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Working Knowledge

Working Knowledge # 4: Hey AI, Tell Me What I Should Buy

October 16, 2020

“After work, Tilly [AI assistant] guided Sai to the flower shop—of course Tilly had a coupon—and then, on the way to the restaurant, she filled Sai in on his date, Ellen: educational background, ShareAll profile, reviews by previous boyfriends/girlfriends, interests, likes, dislikes, and of course, pictures—dozens of photos recognized and gathered by Tilly from around the Net. Sai smiled. Tilly was right. Ellen was exactly his type. It was a truism that what a man wouldn’t tell his best friend, he’d happily search for on Centillion [search engine]. Tilly knew all about what kind of women Sai found attractive, having observed the pictures and videos he perused late at nights while engaging the Just-for-Me mode in his browser. And, of course, Tilly would know Ellen just as well as she knew him, so Sai knew that he would be exactly Ellen’s type too. As predicted, it turned out they were into the same books, the same movies, the same music. They had compatible ideas about how hard one should work. They laughed at each other’s jokes. They fed off each other’s energy. Sai marveled at Tilly’s accomplishment. Four billion women on Earth, and  Tilly seemed to have found the perfect match for him. It was just like hitting the “I Trust You” button on Centillion search back in the early days and how it knew just the right web page to take you to.”

- Liu, Ken. “The Perfect Match.” The Paper Menagerie and Other Stories.

Although this is only an excerpt from a techno dystopia sci-fi story, it almost perfectly encapsulates the goals and ambitions of Big Tech:

“Today, our mission to organize the world’s information and make it universally accessible and useful is as relevant as it was in 1998. Since then, we’ve evolved from a company that helps people find answers to a company that helps you get things done. Now we are focused on building an even more helpful Google for everyone. We aspire to give everyone the tools they need to increase their knowledge, health, happiness, and success. With so many users turning to our products for everyday tasks, we have countless opportunities to help in moments big and small.”

- Sundar Pichai, Google’s 2018 Founder’s Letter

“Facebook's mission is to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what's going on in the world, and to share and express what matters to them.”

- Facebook Mission Statement

“Dedicated to building global platforms of creation and interaction, ByteDance now has a portfolio of applications available in over 150 markets and 75 languages. It includes TikTok, Helo, Vigo Video, Douyin, and Huoshan. ByteDance's platforms aim to help users explore and discover the world's creativity, knowledge and moments that matter in everyday life, while empowering everyone to be a creator directly from their smartphones.”

- ByteDance Careers

A common, inconspicuous thread in all these excerpts is artificial intelligence (AI). AI already enables, and will further advance, the goals, ambitions, and missions of these companies. What’s interesting, and sometimes gets lost in the excited clamor of advancements and breakthroughs, is that AI is not an end in itself — it is a means to an end. AI enables TikTok to provide video production tools for content creators and to push highly relevant videos to audiences; AI allows Facebook to curate your newsfeed, auto-tag your photos, and moderate content; AI is the engine for Google’s search engine and Google Ads platform. For these companies and many others, AI is used to provide a product — it’s a means of production.

For the aforementioned companies, their products are free. So how do they make money? “If it’s free, you’re the product” is a common adage that only scratches at the surface of the business operations of such companies. Another preconception is that these companies sell your data. Yes, some companies sell your data. However, the big tech companies like Google, Facebook, TikTok, and others don’t sell your data. Instead, these platforms make nearly all of their money by selling their customers access to you and other users through ads. The advertising business model isn’t new, but how they serve these ads is.

Let’s take a step back briefly to consider the objectives of the companies looking to advertise on these tech platforms. Companies want to allocate their marketing budgets to the platforms that generate the most sales, thereby maximizing the return on their marketing spend. The best way to do this is to advertise to the right consumer, and companies create a detailed profile of the consumers that are most likely to buy their products, which is called a persona. Working with the likes of Google and Facebook, companies can target people who match the target persona through keywords or specific user data (location, relationship status, interests, age, gender, education, relationship status, etc). With the ability to target people who fit within a specific persona, companies are more confident that their ads will generate sales.

Google, Facebook, TikTok, and other platforms compete for a portion of their customers’ marketing budgets and can win a greater share if their platforms are more effective in generating sales for customers. In other words, the more confident a company is in generating sales through a specific platform, the more money they will allocate to that platform all else equal. To be more competitive, these platforms are incentivized to maximize user engagement and collect any and all data about their users so that customers’ ads generate more sales. This is where AI is changing how advertising-based businesses operate. AI enables tech platforms target users with highly relevant ads. It also allows these tech companies to create new data based on users actions and experiences with the end goal of serving even more relevant ads. When I was planning a July 4th picnic and discussing with friends what drinks to bring for the picnic later that day, I opened Instagram and was immediately shown an Aperol spritz ad. Maybe you had a similar experience that convinced you that your phone is surveilling you, listening to your conversations, tracking your location, turning your experiences into data that is used to serve you ads. Advertising, hypercharged with AI, allows much more precise targeting and more relevant ads.

Your data is Big Tech’s asset, which is why your data isn’t sold by Google, Facebook, TikTok, and other big names. By keeping and protecting user data, these companies can make more money by acting as an aggregator and gatekeeper. I use the word “aggregator” because these tech companies have billions of people using their platforms everyday. They have herded billions of consumers into a single location for companies to market to. Big Tech also acts as gatekeepers because companies can’t reach billions of consumers simultaneously unless they go through these advertising platforms. Companies have to pay a toll before they can reach you and the rest of Big Tech’s user base. That leaves users with two roles: one being a potential consumer of advertised products, and the second being the raw materials for the treasure trove of data being hoarded by tech companies.

I did end up buying Aperol for July 4th. While I appreciate being shown relevant ads instead of irrelevant ones, I’m concerned about how much influence these tech platforms have on my behavior. I have never really enjoyed Aperol, which makes me wonder why I even bought it. Was I really open to trying Aperol again? Or did I just want a decision made for me so I could hurry to the Hudson River before all the good spots were taken? I was just like Sai, guided by technology to buy a product in preparation for an event and never thought twice about it. Both Tilly and Instagram served an ad to the right person at the right time. And just like Sai does later in the story, I’m also wondering what decisions were actually mine and what decisions were influenced by someone else, possibly even manipulated.

Adrian Castro

Adrian is A.I. For Anyone’s Working Knowledge column writer and writes about the applications and implications of AI in business and public policy. He currently works in private capital markets, focusing on cross-border transactions, and is on the junior board of Children of Bellevue.

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