The Prophet of Google's Doom
By Arnold Kling
- I believe the Google system of the world will fail, indeed be swept away in our time (and I am seventy-eight!). It will fail because its every major premise will fail.
- —George Gilder,
Life After Google1
Since the earliest days of the personal computer, George Gilder has been following the advice of one of his favorite computer scientists, Carver Mead, whose catch-phrase was, “Listen to the technology.” In his most recent book, what Gilder hopes he hears is the death knell of Google, which Gilder believes would herald greater freedom and economic growth.
Gilder believes that:
—Google’s idea of intelligence is too data-centric. Statistical analysis can only make rote predictions based on patterns found in the past. It cannot achieve creativity and surprise;
—Google’s technical architecture is too centralized. Soon, it will run out of computing power and bandwidth to be able to maintain its coverage of the world of digital media;
—Google and other Internet businesses are too insecure. While users struggle to recall passwords and get past security gates, hackers are able to steal millions of data records from centralized warehouses;
—Google’s business model is too socialist. Giving its products to consumers for free while relying on advertising serves to insulate Google from the price signals that markets use to guide economic activity.
The centralized technical architecture and business model follow from Google’s idea of intelligence. Gilder writes:
- If there is a moral imperative to pursue the truth, and the truth can be found only by the centralized processing of all the data in the world, then all the data in the world must, by the moral order implied, be gathered into one fold with one shepherd. Google may talk a good game about privacy, but private data are the mortal enemy of its system of the world.
- … If your business plan is to have access to the data of the entire world, then free is an imperative. At least for your “products.” For your advertisers, it’s another matter. What your advertisers are paying for is the enormous data and the insights gained by processing it…
- If you do not charge for your software services—if they are “open source”—you can avoid liability for buggy “betas.”… But don’t pretend that you have customers.
Almost twenty years ago, I pointed out2 that open-source software tends to disenfranchise the non-technical end user. When you are not paying for software, this limits your influence on its design. In the case of Google, user capabilities will always be compromised by the need to satisfy advertisers.
Gilder makes a case for what he dubs the “cryptocosm,” a computer architecture based on blockchain. This, he argues, will satisfy a need for security.
- For you, security means not some average level of surveillance at the network level but the safety of your own identity, your own device, and your own property.
Without security, Gilder argues, we cannot have property rights in the digital age. In his view, the private-key, public-key system incorporated into blockchain helps to protect digital property rights.
- Private keys enforce property rights and identities… The private responder proves identity by decrypting, amending, and returning the message encrypted anew with his private key… By decrypting the message with a public key, the final recipient is assured that the sender is who he says he is. The document has been digitally signed.
Later, writing about Blockstack, a blockchain-based authentication service, Gilder writes,
- Because each item—even copies—always bears different immutable time-stamps, property claims can always be differentiated.
As of now, the most famous application of blockchain is bitcoin, the digital asset. Many skeptics believe that bitcoin’s relationship to items of real value is tenuous. Gilder himself writes,
- Bitcoin is
- —that word again—a massively multiplayer online game… bitcoin is a game with attitude and altitude, ingeniously designed to infiltrate and transform our world.
Gilder later writes,
- Reports from the lushly lubed New York bitcoin entrepreneur Matt Mellon indicated that Goldman Sachs, Morgan Stanley, and an array of other plush old-guard forces are lining up to supply some $500 million more—all raising the piquant possibility that the bags for any so-called bitcoin Ponzi may be Goldman sacks.
Life After Google was fun to read; Gilder’s word plays are neologisms are amusing. His cantankerous opinions are entertaining. In the end, however, I was not persuaded (and perhaps even he was not persuaded) that blockchain will solve the problems with which he is concerned. Here are some reasons I offer to explain my skepticism:
1. The “Big Data” approach to acquiring intelligence may indeed have its limits. But if human intelligence has elements that computers cannot emulate, then blockchain does nothing to bridge that gap.
2. I also think that decentralization is important for liberty. I once hoped that a decentralized Internet would enhance freedom. Now, I am inclined to see lack of appreciation for liberty as a fundamentally human problem, not a technological one. Decentralized computer architecture solves some problems, but it creates others.
3. I am not an expert on data security. However, I suspect that the underlying problem has to do with human weaknesses and desires. So far, it seems, it is difficult for one party to secure data without infringing in some way on another party’s ability to readily access information that both parties might agree ought to be accessible.
4. Digital content and the price system are inherently incompatible. The marginal cost of providing a digital copy is essentially zero. But the fixed cost of generating the content is high. If you charge for each copy a price sufficient in the aggregate to recover fixed costs, that price will be far above the near-zero marginal cost, so that you will needlessly drive away customers who value the product above marginal cost.
All solutions to this dilemma are imperfect. Obviously, the advertising solution has flaws, but it does have the virtue of keeping the marginal cost to consumers at zero. Subscription models may be better. But the most successful subscriptions, such as Spotify Premium or Amazon Prime, are broad-based bundles that distort market signals with cross-subsidies. In theory, blockchain may make micropayments easier to collect, but I am skeptical that micropayments will emerge as the solution to the dilemma.
Even though I was not fully convinced, I recommend reading Life After Google. There is much more in the book on these topics and others.
 George Gilder, Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy. Gateway Editions, 2018.
 “The User Disenfranchisement Movement: Arguing in My Spare Time No. 2.05”, by Arnold Kling. April 27, 1999.
*Arnold Kling has a Ph.D. in economics from the Massachusetts Institute of Technology. He is the author of several books, including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy; and Specialization and Trade: A Re-introduction to Economics. He contributed to EconLog from January 2003 through August 2012.
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