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Cloud Empires: How Digital Platforms Are Overtaking the State and How We Can Regain Control

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The rise of the platform economy into statelike dominance over the lives of entrepreneurs, users, and workers.

The early Internet was a lawless place, populated by scam artists who made buying or selling anything online risky business. Then Amazon, eBay, Upwork, and Apple established secure digital platforms for selling physical goods, crowdsourcing labor, and downloading apps. These tech giants have gone on to rule the Internet like autocrats. How did this happen? How did users and workers become the hapless subjects of online economic empires? The Internet was supposed to liberate us from powerful institutions. In Cloud Empires, digital economy expert Vili Lehdonvirta explores the rise of the platform economy into statelike dominance over our lives and proposes a new way forward.

Digital platforms create new marketplaces and prosperity on the Internet, Lehdonvirta explains, but they are ruled by Silicon Valley despots with little or no accountability. Neither workers nor users can "vote with their feet" and find another platform because in most cases there isn't one. And yet using antitrust law and decentralization to rein in the big tech companies has proven difficult. Lehdonvirta tells the stories of pioneers who helped create--or resist--the new social order established by digital platform companies. The protagonists include the usual suspects--Amazon founder Jeff Bezos, Travis Kalanick of Uber, and Bitcoin's inventor Satoshi Nakamoto--as well as Kristy Milland, labor organizer of Amazon's Mechanical Turk, and GoFundMe, a crowdfunding platform that has emerged as an ersatz stand-in for the welfare state. Only if we understand digital platforms for what they are--institutions as powerful as the state--can we begin the work of democratizing them.

296 pages, Hardcover

Published September 27, 2022

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Vili Lehdonvirta

3 books10 followers

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Displaying 1 - 14 of 14 reviews
Profile Image for Hulttio.
177 reviews39 followers
July 24, 2022
Publication date: 13 September 2022 by MIT Press

Quis custodiet ipsos custodes? This is the question at the heart of Vili Lehdonvirta’s new book, Cloud Empires. The cover and title both drew me to this book. I am not well-versed in economics or sociology, but Lehdonvirta’s subject is something that affects us all—the digital markets or platforms that possess a firm hold on online markets. As such, this book is not about the tech giants in a broad sense, and I wouldn’t necessarily recommend it people who are looking for a more general overview of Big Tech. And yet I am pretty sure nearly everyone these days has bought something online, so it is still relevant to our daily lives. This is an important book and although we’ve been taking in the ominous portents of Big Tech’s reach for years now, we have not yet seen a narrative that tackles digital platforms and commerce for a broader audience. Lehdonvirta’s clear and well-organized prose makes this daunting subject accessible and clear, even if you lack an economics or sociology background.

The narrative is structured chronologically, with the earlier chapters corresponding to the lawless and chaotic days of the early internet. Since there was an abundance of anonymity and not much in the way of regulatory or institutional frameworks, Lehdonvirta explains how digital commerce had yet to really take off—at least until companies like eBay and Amazon came into the picture. Reading about the early days of Usenet and the visions of various tech founders was interesting and established one of the running themes of digital commerce—its primary intention was always to resist the undue influence of outsiders, i.e., government regulation, in favor of giving its users more control and liberty. Of course, this is far from how it actually played out. Lehdonvirta does well to emphasize that this occurred as a byproduct of human attitudes and limitations—not merely because tech founders were actively malicious.

One of the more interesting chapters was on Satoshi Nakamota, the anonymous creator of Bitcoin. I have to say, I quite appreciated this contextual information, and Lehdonvirta’s exposition on Bitcoin has helped me to understand how it works moreso than any other thing I’ve read on Bitcoin. Lehdonvirta also displays a deft skill with European history—he makes several comparisons to medieval economy but also culture generally throughout the book; for instance, he compares Satoshi Nakamoto to Solon after the Athenian peasant revolt, and honestly, as unexpected as that was, he makes a fair point. The historical comparisons did feel overdone at times, but I still found it impressive how broad the author’s range of historical knowledge was. The story of Bitcoin points out an inherent flaw in the nature of the internet—we may be anonymous and equal behind these screens, but even when you have an algorithm, you still need a human (along with all of his or her accompanying biases and flaws) to push the buttons and write the code. The promise of true objectivity and neutrality is far from being realized.

Another great aspect of the book are the parts that touch on labor rights and the digital workers’ movements—for instance, the chapters on the development of Upwork (which I had never heard of until now, somehow) and Kristy Milland’s efforts to seek better treatment for Amazon’s Mechanical Turk laborers. There is a lot of opportunity, particularly in the digital freelancing world, but given its novel nature and unprecedented economic flourishing, digital labor is also ripe for abuse. This book helps to illustrate why this is still a major issue arising from platform giants and what may be done to alleviate these concerns.

The second half of the subtitle is ‘How We Can Regain Control’. On this front, the reader may be slightly disappointed. Since much of the book covers various platforms and their origins or development, the last section of the book, the Conclusion, is where Lehdonvirta begins discussing possible solutions in earnest. However, to his credit, he critically discusses and analyzes various theories and strategies proposed by people such as Lina M. Khan, the newly appointed Director of the Federal Trade Commission. In that sense, he does at least provide some frameworks that the reader can consider for how we may move forward from the current state of things. This book would be especially useful in that regard for those in tech policy. However, he emphasizes that this is something out of the reach of the individual user; we need movements and governments to step in and lend a guiding hand. On this front, I am admittedly skeptical, especially since it seems like most of the Boomer Generation currently occupying seats in the U.S. legislature are not going anywhere any time soon. As long as we have senators who are ignorant of simple things such as how Facebook makes inconceivable amounts of money in revenue or how Amazon tracks users across much of the modern web, I am not sure that the government can adequately respond to these issues. Additionally, this is a minor point, but I wish the author had better established the definitions of ‘digital platforms’ early on in the book; the cover features Amazon, Meta, Apple, and Google, but really only one of these gets a decent amount of discussion, and so I would have appreciated a more expanded overview of these other platforms (as well as interesting cases like Facebook Marketplace).

I also noticed a few typographical or minor grammatical errors. For instance, at one point, ‘Orson Scott Card’ is referred to as ‘Scott Orson Card’. I can only hope these were fixed for the final print version.

All the same, Lehdonvirta’s main message of this book is to convince the reader that digital platforms have taken on quasi-state roles, developing institutional frameworks that occupy both economic and political roles. This applies not only to digital commerce but indeed to most aspects of the internet. Transparency and accountability are seriously lacking. But, as Lehdonvirta points out, this was also the case in the early days of the Industrial Revolution. Things can and still may begin to change towards a more democratizing trend, and for the sake of internet users everywhere I sincerely hope that they do.

After all, just read the latest headlines and ask yourself if this isn’t a dystopia: Amazon to buy primary care provider One Medical for $3.9B

Disclaimer: Thank you to NetGalley and MIT Press for providing an advanced reader copy of this book. This review reflects only my honest thoughts.
Profile Image for Colin Scala.
19 reviews2 followers
September 27, 2022
This is one of those books I didn’t know I needed to read, but I’m glad I did. Timely, necessary, and surprisingly easy to understand, Cloud Empires describes how Amazon, eBay and other large platforms came to be what they are, what opportunities they’ve created, what problems they’ve caused, and what we could all do about it.

Each chapter tells the story of a platform or a technology, usually from the perspective of its creator or a user, and then uses that story as a case study to make a broader point about the rules and nature of the internet. The author does a decent job of writing about weighty matters in a way that doesn’t assume the reader has a degree in political philosophy. It isn’t exactly a beach read, but I often found myself engrossed in this book. All chapters are self-contained and can be read independently, but I recommend reading the entire book sequentially. The book covers primarily commercial and financial platforms–most of it isn’t about social media platforms.

Professor Lehdonvirta traces the development of various technologies and institutions that make up the internet we take for granted today. He describes how each technology changed the scale and scope of human interactions and, in many cases, improved the efficiency of work and the quality of life of millions of people. He also shows how certain problems that are inherent in human nature followed us online, made worse by the scale and anonymity of the internet.

The author makes a compelling argument that online platforms are never free from politics. Contrary to the facile hot takes we see all the time, he doesn’t argue that companies are trying to usurp the territorial jurisdiction of states. Instead, he focuses on how users and companies can’t escape the political struggles that arise from the design of the platforms. Companies fill gaps in state authority and impose their own rules to go with their new platforms. For example, he makes the case that the efficiency and scalability of the dispute resolution systems on many online platforms are often the result of ignoring users’ rights. He also makes the human cost of these rules impossible to ignore.

The author’s takedown of the myths surrounding crypto and blockchain is cogent but also appropriately restrained. He convincingly debunks the lie that these new technologies are decentralised and inherently fair. However, he also rejects the “evil man” theory that claims the problem is just that the people at the top have malicious intentions. Instead, as he does in every chapter, he argues that broader and deeper incentives determine and constrain the range of possible actions each person may take. To understand why a system works the way it does, we need to turn our attention to its rules, context and incentive structure, not just the individuals.

This is the idea that links all chapters of the book. Even if the day-to-day administration of a system could be automated in a reliable, transparent and credible way, the legislative responsibilities can’t be automated. The design of the system itself and its rules can’t be outsourced or ignored, and it is never completely neutral. Personally, as a writer who works in user experience, I was fascinated by the author’s gripping descriptions of the (usually terrible) consequences some design decisions had on each platform’s users.

Lehdonvirta argues that users should have a say in how the platforms they use are governed. He seems enthusiastic about rules and proposals that he sees as a step in the right direction, although he also says we shouldn’t expect states to solve these problems for us. However, the path forward isn’t really the heart of the book at all. His proposals are limited to some brief notes in the conclusion. I would have liked to read more about this–for example, about the possible effects of multilateral regulations. I also think the author might be too quick to dismiss the power of the European Union to regulate these platforms, since the EU has an unusually strong ability to export regulations. Of course, it wouldn’t be reasonable to ask the author to fix the internet in just one book. Perhaps he can do that in a follow-up book.

I received an advance review copy from the publisher through Netgalley.
8 reviews
July 16, 2022
Cloud Empires is an incredible primer on how tech platforms have gotten to where they have through an inspired selection of stories about the history of the Internet. Each story focuses on a particular individual, the role they played in shaping the landscape of our digital world, and how they changed that landscape. Through each story, the reader gains a deeper understanding of why the web is how it is, and what does and doesn't work to improve it. Lehdonvirta does a masterful job explaining these stories from first principles for newcomers to the space, while adding depth and context for readers already familiar with many of the concepts in the book.
Profile Image for Tuija Aalto.
71 reviews
December 30, 2022
Platform owners have too much power and too little accountability. We live in a digital reality imposed on us gradually in course of several decades, where internet commerce and communication platform owners dictate decisions that affect millions and millions. Time has come to fix this, says Economic Sociology and Digital Social Research professor Vili Lehdonvirta from University of Oxford. He authored Cloud Empires, where he explains cases from the history of online commerce and labour from eBay to Uber and from Mechanical Turk to Upwork.

Lehdonvirta says there are at least four social classes in the platform economy. The aristocrats at the top, abusing their subjects. The consumers, us, at the bottom. Laborers who keep the platforms running. And above the laborers, below the aristocrats, the new burghers of the platform economy are gaining power. Among the rising bourgeois class are the successful app developers, online merchants, and influencers. They have, Lehdonvirta claims, earned resources on digital platforms that enable them to push back against the platform aristocrats’ power.

Calling himself neo-medievalist, Lehdonvirta uses these old power structures throughout the book, driving his point that nothing new is going on in the digital realm, that humanity hasn’t dealt with before. So just like the wealth started accumulating in mediaval towns to this new bourgeois class, there is platform power now in the hands of some commercial platform users. His book offers just one example of a business owner making their case and winning against a platform: App entrepreneur Andrew Gazdecki was able to compel Apple to revisit a policy change about to be made in “The App Store Review Guidelines” in 2017 that threatened his business (the 4.2.6 policy that stipulated that Apps created from commercial template or app generation service would be rejected). Gazdecki’s company “Biznes Apps” was about to be outlawed. Thanks to his connections and resources, Gazdecki was able to get Apple’s attention and have the rule amended.

Unlike the powerty-stricken pieceworkers, members of the platform middle-class could take the time off work to do politics. They could afford to learn about an issue that affected them, discuss it with their peers, sign a petition or perhaps even blog about it or contact a local journalist or a politician, Lehdonvirta summs up in chapter 10. Collective action II: Rise of a Digital Middle Class. He further observes that members of this middle class have the confidence, education and skills to challenge the rulemakers, not forgetting the fact that they are not that afraid of platforms penalizing them for speaking up, as they have their skills and savings as safety nets to fall on.
Profile Image for Alisha Saxena.
47 reviews1 follower
June 30, 2022
As someone in the policy world, I think this was an interesting piece- we cannot focus on regulating big tech until we understand how they came to be, why they made the decisions they did, and in what ways they attempted to diverge themselves from governmental interference and oversight. This book covers the trajectories of the creation of the internet, EBay, Amazon, GoFundMe, Bitcoin, and more. I could not give it 5 stars because I had some issues with the author’s writing style- though they managed to write about economic concepts like economies of scale in layman’s terms, their flow sometimes left me confused. For instance, they started in one chapter with an anecdote of a Cuban refugee and attempted to run this anecdote parallel to Amazon’s development- unlike most chapters, however, they had a very thin link in this chapter between the anecdote and the main premise of the chapter, making it feel disjointed. I think the author also struggled in figuring out how much biographical details to include about the founders- I didn’t think it was important to learn about what Bezos majored in during college, for instance. Writing flaws aside, this book was accessible and important, especially as we continue to deal with the issue of regulating big tech.

*received an ARC from NetGalley*
Profile Image for Oskar Brenner.
18 reviews
April 6, 2024
Amazon, Apple, Google, Meta, Microsoft. Companies more powerful than most of the countries in the world, even if they have existed for only a few decades. In this book, Lehdonvirta explains how Internet has changed from being a anarchistic platform against state control into a place dominated by huge companies, which are ruled by authocratical means.

The book was readable and Lehdonvirta is usually crystal clear with his arguments.

The book ends on a "positive note" on that joint-stock companies can and tend to transform into public bodies with democratic governments. I am somewhat sceptical regarding this claim - the companies are not grounded on physical soil, and might demand quick solutions for the company leadership - something that democratic societies tend to not excel at. But I am not an expert in the subject.

The scary thing is, that a "ruler" in the Internet seems to be necessary - a lawless wild west obviously gives only room to scammers and thieves. The question is: who rules and in what way. This has to be quite quickly decided, because these platform rules seem to abuse their power with increasing means.
Profile Image for Diana.
24 reviews1 follower
May 29, 2023
Non-fiction

This guy talked a lot about how the Internet (which was a place of freedoms without the govt) replicated the very state like governance it went against only this time the ones ruling are corporations who only care for profit. He’s like no we neeed governance u guys in order to maintain some sort of social order and peace we gotta get some ruling and policy up here. But he’s also like listen guys it doesn’t have to be all gov vs all corps running the show what if it was the people!! Let’s get some digital democracyyyy. He kinda slayed with it go off.
Profile Image for Greg.
412 reviews11 followers
December 18, 2023
This is a really good analysis of Big Tech and how they have become too powerful by creating their own platforms and creating their own rules and regulating who can use their platforms. The author compares them to the 19th American corporations like Standard Oil who became too powerful and dominated whole industries. Various methods of curtailing their power are discussed.
11 reviews
April 18, 2023
An informative and fascinating book about internet economic history with many good representative examples. I have definitely gained much better knowledge about the internet history and its future along the human history as an analogy used by Dr. Lehdonvirta frequently.
Profile Image for Jake Pitre.
48 reviews4 followers
May 25, 2023
some insights and whatever but like so much of this stuff seems unable to ask whether uhhh idk capitalism might be the problem

also he writes this sentence: "In today's parlance, we might say that Bismarck created the welfare state to own the libs." so...
8 reviews
February 23, 2023
A great in-a-nutshell overview of some of the biggest players in our digital world, along with some brief discussion on the political and economic implications of their past and current footholds.
Profile Image for Molly.
29 reviews
December 31, 2022
4.5 stars

A much needed book. Makes all its points eloquently and without repetition. My few suggestions would be:

1. I think there's some discussion missing around data privacy and data protection law, for which Meta would have been a good case study (unlike Amazon and Google, it doesn't really get a mention!). Specifically, around superprofiling and abusing their market position. This would then have been very relevant in the final chapter about democratisation of these platforms. Data subject rights, including the right to transparent information (GDPR Art. 13 and 14) are a clear proto-example of the author's proposed solutions.

2. In places there are a few typos. Doesn't detract from the quality and authorship overall but could be tightened up in a 2nd edition.

3. The chapter on crypto could be explained a little better. I realise crypto is very hard to understand anyway but I didn't fully grasp how it works so the rest of the chapter was a little less accessible. A diagram maybe?

Overall though, a really compelling read. I also learnt a lot about early Internet history which was a real gap in my knowledge and, it turns out, pretty pivotal to why things are the way they are and the certain level of cognitive dissonance among "platform princes".
Displaying 1 - 14 of 14 reviews

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