The ethical bar for digital entrepreneurs today is higher than it has ever been

En kortare version av denna text publicerades på svenska under vinjetten ”Åsikten” i Entré nr 1, 2020:

Digital entrepreneurs today are some of the most ambitious in the history of entrepreneurship. Entrepreneurs have always sought to create both social and economic value, but economic values have long taken centre stage. Today, digital entrepreneurs, and rightly so, want to respond to grand social challenges – but risk creating new ones in the process.

Investors are also growing believers in only investing in ventures with a positive social and environmental footprint: through impact investing, mission investing, or sheer caution. The expectation is that today’s digital entrepreneurs will be the Googles, Amazons and Facebooks of tomorrow, but without their bias, data exploitation (as in Cambridge Analytica) or carbon footprint.

Today, these risks include the 1) burden of data stewardship, 2) lab rat effects, 3) their role in inequality and marginalisation, and 4) the disconnection of the digital from the point of impact.

Data stewardship
Cambridge Analytica was just the tip of the iceberg when it comes to how much of – and by whom – our data are currently being collected.

The volumes of data, even non-identifying aggregate data, mean that patterns around our behaviour can be identified like never before. Large volumes of data are already used to calculate alternative credit scores, create heat maps of likely criminal activity, and offer children under 18 targeted advertising.

And these are just the white label uses. At first glance, they seem innocuous enough, but the collection of these data means that they can be used for other purposes too: either because the data are leaked, because there is a surveillance-friendly new regime in town, or just through sheer accident. An image of a sunny holiday in Lisbon could lead a would-be burglar to an empty home in Stockholm, for instance.

Data are also often thought to be all-encompassing and therefore not prone to bias. However, studies have shown not only that data reinforce existing relationships (so are bad for making hiring more diverse), but also that they contain great big holes, called data voids, ripe for exploitation.

China’s use of big data and surveillance technology serves as a cautionary tale: although a high ”citizen score” offers perks like visas and high-speed internet, the definition of good citizenship is subjective – even if the data are not.

Treating people like lab rats
As data become more fine-grained and available, their ability to predict – and influence – our behaviours and state of mind increases. Google, for instance, has been likened to ”a confessional”; concealing information in the search bar would undermine the whole point of the search.

These data, and the ability to observe individuals as they interact online, mean that our behaviours can be both directed and influenced. This directing runs the gamut from the mundane of A/B testing to increase sales and conversion, to far wider-ranging influential directing. Another recent example lies in Facebook using its newsfeed to influence our emotions. Opponents to digital currency innovations also argue that the digitalisation of currency will allow firms to build algorithms that combine psychology and digital triggers to alter our perceptions and change our consumption patterns. Called ”digital nudging”, it seems to be gaining prominence as a socially acceptable way to promote good behaviour – but the implicit coercion may one day be seen as problematic.

Moreover, the culture of ”always on” brings with it new sources of pressure and stress – from employers watching their employees, to digital tools that reduce a personality to numbers in a standardised (online) psychometric our analogue activities being digitised for use in yet another algorithm. It is no surprise that international surveys show that young people in the developed world have high levels of stress (US, EU), work more and party less, and are generally more risk averse than previous generations.

And even wanting to be a good citizen online is not enough: being able to ”click” on something makes it feel like one is making a difference even when one is not, as in the case of signing a poll, undermining real forms of resistance. And the smoothness of the ”click” obscures what psychologists call ”the pain of paying”: we do not feel the money disappearing, which could lead to indebtedness. Moreover, if children do not see and feel what it is like to spend money, how do we teach them to be fully financially literate?

Inequality and marginalisation
The use of digital tools has led to people pointing to how they perpetuate inequality and marginalisation – and even create new inequalities.

For instance, gig work, with its famed flexibility, has been seen to service at least two different groups of giggers: the sought-after, who set their own schedules and prices, and lead more fulfilling lives, and the indentured for whom flexibility means being available when – and at a price – set by others.

Access to resources is not equal either. There is pressure towards having the latest device, whether a smartphone or other digital device. For instance, in what has been called ”Batterygate”, Apple was recently fined for slowing down older phones – in the name of preserving battery life. In the same vein, WhatsApp recently withdrew support for phones running older versions of Android and iOs, and withdrew support for Windows phones entirely. Both trends are irritating, at best, in Sweden – but devastating when one considers how most older phones are in use in developing countries by people for whom an upgrade would be prohibitively expensive. At the same time, WhatsApp has high penetration in developing countries like Brazil, Mexico and South Africa – and an enormous user base of some 200 million in India.

In Sweden, unequal internet coverage is instead cause for concern.

Disconnected from the point of impact
And this push towards the latest model is inefficient: not only does it necessitate the mining of more cobalt, iron, aluminium, copper and rare earth minerals, but this mining finances armed groups, and produces toxic runoff. But there is not yet a viable business model for recycling existing minerals: extraction is just too expensive for a single phone.

This inefficiency is also reflected in the use of digital technologies that have become ”standard”; even though cloud computing has become more effective, any potential carbon savings are offset by its increased use – often unnecessarily – in what is known as Jevon’s Paradox. And don’t even get me started on the energy use of the Blockchain and machine learning; for an entrepreneur, the question is: are they necessary, and can one compensate for their use – for instance, by cutting energy use elsewhere.

The fact that we do not see how much digitalisation affects the environment – and individuals – is itself a problem. E-Commerce, making use of new conversion techniques, has not only led to an increase in (unnecessary?) shopping, but also a ”retail apocalypse”: small, entrepreneurial retailers are closing their doors.

Without being a Luddite, responding pre-emptively to these challenges will not only make today’s digital entrepreneurs produce better products but will allow them to pre-emptively respond to wider awareness of the social and environmental impact of their digital creations. But are digital entrepreneurs aware of them all?

Om Claire
Claire Ingram Bogusz är verksam på Handelshögskolan i Stockholm och tankesmedjan Fores. 2018 la hon fram den prisbelönta avhandlingen Crowds, Coins and Communities: Digital Entrepreneuring in Emerging Financial Structures. Till Claires forskningsintressen hör fintech, digital transformation och entreprenörskap. Hon nås på claire@clairebogusz.com———–