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Tech by VICE

Groupon, Aaron Swartz, and the Failings of the Second Great Tech Boom

Today, as the second bubble slowly deflates, the network has evolved from curiosity to necessity, and as such is under greater threat than ever before.

Mar 12 2013, 2:50pm
Former Groupon CEO Andrew Mason, left, and Aaron Swartz.

Andrew Mason’s resignation from Groupon comes up over beers. “Feels like the end,” my techie friend tells me. Five years after a crew of ragtag artist types, with the backing of a benevolent financier, turned a tiny campaign site into a multi-billion dollar deal-of-they day empire, its affable leader has stepped down. The bubble has finally popped.

Not that Mason needs our sympathy. Even as Groupon sits at $5.49 a share, having lost three quarters of its value since an IPO that propelled the company to an astronomical $13 billion valuation, Mason’s Chase account is doing just fine. But Groupon, then the biggest tech offering since Google, epitomizes the disappointment of Silicon Valley's second coming and the once lofty promises of the network that binds us all.

The first Silicon Valley bubble was fueled by the belief that the Internet would be the key to free us from our shackles. By empowering the individual, it was supposed to usher in the age of information, instant (free) access to the knowledge and culture of humanity and the power to transcend censorship. A seemingly immutable platform for protest, it was deemed the savior of free speech and an unprecedented opportunity for meritocracy. It was to be the voice of the people and a vehicle for transparency and accountability against the powers that be.

At first, it did just that–swimmingly, in fact, blossoming into a bastion of information, real-cum-virtual relationships, and free enterprise. We got email, the mp3, and Wikipedia. We could chat and share and play with anyone around the world, always connected.

Even as the halcyon days of Silicon Valley faded into a sea of killer apps, the internet only grew in its role as an information clearinghouse. Videos stayed on YouTube. Bloggers called out big media. Anonymous called out Scientology. WikiLeaks called out America. In the Arab Spring, we had our first social network-fueled revolution. There were moments when the shift in power was palpable.

Today, as the second bubble slowly deflates, the network has evolved from curiosity to necessity, and as such is under greater threat than ever before, perpetually assaulted by acronyms like CISPA and SOPA. Those fighting for its freedom–no matter the size of their ego or potentially dubious nature of their intentions–have never been more brutally and broadly persecuted. Julian Assange is on lockdown, Kim Dotcom awaits extradition, and Aaron Schwartz, at just 26, became a tragedy.

In countries like China, Bahrain, and, of course, North Korea, firewalls and filters prevail. As nations quietly wage cyberwar, our infrastructure and systems have never been less secure. And individuals have become tiny nodes pushed to the fringe, tethered to an authoritarian central server, where freedoms are readily compromised so that the machine can keep on humming.

In the name of convenience, we've surrendered our data. And in the name of progress, we're not sure if we even care.

In a post-9/11, post-Facebook, post-cloud reality, the notion of privacy is forever muddled. In the name of sharing, we give it up willingly. In the name of national security, the U.S. will pry, request, and monitor its citizens, often without a warrant. In the name of advertising, cookies follow and track us wherever we go. In the name of self-preservation, respected institutions like Harvard readily read staff emails. In the name of convenience, we've surrendered our data to Google. And in the name of progress, we're not sure if we even care.

Twitter takes down tweets and hands over sources. China listens in on Skype. The RIAA and MPAA battle BitTorrent while everyone loses. Comcast, Time Warner Cable, and Verizon generously allow six strikes. The legacy of Martin Luther King, Jr. is silenced by copyright. Knowledge becomes intellectual property. History falls victim to DMCA takedown. Apple betrays innovation and patents the obvious. Ideas aren't shared, they're claimed and trolled. Victory is determined on the basis of first-come-first-serve. Secrets abound, whistleblowers are tortured and held without trial.

Even information’s very accessibility can be a mirage. Here, the internet confirms what we already know or think we know. Inundated by Big Data, black-box algorithms funnel us into an echo chamber of preconceived biases. In a sea of shouting, only the prominent or provocative are heard. For far too many, evolution and global warming still fall into the realm of questionable fantasy as opposed to indisputable fact.

Drowned out by noise, the signal is lost, evidence is obscured, and the truth remains hidden. Distracted by our shiny new toys, we willfully ignore it, eagerly trading enlightenment for endless entertainment and virtual validation. Amid the confusion, profiteers prey on the gullible and the weakcatfish con the insecure and outcast, and perverts peep us through our webcams. In our interconnected ubiquity, we find ourselves profoundly lonely.

Reed Hastings discusses his new startup Netflix in 2001. The next generation has birthed social coupons and Facebook gaming conglomerates.

And so we have Groupon, borne out of hype and our viral need to consume. It’s a billion-dollar company we, at one point, willingly let spam our inboxes in the name of saving a few bucks for things we likely didn't need. Not that there’s anything wrong with coupons--I used a LivingSocial deal just the other week--but for a firm Google once valued at $6 billion, you have to wonder, is this the best Silicon Valley has to offer? What sort of value have we added?

Value is something the Groupon board grapples with as fervor subsides and growth stagnates. With little room left for expansion, the latest idea is to become Amazon-lite. But as we’ve learned about information networks, there’s usually only one sheriff in town. Speaking of LivingSocial, the number two deals site is a trainwreck.

Just enjoy the shiny gadget and ignore the fact that your data,
which you no longer own, is being commodified.

We also have Facebook, which is at once powerful and totally lame; elementary to our new existence but, more often than not, also kind of trivial. Along the way, Mark Zuckerberg began leveraging our friends and Likes in search of revenue to appease Wall Street after an IPO that, at its height, valued the overarching social network at $100 billion.

As this latest bubble bursts, Facebook joins Apple and Google as the titans of information, the former having created the mobile hardware by which we manipulate it, and the latter having economically leveraged our need to seek it. More than any other company, Google has successfully transformed the way we interact with the network by providing an essential software suite that profitably made us the product.

Meanwhile, our smartphones have never felt like technology we actually own, unlike the desktop computers that preceded them. Locked and leased from our spectrum overlords, we have little option but to pay rent for the utility of their noncompetitive networks.

Less so a library, the internet feels like a mall, albeit one with a robust newsstand (and adult video section). It's open 24/7 and now offers same-day delivery. Less so a school, it's a playground, equipped with a billboard for our personal brand. From this vantage point, the internet is less the revolutionary invention that it is, or can and should be, instead acting as a glorified telephone and digital, sepia-filtered distraction, one lubricated and optimized for constant, frictionless consumption.

Along these lines, James Temple of the San Francisco Chronicle called out Silicon Valley on its hypocrisy and its promises to change the world through the power of technology, citing a speech at a TechCrunch conference in 2011.

"Technology innovation in this country is somewhere between dire straits and dead," said PayPal co-founder, Max Levchin at the time. "The solution is actually very simple: You have to aim almost ridiculously high." 

Levchin’s two ventures since then? Slide, a photo-sharing service for taking care of your virtual “SuperPoke!” pets and Affirm, a venture that lets Facebook users buy things using their profile, a far cry from the rhetoric he championed only two years ago. Not disruption, but subjugation.

There is, of course, Elon Musk, the big picture serial entrepreneur who one day hopes to die on Mars. Yet in the Valley, Musk is now the exception, not the rule, as he ponders electric vehicles and reusable rockets. Silicon Valley's second gold rush has birthed countless new apps and social networks, but in the end, few jobs. The ones it did produce have only furthered inequality, creating a few lucky billionaires while leaving many behind. Robots pick up the scraps.

Which brings us back to Aaron Swartz, our beloved cyberpunk martyr, the troubled but idealistic hacker who helped create RSS and the Creative Commons. Even he had become increasingly disillusioned in technology’s potential to truly make a difference. As Larissa MacFarquhar wrote in the New Yorker:

In the last years of his life, he decided that he disliked programming, that computers were awful in many ways, and that there were things more interesting than freedom of information. He would have liked to give up computers altogether. In the summer of 2009, he spent a month offline—no computer, no phone; mostly he just sat in his apartment and read—and he always described this month as the happiest of his life. But whenever Taren suggested that he do it again, or do something else that would make him happy—go for a hike, move to Boston—he would say that he didn’t care about being happy.

He became a political activist. He did not abandon his old issues entirely—he campaigned to prevent passage of the Stop Online Piracy Act, sopa. But he never felt as strongly about any new idea as he had once felt about them. He would adopt a cause, only to become dissatisfied, deciding that it wasn’t important enough, or was too unlikely to succeed, and he would move on to something else. He wanted to live an ethical life, but he was neutral about how he should do that.

So it may have been the disappointments and tribulations of technology, not the prospects of prison, that drove Swartz to the edge. A felony conviction would banish him from the one realm where he believed he could catalyze real change, politics. Swartz realized technology wasn’t the issue. It was the system. It was us. 

Yet as depressing as this dystopia can be, it’s the destined conclusion of another cycle.

We are, in more ways than one, better off, even if we haven't arrived as far as we would have liked and old problems persist. The evolution of technology is defined by constant tension, a persistent game of cat and mouse. Progress is as fickle as it is ruthless. As seamlessly as we adopt new paradigms, we bore of them just as easily. Uncertainty is guaranteed; change is undeniable.

Yet as depressing as this dystopia can be, it’s the destined conclusion of another cycle. Ultimately, the regulation of the wild west and the commercialization of the frontier was just as predictable as it was inevitable. And it would be unfair to undermine the often unquantifiable benefits of the information age.

And as powerful forces converge on and exploit the digital landscape, we invariably burrow deeper as conversations of cryptology and security emerge at the forefront. Surveillance is met with encryption. As smartphones transition from futuristic tools to everyday commodities, we look to the future, where centralized empires in the cloud like Google will still rule with self-driving cars and Project Glass, but also a future that may yet empower the powerless.

As one cycle ends, new ones undoubtedly emerge, as we rest our hopes in movements like open source, peer-to-peer, decentralization, and DIY; technologies such as 3D printing, drones, and Bitcoin; and ideals founded on equality, self-sufficiency and sustainability. Together we soldier on and trudge forward.

"I'm OK with having failed at this part of the journey," wrote Mason in his resignation letter. "I'll now take some time to decompress, and then maybe I'll figure out how to channel this experience into something productive." And through our disappointment, we reflect, we learn, and we recover. We react, we adapt, and we rebuild, and eventually, like Mason, we will surely move on.


Silicon Valley
Andrew Mason
Aaron Swartz
social networking
tech bubble