted to
reconsider, the following
actions were taken: 69 were
sent without revision; 9 were
cancelled; [and] 22 were
revised," wrote Twitter's
Kathy Yang and Lauren
Fratamico. Of those 22
revisions, only one was
rewritten to be made more
offensive, and more than a
third were redrafted to be
more palatable.
The effect lasts longer than
simply the initial tweet;
compared with users who
didn't see a prompt, the
incidence of repeat offences
dropped by a fifth among
those who were shown
warnings. "This represents a
broader and sustained
change in user behaviour,
and implies that receiving
prompts may help users be
more cognisant of avoiding
potentially offensive content
as they post future tweets,"
the researchers write.
And the benefit goes both
ways: "reducing the number
of harmful and offensive
tweets that a user sends also
reduces the number that
they receive … When a user
turns a conversation
negative, or when they
extend an already negative
thread, their reply tweet can
become the new root for
other users to contribute
negatively." By encouraging
users to rethink hostile
become a business.
But the perfect market turned out to be
less than perfect. Disputes broke out
between buyers and sellers, and Omidyar
was frequently called upon to adjudicate.
He didn't want to have to play referee, so
he came up with a way to help users work
it out themselves: a forum. People would
leave feedback on one another, creating a
kind of scoring system. "Give praise
where it is due," he said in a letter posted
to the site, "make complaints where
appropriate." The dishonest would be
driven out, and the honest would be
rewarded - but only if users did their part.
"This grand hope depends on your active
participation," he wrote.
The value of AuctionWeb would rely on
the contributions of its users. The more
they contributed, the more useful the site
would be. The market would be a
community, a place made by its
members. They would become both
consumers and producers, as Omidyar
hoped, and among the things they
produced would be the content that filled
the site.
By the summer of 1996, AuctionWeb
was generating $10,000 a month.
Omidyar decided to quit his day job and
devote himself to it full-time. He had
started out as a critic of the e-commerce
craze and had ended up with a successful
e-commerce company. In 1997, he
renamed it eBay.
Ebay was one of the first big internet
Twitter’s niceness prompts
do alter behavior
eBay’s magic of turning internet into a marketplace
approaches, the social
network also helped them
make life more pleasant for
themselves.
The experiment's success
was welcomed by social
media experts. "It turns out
that if you do even the bare
minimum you can sizeably
reduce how horrible Twitter
users treat each other," said
Ryan Broderick, an internet
culture writer who runs the
Garbage Day newsletter.
"The fact Twitter, as a
company, had to come up
with a 'please don't
cyberbully each other'
warning for their users is a
wildly embarrassing
summation of how vicious
they've allowed their website
to become, but, hey, if it
works, it works."
Photo: Sean Gallup
companies. It became profitable early,
grew into a giant of the dot-com era,
survived the implosion of the dot-com
bubble, and still ranks among the largest
e-commerce firms in the world. But what
makes eBay particularly interesting is
how, in its earliest incarnation, it
anticipated many of the key features that
would later define the phenomenon
commonly known as the "platform".
Ebay wasn't just a place where collectors
waged late-night bidding wars over rare
Beanie Babies. In retrospect, it also
turned out to be a critical hinge in the
history of the internet. Omidyar's site
pioneered the basic elements that would
later enable Google, Facebook and the
other tech giants to unlock the profit
potential of the internet by
"platformising" it.
None of the metaphors we use to think
about the internet are perfect, but
"platform" is among the worst. The term
originally had a specific technical
meaning: it meant something that
developers build applications on top of,
such as an operating system. But the
word has since come to refer to various
kinds of software that run online,
particularly those deployed by the largest
tech firms. The scholar Tarleton Gillespie
has argued that this shift in the use of the
word "platform" is strategic. By calling
their services "platforms", companies
such as Google can project an aura of
openness and neutrality. They can
present themselves as playing a
supporting role, merely facilitating the
interactions of others. Their control over
the spaces of our digital life, and their
active role in ordering such spaces, is
obscured. "Platform" isn't just imprecise.
It's designed to mystify rather than
clarify.
A more useful metaphor for
understanding the internet, one that has
guided its architects from the beginning,
is the stack. A stack is a set of layers piled
on top of one another. Think of a house:
you have the basement, the first floor, the
second floor and so on, all the way up to
the roof. The things that you do further
up in a house often depend on systems
located further down. If you take a
shower, a water heater in the basement
warms up the cold water being piped into
your house and then pipes it up to your
bathroom.
The internet also has a basement, and
its basement also consists largely of pipes.
These pipes carry data, and everything
you do further up the stack depends on
these pipes working properly. Towards
the top of the stack is where the sites and
apps live. This is where we experience the
internet, through the pixels of our
screens, in emails or tweets or streams.
The best way to understand what
happens on these sites and apps - on what
tech companies call "platforms" - is to
understand them as part of the broader
story of the internet's privatisation.
The internet started out in the 1970s as
an experimental technology created by
US military researchers. In the 80s, it
grew into a government-owned computer
network used primarily by academics.
Then, in the 90s, privatisation began. The
privatisation of the internet was a
process, not an event. It did not involve a
simple transfer of ownership from the
public sector to the private, but rather a
more complex movement whereby
corporations programmed the profit
motive into every level of the network. A
system built by scientists for research was
renovated for the purpose of profit
maximisation. This took hardware,
software, legislation, entrepreneurship. It
took decades. And it touched all of the
internet's many pieces.
The process of privatisation started
with the pipes, and then worked its way
up the stack. In April 1995, only five
months before Omidyar made the
website that would become eBay, the
government allowed the private sector to
take over control of the network's
plumbing. Households and businesses
were eager to get online, and telecoms
companies made money by helping them
access the internet.
But getting people online was a small
fraction of the system's total profit
potential. What really got investors'
capital flowing was the possibility of
making money from what people did
online. In other words, the next step was
figuring out how to maximise profit in the
upper floors, where people actually use
the internet. The real money lay not in
monetising access, but in monetising
activity. This is what Omidyar did so
effectively when he created a place where
people wanted to buy and sell goods
online, and took a cut of their
transactions.
The dot-com boom began with
Netscape's explosive IPO in August 1995.
Over the following years, tens of
thousands of startups were founded and
hundreds of billions of dollars were
invested in them. Venture capital entered
a manic state: the total amount of US
venture-capital investment increased
more than 1,200% from 1995 to 2000.
Hundreds of dot-com companies went
public and promptly soared in value: at
their peak, technology stocks were worth
more than $5tn. When eBay went public
in 1998, it was valued at more than $2bn
on the first day of trading; the continued
ascent of its stock price over the next year
made Omidyar a billionaire.
Yet most of the startups that attracted
huge investment during these years
didn't actually make money. For all the
hype, profits largely failed to materialise,
and in 2000 the bubble burst. From
March to September, the 280 stocks in
the Bloomberg US Internet Index lost
almost $1.7tn. "It's rare to see an industry
evaporate as quickly and completely," a
CNN journalist remarked. The following
year brought more bad news. The dotcom
era was dead.
Today, the era is typically
remembered as an episode of collective
insanity - as an exercise in what Alan
Greenspan, during his
contemporaneous tenure as chair of the
Federal Reserve, famously called
"irrational exuberance". Pets.com, a
startup that sold pet supplies online,
became the best-known symbol of the
period's stupidity, and a touchstone for
retrospectives ever since. Never
profitable, the company spent heavily
on advertising, including a Super Bowl
spot; it raised $82.5m in its IPO in
February 2000 and imploded nine
months later.
Arrogance, greed, magical thinking and
bad business decisions all contributed to
the failure of the dot-com experiment. Yet
none of these were decisive. The real
problem was structural. While their
investors and executives probably
wouldn't have understood it in these
terms, dot-com companies were trying to
advance the next stage of the internet's
privatisation - namely, by pushing the
privatisation of the internet up the stack.
But the computational systems that could
make such a push feasible were not yet in
place. Companies still struggled to turn a
profit from user activity.
The iPhone 6 and 6 Plus were among the handsets to receive the power management tool that is the subject of Justin
Gutmann's claim.
Photo: Stephen Lam
Apple to face £750m lawsuit
The company prompts users to consider whether they want to send certain tweets. Photo: chesnot
TechnoLoGy DeSk
Apple is facing a multimillion-pound legal
claim that could reimburse millions of
iPhone owners over a secret decision to
slow down older phones in 2017. An
undocumented battery management
system, released in a software update in
January that year, slowed down the
performance of older iPhones in order to
stop them shutting down without warning.
But Apple didn't give users the option to
disable the setting, and did not warn them
that their phones were being "throttled"
deliberately.
Justin Gutmann, a consumer rights
campaigner, has launched a claim against
Apple over the decision at the Competition
Appeals Tribunal. If he wins, the company
could be forced to pay damages of more
than £750m, spread out between the
approximately 25 million people who
bought one of the affected phones. The
claim relates to the iPhone 6, 6 Plus, 6S, 6S
Plus, SE, 7, 7 Plus, 8, 8 Plus and iPhone X
models.
Gutmann argues that Apple's decision to
throttle the phones wasn't disclosed to
users at the time, and was introduced to
disguise the fact that older iPhone batteries
were unable to cope with the new demands
placed on them. Rather than introduce a
battery recall or replacement programme,
or admit that the latest software update was
unsuitable for older devices, Apple pushed
users to install the update knowing it would
worsen their devices' performance, he says.
"Instead of doing the honourable and
legal thing by their customers and offering
a free replacement, repair service or
compensation, Apple instead misled
people by concealing a tool in software
updates that slowed their devices by up to
58%," Gutmann said.
"I'm launching this case so that millions
of iPhone users across the UK will receive
redress for the harm suffered by Apple's
actions. "If this case is successful, I hope
dominant companies will re-evaluate their
business models and refrain from this kind
of conduct."
Apple acknowledged the throttling
almost a year after it introduced it, and said
that it slowed down phones that had older
batteries, were running out of energy, or
were cold, which can affect the
performance of a battery. The company
said that when a battery was in a poor
condition it might not be able to supply the
required maximum current demanded by
the phone's processor at full speed. Before
the update, that would simply result in the
phone shutting down, and the update was
intended to instead allow the device to
continue running, but at a slower pace.
"We have never - and would never - do
anything to intentionally shorten the life of
any Apple product, or degrade the user
experience to drive customer upgrades,"
Apple said in a statement on Thursday.
"Our goal has always been to create
products that our customers love, and
making iPhones last as long as possible is
an important part of that." iPhones now
include a report in the settings menu, under
"battery health", that discloses whether the
throttling is in effect.
The UK claim is the latest in a long line of
lawsuits against Apple over the throttling.
In Italy, the company was fined €10m,
alongside Samsung, which was fined €5m
for a similar program. In the US, a classaction
lawsuit saw the company agree to
pay $25 per iPhone, capped at $310m, in a
settlement agreed in March 2020.