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Cyber Saturday—Rise of ‘Surveillance Capitalism,’ China and Iran Go Hacking, Facebook as ‘Digital Gangster’

The reverse of the United States one-dollar bill depicting a Pyramid with 13 steps and the Eye of Providence.The reverse of the United States one-dollar bill depicting a Pyramid with 13 steps and the Eye of Providence.
In capitalism's latest iteration, companies extract value through surveillance and data-mining.BSIP/UIG via Getty Images

Capitalism got its start in 16th century Europe through mercantilism, a system in which merchants moved goods and marked up prices between markets. Two centuries later, Adam Smith, the Scottish philosopher of “invisible hand” renown, used writings by his own hand to prop up industrial capitalism, a regime that manifested in factories, mass-produced goods, and machines. Today we’re witnessing the emergence of a new paradigm: “surveillance capitalism.”

The phrase is the title of a new book by Shoshana Zuboff, a retired Harvard Business School professor who helped popularize the term in a 2014 essay for a German magazine. As she wrote at the time, “Under surveillance capitalism, populations are not to be employed and served. Instead, they are to be harvested for behavioral data.” The information economy, “artificial intelligence,” big data—pick your euphemism. In a data-driven world, all roads lead here: Corporations plundering personal information for profit.

It’s a point that many stars of the techie-literati have been making of late. See the public apostasy of Roger McNamee, a Facebook investor and onetime Mark Zuckerberg mentor who has become one of the media giant’s most vociferous critics. As the Zucked author recently put it to Fortune: “The problem today is that…the people are not the customers; the people are the fuel.” To extend the analogy, the erosion of democracy is, one might suppose, equivalent to the existential threat of climate change.

While I have not yet read Zuboff’s book (I’m in the middle of an older hair-prickler, In the Garden of Beasts by Erik Larson), I did catch this excellent interview she gave to Recode’s Kara Swisher. The chat is well-worth a listen; as Zuboff explains, the data-exploitative business models of Silicon Valley’s scions were forged in the fires of the dot-com bust. In the scramble to find revenues, data-fed advertising materialized as the industry’s savior. Since users tended to opt out when asked to fork over information, the tinkerers in tech-land got good at acquiring this precious commodity surreptitiously. And so here we are.

(Bonus: Swisher drops a reference to a Fortune classic, “Chaos by Design,” about Google’s adolescence, a portentous feature penned in 2006 by this newsletter’s regular, weekday author.)

I’m looking forward to devouring Zuboff’s book. And I’m certain, given my search history, that I’ll be seeing more than a few advertisements around the web for it.

***

Longtime readers of this newsletter will recall my aversion to DNA testing. As I wrote last year, my stance was “informed by the chilling possibility—however slight—that a political regime could ever use this information against me and my loved ones.” Now a report by the New York Times has alleged that Chinese authorities have been collecting citizens’ genetic and biometric information, under the guise of free medical checkups, for the purposes of surveillance and oppression. The Communist Party has supposedly been using these data in its crackdown on the country’s ethnic Uighur population. This is exactly the kind of dystopian scenario my paranoiac mind feared…

Robert Hackett

@rhhackett

robert.hackett@fortune.com

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.

THREATS

Won’t you be my neighbor? Iran and China have been ramping up cyberattacks on the U.S. since President Donald Trump pulled out of the Iran nuclear deal and stirred up trade disputes with China. Iran has been conducting espionage, pillaging people’s email inboxes, while China has resumed looting corporate intellectual property, the New York Times reports. For more on the suspected Iranian intrusions, there’s no better dissection than this deep dive by Brian Krebs, an independent security journalist.

No way, Huawei. While the U.S. tries to persuade allies to exclude Huawei from their next generation telecom network build-outs, Ren Zhengfei, the typically media-shy founder of China’s embattled equipment maker Huawei, struck a defiant tone in a recent press conference, saying there’s “no way the U.S. can crush us.” Seeming to support his statement: one of the UK’s most senior intelligence officials said the British could mitigate any security risk posed by using the company’s equipment. Piling on, a spokesperson for Germany’s federal interior ministry said the country was not ready to shut Huawei out of its network buildout.

From the land down under. The Parliament and major political parties of Australia—one of the countries that has already banned Huawei from its 5G network build-out, along with New Zealand and Japan—were digitally infiltrated by Chinese spies, reports the Sydney Morning Herald. (The piece disputes a Wall Street Journal report that initially pegged the espionage activity on Iranian hackers.) Meanwhile, one of China’s biggest ports has banned Australian coal imports, a move deemed as retaliation for the Aussies giving Huawei the boot.

Fait-book accompli. A British Parliamentary committee called Facebook a “digital gangster” for its fast-moving, thing-breaking approach to data management in a report this week. Facebook responded by saying that it is “open to meaningful regulation.” Though Mark Zuckerberg refused to appear before British Parliament after last year’s Cambridge Analytica scandal, he invited Jeremy Wright, the UK’s culture secretary, to meet at Facebook’s headquarters this week. Zuckerberg also dropped by Harvard Law School to chat about the company’s many controversies.

“We take your security and privacy seriously.” Do you really?

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ACCESS GRANTED

Do you want to know a secret? The Wall Street Journal investigated 70 of the most popular apps in the Apple App Store in categories that deal with sensitive user information, such as health and financial services. The reporters found that 11 of the apps it tested were sending data to—you guessed it—Facebook. A Facebook spokesperson said the company is now looking at ways to discover which apps might be breaching its terms of service (which prohibit app makers from sending such sensitive information to it) and how to build in safeguards to prevent Facebook from retaining the data when violations happen.

Millions of smartphone users confess their most intimate secrets to apps, including when they want to work on their belly fat or the price of the house they checked out last weekend. Other apps know users’ body weight, blood pressure, menstrual cycles or pregnancy status.

Unbeknown to most people, in many cases that data is being shared with someone else: Facebook.

FORTUNE RECON

Google Admits ‘Error’ After It Forgot to Tell Nest Secure Users About Hidden Microphones by David Meyer

China Banned 23 Million People From Traveling Last Year for Poor ‘Social Credit’ Scores by Don Reisinger

This Is What Tech Companies Want in Any Federal Data Privacy Legislation by Danielle Abril

Forget Phishing and Ransomware. Formjacking Is the New Favorite Hack of Cyber Crooks by Alyssa Newcomb

Goldman Sachs-Backed Email Security Startup Quietly Replaces CEO by Robert Hackett

Hot Job Alert: Anything With ‘Privacy’ In the Title by Danielle Abril

Russia-Linked Hackers Responsible for Vast European Cyber Attacks, Says Microsoft by Lucas Laursen

ONE MORE THING

Theory of everything. Physics is replete with examples of different, competing mathematical models effectively describing and predicting the outcomes of natural phenomena. But as scientists peel back the layers of the universe, a single model tends to prevail. (See the principle of least action trumping rival descriptions of gravitational force.) In this fascinating essay for the New Yorker, Natalie Wolchover asks whether Einstein’s general theory of relativity may be holding us back from deeper explanations of nature. “Today, various puzzles and paradoxes point to the need to reformulate the theories of modern physics in a new mathematical language,” she writes.

Maybe, for instance, we need to replace the fabric of space-time with amplituhedrons? It’s an idea worth testing.