Max Levchin [one of the Silicon Valley elite—computer scientist, cofounder of PayPal, buddy of Peter Thiel, Yahoo director, restless entrepreneur, big thinker, venture capitalist, angel] gave the keynote Iat DLD13 in Munich recently, where he argues that “the next big wave of opportunities exists in centralized processing of data gathered from primarily analog systems” (think Über, neighborhood security, therapists, the human mind).
Yes, this approach has risks, but, he says, “as a species, we simply must take these risks, to continue advancing, to use all available resources to their maximum”. “The way to deal with risk is of course some form of insurance. Modeling loss from observed past events is hardly news, but dynamically changing the price of the service to reflect individual risk is a big deal. My expectation is that next decade we will see an explosion of insurance and insurance-like products and services — leveraging those very same network effects of data, providing truly dynamic resource pricing and allocation.”
In conclusion, Levchin believes “that in the next decades we will see huge number of inherently analog processes captured digitally. Opportunities to build businesses that process this data and improve lives will abound.”
The Big Brother consequences of this efficiency madhouse are obvious and Nicholas Carr couldn’t take it anymore:
“Levchin refers to “humans” as “analog resources,” a category we share with “cars, houses, etc.” The tragedy of analog resources is that they’re horribly underutilized. They spend a great deal of their time in idleness. Look out into the analog world, and you see a wasteland of inefficiency. But computers can fix that. If we can place sensors and other data-monitoring devices on all analog resources, including ourselves, then we can begin to track them, analyze them, and “rationalize their use.” […]
This is Clay Shirky’s “cognitive surplus” idea taken to its logical, fascistic extreme.” […]
This is the nightmare world of Big Data, where the moment-by-moment behavior of human beings — analog resources — is tracked by sensors and engineered by central authorities to create optimal statistical outcomes. We might dismiss it as a warped science fiction fantasy if it weren’t also the utopian dream of the Max Levchins of the world. They have lots of money and they smell even more. […]
It’s the ultimate win-win: you get filthy rich by purifying the tribe.”
Evgeny Morozov is worried as well about the marketing dangers of the Big Data craze.
So, asks GigaOm’s Mathew Ingram in his summary of the debate, “is the world of big data one in which information about us allows us to personalize services and benefit from that personalization, or is it one in which our data is used against us by companies and governments?”
“The common thread in both of these dystopian visions is a world in which our data is transmitted without our knowledge, and/or used against us in some way. Where Levchin seems to see an efficient exchange of data between user and service, one with benefits for both — and presumably a level (and secure) playing field in terms of who has access to it — Carr and Morozov see companies and governments misusing this data for their own nefarious purposes, while we remain powerless.
What makes it difficult to argue with either one is that we’ve already seen the building blocks of this potential future emerge, whether it’s Facebook playing fast and loose with the privacy settings of a billion people, or companies aggregating information and creating profiles of us and our activities and desires. What happens when the sensor-filled future that Levchin imagines becomes a reality? Who will be in control of all that information?”