The fall of Big Data and the rise of the Blockchain economy

Tuesday, October 30th, 2018

George Gilder’s Life After Google predicts the fall of Big Data and the rise of the Blockchain economy:

Famously, Google gives most of its content away for free, or (in comments Gilder credits to Tim Cook) if it’s free, you’re not the customer; you’re the product. That’s the least of it. Spanish has two words for “free”–gratis and libre. In our context it means gratis.

Let’s count the ways gratis benefits Google:

  • They are completely immune from any antitrust prosecution and most other regulatory oversight.
  • They can roll out buggy, beta software to consumers and improve it over time.
  • They don’t have to take responsibility for security. Unlike a bank, Google is at no risk if somehow your data gets corrupted or stolen.
  • They provide no customer support.
  • Your data doesn’t belong to you. Instead it belongs to Google, which can monetize it with the help of AI.
  • You get locked into a Google world, where everything you own is now at their mercy. (I’m in that situation.) Your data is precisely not libre.

Note that Google didn’t even bother to show up at the recent Congressional hearings about “fake news.” They consider themselves above the law (or, perhaps more accurately, below the law). They can get away with this because it’s free.

There are some disadvantages.

  • It’s not really free, but instead of paying with money you pay with time. Attention is the basic currency of Google-world.
  • People hate ads. “[O]nly 0.06 percent of smartphone ads were clicked through. Since more than 50 percent of the clicks were by mistake, according to surveys, the intentional response rate was 0.03 percent.” This works only for spammers. Ad-blockers are becoming universal.
  • Google thinks it can circumvent that by using AI to generate ads that will interest the user. No matter–people still hate them.The result is the value of advertising is declining. Gilder does not believe that AI will ever solve this problem. (I agree with him.)
  • Most important–Google loses any information about how valuable its products are. Airlines, for example, respond sensitively to price signals when determining which routes to fly, what equipment to use, what service levels to provide, etc. Price is the best communication mechanism known for conveying economic information. You immediately know what is valuable to consumers, and what isn’t.Google loses all that information by going gratis.Is Gmail more valuable than Waze? Google has no idea. As a result it has no way of knowing where to invest its money and resources. It’s just blindly throwing money at a dartboard.


  1. Kyle Munson says:

    While I get your point, ANY system or process can be controlled and manipuated.

    Blcokchain will be no different.

    The internet was supposed to offer freedom, yet has come under control of a few large corporations, for the sake of driving profits to their shareholders.

    Consider the relative success of Facebook, the relative failure of Myspace. The relative success of Google, the relative failure of Alta Vista.
    And on on…..

    Interestingly, both Google (Alphabet) and Facebook are owned by many of the same largest institutional shareholders (source =

    If blockchain catches on, and proves valuable, it will be controlled by those with the power & money to do so.

    Yes, Google will eventually go away, nothing lasts forever.
    But those same largest institutional shareholders will gobble up the replacement.

    Side note: Just three money-management firms own over $16 TRILLION of a total $90 trillion U.S. markets capitalization. That over 17 percent of the entire markets…..owned by just THREE firms.
    Just a couple handfulls of collaborating firms combined own upwards of 40-50 percent of the entire markets.

    Ultra-wealthy individual investors, combined with these firms, own upwards of 90 percent of all stocks.

    They have created virtual monopolies, via their large share holdings of the largest “competing” corporations, in most every single industry.

    They own not only Alphabet, and Facebook, but also Apple, Yahoo, Microsoft, Amazon, Netflix, IBM, and other of the largest “competing” tech firms.

    They don’t care about any one asset, as long as enough profit is generated in the end.

    Choosing IOS over Android? They don’t care, they profit from both.

    Cutting Cable for streaming? Big deal, they own the largest cable and streaming companies.

    Ditto in most ever single industry as well.
    Banking, insurance, manufacturing, autos, pharma, telecom, defense, energy/utilties, clothing, food, retail, etc…..

    As you state, “As a result it has no way of knowing where to invest its money and resources. It’s just blindly throwing money at a dartboard.”
    Ditto for most investors…’s called diversification.

    Google, like most else, is prone to the 80/20 or Pareto Principle.
    20 percent of it’s products generate some 80 percent of revenue.

    They have dozens, if not hundreds of different products….yet most are money-losers, whilst a few subsidize the rest.

    This is why the largest investors diversify, and why the absolute largest (money-management firms) own the largest “competitors” in most ever industry.
    They’ve truly no idea what’ll hit & what’ll miss.
    Their best bet is by owning so much, the 20 percent will offset the 80 percent.

    This is the “secret” of success.
    Success is largely accidental, or due to luck.

    But the successful will never admit (or realize) that fact.

    Beyond that, Blockchain actually fits right into the Big Data corporate profit mold.

    With Blockchain, there is still recordkeeping, thus data to mine.

    Plus, as in the case of Mycelia, “that gives artists more control over how their songs and associated data circulate among fans and other musicians.”
    Thus,we’re back to control issues.

    Even the legal concept of “Blockchain” is currently up for debate.
    And often in the legal realm, the most money wins.

    Just wait……this too will eventually be exploited.

    Those with the most money eventually come to control everything.

    But it’s a nice dream.

  2. Felix says:

    Does Google not know how valuable its products are because they don’t have pricing information? Sounds silly.

    They do have rather a lot of information about whether their products are used or not. When. How. By whom. Etc.

    That is even better information than pricing information.

  3. Felix says:

    Kyle, it seems a bit of a stretch to say that these money management outfits “own” the companies they own stock in. That would imply that stock ownership is something close to corporate ownership.

    Who has first cut at the money coming in to a public corporation? Who calls the shots as to what a public corporation does? Who takes the earliest and hardest hit when things go badly?

    Heck, on some of such “who-is-an-owner” lists, various governments appear before stock owners. They take their cut before stockholders, for instance.

    Anyway, money management outfits are professional gamblers who charge to place their customers’ bets in ways generally known only to the outfit. Stocks to them are something to put bets on, not to “own”.

  4. CVLR says:

    “With Blockchain, there is still recordkeeping, thus data to mine.”

    It’s even better than that: with “blockchain” (god, it sounds buzzwordy already), the recordkept data are perfectly public, an unrestricted, unguarded commons.

    “Beyond that, Blockchain actually fits right into the Big Data corporate profit mold.”

    What, don’t you want to digify everything that was previously informal and ad hoc social, and attach it all to the Panopticon Internet? Get with the program, my dude! Worrying about having alignment of interest with your thermostat is so last millennium.

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