RANA FOROOHAR: The consumer-led society, as long as prices are going down, there's no monopoly. The problem is price becomes irrelevant when you're dealing with an economy that's driven by data. Data is the new oil in this economy. Products are often being given away for free, but what's being harvested from you and from me is data.

If you go back to the father of modern capitalism, Adam Smith, he would have said that you need a few things in order for free markets to function properly. One is price transparency, equal access to information on both sides of a transaction, and a shared moral framework. I would argue that none of those things exist in surveillance capitalism as it is practiced today.

VINCENT CATALANO: Rana, welcome.

RANA FOROOHAR: Thanks for having me.

VINCENT CATALANO: That's great. We're going to talk about your book.

RANA FOROOHAR: Awesome.

VINCENT CATALANO: This book here, Don't Be Evil. I'm going to get to that title in a moment. How Big Tech Betrayed Its Founding Principles and All of Us. Okay, first of all, title. Don't Be Evil comes from Google's original garage mentality.

RANA FOROOHAR: Garage mantra. Yeah. Don't Be Evil was the official corporate mantra of Google for some time. It definitely came out of this utopian Silicon Valley, which that progression from utopia to now dystopia, which has been a 20-year cycle is something I very much try and chart in the book. I used Google, I could have used any number of big companies to reflect this but Google was really the beginning of the core business model of big tech that I focus on in my book, which is this idea of targeted advertising, surveillance capitalism, how that's evolved, how it's changed our economy, our politics, our brains.

VINCENT CATALANO: Understood and we're going to get to some of those items, particularly surveillance capital, because that appears to be a central point in a lot of this. Let's start with the subtitle, How Big Tech Betrayed Its Founding Principles and All of Us. Betrayed all of us. How did big tech betray us?

RANA FOROOHAR: Well for starters, the marketing deck is meant to sell books. But you know how that goes, why would that happen? No, I would say that there actually was a betrayal interestingly. One of the things I really poured over in researching this book was the original paper that was done at Stanford on search by Larry Page and Sergey Brin, who were, of course, the founders of Google. This is a paper from 1998, you can get it online.

When you look through this paper, it lays out what a search engine is, what the world wide web is, but also how do you monetize this stuff? What is the business model? It's very interesting this-- I think, in some ways, the fact that this point hasn't come out more is evidence of the fact that nobody reads anymore because you have to go down to the appendix and there's a section about advertising and its discontents. The pair really looks at what targeted advertising as a business model could do for the users and consumers and they say very clearly that this is probably not in the public interest, because hypertargeted advertising can be manipulated and misused so easily for disinformation by both companies, but also potentially public actors. In fact, the pair says, this is a strong reason why you might want to have a search engine in the public sphere, in the public interest. Of course, when you get close to IPO, the VCs don't want to hear that.

VINCENT CATALANO: That's for sure. Then when we become publicly traded, becomes a completely different story at that point and we'll touch on that. There's an element here, two core concepts. One deals with data and price. We're going to get into that and how much is my data worth and things of that sort. The other deals with this monopoly dimension of all of this and how the monopoly concept and definition of monopoly sounds like it needs to change. Is that a fair statement?

RANA FOROOHAR: I think it is a fair statement. I think that surveillance capitalism, and these data driven businesses are really a fundamentally different business model, or in some cases, harken back to an older business model. A lot of people make the comparison between the network power of the big tech platforms and the network power of say, the railroads which were, of course, eventually broken up because they owned both the means of transportation and we're owning the commerce on the rail lines that was decided to be unfair. That separation of platform and commerce is still something that exists to a certain extent in the financial sector.

That's an area to be revisited, but there's also a bigger issue here. One of the chapters in my book looks at the way in which Silicon Valley has really hijacked the political debate. Something that I found, and this is not unusual, you find academics that are paid for by big oil or finance or whatever. Silicon Valley has conducted a blanketing of our nation's capital of Brussels, of regulatory agencies in ways that I think are really unprecedented. If you look at the revolving door between the Obama administration and Google, it's pretty stunning. This company had the single most meetings in the White House during his entire tenure.

Even now, Google, Amazon, these are the single biggest corporate lobbyists. There's been such a capture, regulatory capture, cognitive capture that I think we have to start bringing the idea of power back into the conversation about the political economy and regulation. I think that you're going to hear a lot about that in 2020.

VINCENT CATALANO: I would imagine that we would. Let's come back to the issue of monopoly and specifically, the definition of monopoly and the definition in an industrial economy, the definition of monopoly deals with price and the impact to consumers and that type of thing. This is different.

RANA FOROOHAR: This is different. If you go back really starting with the Chicago School, you started to have a transition to the idea of a consumer-led society as long as prices are going down, there's no monopoly problem, the consumer is better off. We don't look at things like how big your market share is whether or not you're both owning the platform and operating on the platform as much as long as prices are going down, everything's fine. The problem is price becomes irrelevant when you're dealing with an economy that's driven by data.

Data is the new oil in this economy. Products are often being given away for free, but what's being harvested from you and from me is data and that is a very asymmetric transition or sorry, transaction. As I said in my first book, Makers and Takers, if you go back to the father of modern capitalism, Adam Smith, he would have said that you need a few things in order for free markets to function properly. One is price transparency, equal access to information on both sides of a transaction and a shared moral framework. I would argue that none of those things exist in surveillance capitalism as it is practiced today.

VINCENT CATALANO: Sure. Well, and none of that seems to-- well, some of it exists, in overall the economic theory that underpins a lot of this, which is neoliberalism.

RANA FOROOHAR: Indeed, which is also under challenge, I think.

VINCENT CATALANO: Sure. Exactly. Well, you mentioned Chicago School, and that's the institution that really is the advocate for what I call Friedmanism, because that's really-- Keynesianism, Friedmanism, neoliberalism. Back on the price issue, a quote from your book, "In a world where data is the new currency, prices and insufficient, if not irrelevant, metric." I think that that point really needs to be emphasized to the viewers. They need to understand the fact that, yeah, everything is free. Things are cheap. We're getting a lot of benefits, we're using all of the services, etc., but there is a price to be paid in the form of the data being captured and we're going to get to a little bit cognitive thing I know is one of your areas. I want to tie that in with addiction in a moment.

RANA FOROOHAR: You're bringing it home now.

VINCENT CATALANO: I know. That's in your book, in both books actually, but this one in particular, but the cognitive issues, again, emphasize the point about price being an insufficient, if not irrelevant, metric. That's a challenge.

RANA FOROOHAR: Very much. Even just understanding what the value of data is, is a challenge. If you think about it, and this is an easy line for big tech companies to push back on, your tiny bit of data about where you shopped for your sneakers is, it has a small value, but what really has value is the layering of lots of different data patterns across a wide population. That's why big tech firms love to go in, their business model is to go in, not worry about profits, grab as much market share as possible, and then start mining that layering data that gives them more information for their algorithms that leads to better outcomes.

The question is, have they ringfenced entire areas of the economy in such a way that you now have an unequal playing field for other competitors and innovators to come up? I would argue, yes. There's a lot of ways that you can flush that out. One of the things is over the last 20 years, as these companies have gotten bigger and bigger, by the way, creating far fewer jobs than previous generations of tech companies or industrials, entrepreneurial zeal by many metrics, and our economy has gone down. I know one of the things that came up in my book, I would have been here just randomly at dinner parties, at conferences, from entrepreneurs and all areas that were just unable to even get into the market now with good ideas because so much of it had been ringfenced.

VINCENT CATALANO: In a weird take-all environment indeed, that makes it incredibly difficult and when you have major companies doing, in some cases, catch and kill.

RANA FOROOHAR: Indeed, yeah. Absolutely.

VINCENT CATALANO: Much of that referred to in a corporate sense, but it is happening in this regard. Little bit of a challenge here for you in regards to, "We are the product." In the capture of information, Shoshana Zuboff stating, "You are not the product but rather the abandoned carcass." Interesting.

RANA FOROOHAR: Well, Shoshana has a very strong worldview. She's been on a 10-month book campaign to change the nature of capitalism. I probably wouldn't go that far but I can see why she does. She views surveillance capitalism as really a fundamentally new system that is going to undermine, not just capitalism itself in a very Marxist way that we're eating our self within the system, but that it's going to undermine liberal democracy, and even free will. Those two points I would agree with actually.

If you look at surveys of countries in which more people get their news from social media, more people are spending time online, that actually coincides with a decline in trust in liberal democracy for all reasons. I think that to the extent that our brains are being harvested, our information is being harvested, our thoughts are being harvested, which we're just at the tip of the iceberg here because we haven't even gotten into the physical world of data, smart sensors and everything from this coffee cup to that table, the Internet of Things.

The fact that you will now be surveilled, not just online, but when you're crossing the street or when you're in your car or when you're in a retail shop, that amount of information and where it can then lead you-- think about typing now, in pattern recognition. I sometimes like Google finished my sentences, where does that lead us? Do we actually have choice anymore? Not just in consumer products but in political candidates, in our thoughts.

VINCENT CATALANO: True. Exactly. Living in the matrix.

RANA FOROOHAR: Living in the matrix. Yeah.

VINCENT CATALANO: Let's bring this down to a personal level, and really cut to the chase in terms of the impact that maybe not everyone sees. I believe that this comes from Shoshana again, one of the things that what we're talking about here allow advertisers to pinpoint the exact moment when a teenager needs a confidence boost, and is therefore most vulnerable to a specific configuration of advertising nudges and queues. I think that that's something that you think about, okay, well, what's so bad about finishing a sentence, etc.? What happens when you have an environment, a system that then guide you towards a certain way of thinking, that you said--

RANA FOROOHAR: You're really bringing this home now because of course, I got involved with writing this book for two reasons, one of which is I'm a columnist at TFT and I follow the money and the money is in big tech. 80% of corporate value is now living in 10% of firms that own the most data and IP. Setting that aside, the other reason I got interested is that my son became a video game addict. I came home one day about three years ago, opened up a credit card bill and looked through it and there were multiple charges in the $1.99, $5 amounts. I total them all up. It was over $900. I thought, my God, I've been hacked.

Then when I looked more closely, I noticed that they were all from the App Store. I thought, aha, who has my password? My 10-year-old son. I went to talk to him about this. This is a boy really isn't my mother's pride here, he knows to ask before using my password, and I questioned him about it. What became clear to me and I was really questioning as a journalist, it was as though he had fallen into this game and he didn't really fully understand that when he clicked on this coin or that icon that he was spending my money.

The game is, as are so many apps, so many games, really everything that we use online, it includes persuasive nudges, persuasive technologies that are built. They're blending BF Skinner, clicker dogs and clickers and casino gaming techniques and sticking them into algorithms and apps that literally can guide you to a certain place, a certain outcome. To me, that is really problematic. I could run you through the statistics about anxiety and depression and the inability of kids to read and focus on big complex problems now because of the time spent online.

Let's just think about what that means when you add in things like voice assistance, and I'm asking Alexa for a product idea. I'm being pushed to something that isn't Jeff Bezos best interest isn't in mind. Who knows? Where does that go politically and we haven't even gotten into the fact that there are entirely other parts of the world, China namely, that are complete surveillance states. There are no assumptions of privacy, and they would love to be able to guide citizens down certain paths or keep them in certain paths.

VINCENT CATALANO: That I think in a larger context is the personal threat. That appears to be there. The economic threat that Shoshana writes about, and you talk about and write about deals with an economic system that we have here. Here's a challenge point for you. How do we change an economic system without there being a fundamental change and an economic theory that underpins it?

In other words, what you have today is you have neoliberalism. Everything that I hear that's recommended and suggested, things like wealth taxes, etc., and regulatory changes, and all of that stays within the neoliberalism system. It's not a replacement of, it's a modification of that system. That's there. Whereas Friedmanism, neoliberalism, in effect, to a large extent replace Keynesianism. Keynesianism replaced laissez faire. How do we get change other than almost like working at the margins?

RANA FOROOHAR: It's such an interesting question. It's such a deep question, imminent, and it's the question of our age. Let me start by saying that these things don't happen, as you well know, in one silver bullet take. The Chicago School is when you break it down a series of 40 years of small tweaks, and yes, there was a system underpinning it, I think we are shifting into what is going to be a new system. In fact, I think in some ways, the battles between a company like say Facebook and politicians like Elizabeth Warren are in a way, a bigger battle between neoliberalism and call it what you will, it may be patriotic capitalism, it may be some economic nationalism.

It may be some global realization 2.0 that is just simply more regional. Raj Rajan, who used to be the head of the Central Bank of India, professor at University of Chicago had a wonderful book looking at the idea that unfettered globalization which is underpinned by the theory of economics around neoliberalism, has always allowed capital to fly 35,000 feet over the problems of the nation state, and in particular, the workers in those and the citizens in those countries. That system is no longer sustainable. Everything in our politics globally now tells us that that is no longer sustainable.

You might start to see somewhat of a pullback and you are already seeing this, both in Europe and to a certain extent, in the US, where you say, all right, we have to check certain aspects of this neoliberal, hyperglobalized system. Maybe you need to give back a little in order to keep what you have. By the way, I would say the same on taxes, I think this is a conversation I'm sure many of your viewers and listeners are having right now. I think a lot of people at the top of the food chain realize we're going to have to give back a little bit and bend a bit or the system is going to break.

VINCENT CATALANO: I'm skeptical. I'm an analyst, I'm supposed to be skeptical. I'm skeptical in regards to and on this point that we're talking about here. Related to it is the operating system that exists. The operating system that exists is justification for actions that you do. Therefore, if you have finance and institutional investors, really in effect, let's call them the tail, wagging the economic dog and so, that ties in with the whole issue of C-suite executives, stock options, everything.

RANA FOROOHAR: You've just summarized the problems I sent out in my first book, Makers and Takers, really well, and that book was started from exactly what you're saying, this idea. I've been a financial and economic journalist for about 30 years. Worked in venture capital briefly. I've been a watcher, observer of the markets for some time and I would look and say, all right, I know the CEO is a smart guy. Why is he making this incredibly shortsighted decision that's going to kick up his--

VINCENT CATALANO: Short-termism.

RANA FOROOHAR: Yeah, short-termism. It's going to mean that they're going to have a major supply chain disaster in five years. You can see that happening now from Boeing to GE, to PGNE. It's all blowing up right now. It's interesting, because I think that this is the result of what I call financialization, this idea that the markets, which again, Adam Smith would have said, are a helpmeet. They're an intermediary between your savings and the productive use of capital investment into the real economy. That's what the finance markets are supposed to be not the end, but the thing in the middle.

Well,