August 25, 2022

From User Exploitation to Data Coops: The Never-Ending Battle for Control of Users and the Online, and Offline, Experience

By Jonathan Askin

TL;DR: 

  • Since the dawn of human history, there has been a battle centered around two overlapping conflicts: (1) control over content creation and distribution and (2) control over user information and data. 
  • Today, digital technology (e.g., Blockchain combined with user-centric organizing structures like DAOs and platform coops) is finally able to provide profound opportunities – giving control of the Internet to the users and workers, enabling users to build functional data collaboratives, and breaking the stranglehold of the Internet platforms and data brokers. 
  • However, history suggests user/worker-controlled networks will lose to the centralized server-spoke model of the Silicon-Valley data brokers.

Since the dawn of human history, there has been a battle for control over the hearts and minds of individuals and communities.[1] This battle has centered around two overlapping conflicts: (1) control over content creation and distribution and (2) control over user information and data. 

If we were to create a histogram of human control of media over the past ten thousand years, we would notice ebbs and flows in the media landscape between periods of very tight centralized control over content to periods of more distributed user control. Concurrently, we would also see a general trend towards the greater ability of communities and individuals to distribute more content to a larger audience across larger geographic areas. 

We would also see ebbs and flows over the degree of individual privacy and autonomy. Concurrently, we would see never-ending one-upmanship between technologies and processes (1) to enable greater capabilities to gather and harness user data and (2) to secure, encrypt, and conceal user data.

Each time a new technology comes along, there is a scramble between (1) those who would promote the power of the individual to create and distribute content freely and to broadly and (2) those who would try to control and centralize the content creation and distribution, and a corollary scramble to protect or eviscerate individual autonomy and privacy, both for political and corporate purposes.

In tribal villages and other closely knit human communities, the individual had little ability to preserve privacy, primarily due to the size and interconnectedness of such communities. Industrial urbanization made it easier for individuals to maintain privacy within the chaos and anonymity of the crowd. In the Information Age, it has become increasingly easier for corporations and governments to track individuals, collect data, and to create invasive profiles of individuals and communities, regardless of the size of the community.

In early tribal oral traditions, the speaker had almost absolute control over production, release, and use of their content – the only vehicle for redistribution being another person’s analog recreation of the same or derivative content. Through ancient times and into the Middle Ages, content replication and distribution remained largely in the hands of a small guild or class of literate scribes. With the advent of the printing press, content became dramatically easier to replicate and to distribute, at least among the growing literate classes. Through the 18th and 19th Centuries, we saw pamphleteers harness printing and distribution technologies and fight for attention and eyeballs by self-publishing and distributing their content, only to be reined in by the newspapers and media distribution outlets, who were able to corral and monopolize content creation and distribution and to establish the media empires of the 20th Century.

Electronic transmission via wire and wireless networks took more control away from the original content creator or holder of the original data and allowed for increasingly greater mass replication and distribution. Digital replication and Internet distribution took significantly more ownership and control away from the originator of the content or data. Peer-to-peer networks made it almost impossible for the originator to control the flow of content and data – thus the early Internet battles between content creators and distribution platforms (e.g., Napster, BitTorrent, Google, and other promoters of digital search and distribution). Digital replication and Internet transmission also gave inordinately more power to individuals to create their own content distribution systems, but also dramatically encroached upon the individual’s ability to control their own content, information, and privacy as communication flows across the Internet enabled digital tracking of user data. Blockchain and encryption technologies, however, have the potential to allow end users to regain control over their data, privacy, identity, and autonomy.

This post won’t deal much with the first tens of thousands of years since humans have been sharing stories with one another. This post considers the past couple of decades since the emergence of the Internet, throughout which time there has been a battle between the edge (users) and the hub (network and systems operators) to control the flow of content, data, communications, and the user experience. In each iteration of this battle, the edge seems to get the early edge, but almost always, the hub prevails. 

Over the course of the past 150 years in the evolution of electronic distribution systems, we have seen the opportunity for more and more control and tailoring of content closer to the edge and away from central content creators and distributors. We largely started with broadcast systems that allowed just those with powerful equipment and knowhow to create, curate, and distribute content (e.g., the early days of radio and television broadcasting). We saw the evolution of telecommunications networks that allowed for more and more control by, and more functionality between, any two user endpoints. Now, with the emergence of the ubiquitous, distributed Internet, we have the ability for any individual or groups of individuals to create exponentially more powerful network effects with significantly more powerful capabilities as any combination of individuals or groups may communicate directly with any other combinations of individuals or groups without any intermediaries to control the communications and interactions. Any individual living in the 21st Century has more functionality and greater ability to reach and interact with more people over a broader swath of the planet than the most power media empires of the 20th Century.

Like Charlie Brown’s dance with Lucy van Pelt as Charlie approaches Lucy’s football, each time a new online digital technology or process comes along (e.g., P2P torrenting, Voice over Internet Protocol, online encrypted digital lockers, Blockchain, … quantum computing?), a new, often noble, typically naïve, group of challengers, unjaded by history and institutional memories, thinks they will logically take down the powerbrokers and the old-line, centrally-controlled, top down, server-spoke, hub-edge ways of doing things. These would-be Internet disruptors and social entrepreneurs hope to harness the new technology or process to create user-controlled distributed networks and systems that disintermediate the Internet overlords and their central servers and clouds.

The early generation of internet startups (e.g., yahoo!, AOL, Google) planned to disrupt the 20th Century media empires for the broader public good. In each instance, the early disrupters either died (e.g., GeoCities), were absorbed into the old empires (e.g., AOL), or became the new media empires with little regard for the end users beyond productizing and monetizing the users themselves (e.g., Google, Facebook).

First came peer-to-peer networking …

 Many hoped that peer-to-peer networks and torrents would disintermediate music, video, voice service providers (i.e., the record labels, the media companies, the cable and telecom companies). Each time, there was temporary disruption and the hope of end-user-empowerment. Each time, either the old powerbrokers regained control, killed or absorbed the insurgents, or new ventures turned into new behemoths to become the new powerbrokers.

… And then came Google.

Google formed with the noble ambition “to organize the world’s information and to make it universally accessible and useful.” Google’s initial promise was “Don’t Be Evil,”. As Google emerged from its larval stage and looked towards its long-term survivability and growth, Google determined that its most viable path to success required monetizing its users’ data and auctioning it off to the highest bidder — advertisers. With that decision, Google transformed what the Internet would become. Facebook and most every other social network and online platform followed suit and turned their users and their users’ data into sellable product.

… And then came Blockchain.

Blockchain technology enables a system in which data may be readily stored and secured at the edge and need not be centrally stored and processed. Until Blockchain came along, many thought that data had to be centrally stored to maximize usability. This meant that data security had one single point of failure and vast amounts of data could be accessed simply by hacking one repository. Moving data storage and control away from central servers to millions/billions of edge points means fewer points of failure and means that data should be less susceptible to mass attacks and unwanted access. From a user perspective, Blockchain opens the door to greater control and flexible, more precisely tailored data usage. Under traditional centralized server control by the data oligarchs (e.g., Google, Facebook), the corporate data intermediaries only have access to, and control over, a narrow sector of the end user’s data. Furthermore, these data controllers would not willingly combine their data to get a complete data picture of the end user. Additionally, the combined computational power of the unified end points is much more powerful than that of the central servers and clouds, making for much more robust algorithmic applications, while preserving data at each end point. Thus, end-user controlled Blockchain-based networks could ultimately be far more robust and functional than the kluge network of multiple corporate data farms. Storing and securing data at user end points also opens up opportunities for each user to derive direct economic value – to get paid for each time the user offers its data or an entity requests the user’s data. 

Back around 2010, my students and I worked with a startup venture – Diaspora – four college students attempting to build a user-controlled, privacy-sanctifying, IP-securing social network, in which each end user would control their own user logs and only release their content, data, and other information when, to whom, for what duration and purpose as each user specifically self-determined. This was before Blockchain technology took root. Blockchain arguably makes this process of user data self-control and information flow significantly more viable. Diaspora’s goal was nothing less than to revolutionize online social networks and to give full control to each user, but without the enabling power of Blockchain technology and processes.[2]

The Diaspora founders were irritated that many social media networks owned a user’s content, identity, data, user logs, and other personal information. The founders developed a privacy-aware, intellectual property-protecting, personally-controlled, open-source social network. The founders were the quintessential first-time entrepreneurs: they had a great idea but were unsure about how best to execute their vision. They were overwhelmed in a sea of corporate structure options, taxation issues, and intellectual property concerns. The existential conflict for these young entrepreneurs was that they wanted both to do good and to do well – they wanted to become a multi-billion-dollar venture and also pursue the public good. As such, they were conflicted about whether to become some sort of for-profit venture, a non-profit venture, some sort of hybrid social enterprise, or some sort of non-corporate entity. Diaspora was also the first entity to raise more than $200k on Kickstarter. The eyes of the world were upon them.

Others have made similar efforts to build user-centric social networks. As best I can tell, these efforts have largely failed to take root and gain any viral uptake or network effects. But, across every iteration of the Internet and through the birth and mainstreaming of each transformative digital technology, some noble, enterprising, young entrepreneurs give it another shot, history be damned or forgotten.

… And then came “Platform Coops” and “DAOs.”

Diaspora – our intrepid, but perhaps pollyannaish and premature, startup – had tried to establish its venture before such concepts as Blockchain had become mainstream or even functionally possible. In recent years, there has been great optimism in disruptor and social entrepreneur circles that Blockchain-based systems could be the key to user-empowered social networks. Add to that the coming of age of such concepts as “Distributed Autonomous Organizations (DAOs),” [3] “platform cooperatives,” [4] and other worker/user-controlled collectives and alliances.

Diaspora had established itself as a C-Corp, but without an immediate revenue model (because it would not rely on selling user data or controlling the user experience). Platform Coops and DAOs and similar loose confederations of workers and users had not yet become mainstream, viable organizing structures.

Diaspora came before the Blockchain revolution and relied only on the capabilities and functionality of “traditional” peer-to-peer networks. As a result, Diaspora and similar user-centric social networks failed to develop business structures or revenue models able to compete against the social network business model built on monetizing users and user data.

Now, we see the possibilities of DAOs and worker/user-controlled platforms, in which the workers and users may share in the revenue derived from use of their data. Once again, many social entrepreneurs hope that these new organizing structures and data-control systems may break the stranglehold that the current cabal of Internet and social networking platforms have over exploitation of user data.

By combining the enabling power of Blockchain with the new-fangled user/worker-centric organizing structures like DAOs and platform coops, we have profound opportunities to give control of the Internet to the edge – to the users and workers. Digital technology is finally able to provide individual users, workers, user groups, and other communities and collaborations with the tools to organize and secure data online, and with those capabilities to allow users and user/worker groups to harvest the fruits of their data and/or labor — to claim the revenue derivable from use of their individual and/or collective data.

Fifteen years ago, I had suggested to the Skype leadership that they become the first online network to offer ownership and voting stakes to each of its members in lieu of an IPO or private sale. Skype could have become a globally-distributed and controlled organization – perhaps the first DAO before we even knew what a DAO was and before we had the Blockchain technology to manifest a DAO. Now, such a concept is increasingly more viable. Fifteen years ago, we were unsure of the process and consequences.

… And now come the “Data Coops.”

Today, the ability to self-organize and empower user groups to control the flow and uses of their individual and collective data and labor is increasingly viable (arguably subject to certain jurisdictional approvals over corporate formation and liability) and could break the stranglehold of the Internet platforms and data brokers. But will we see new insurgent user/worker run collectives achieve critical mass and meaningful negotiating power to take the reins from, or at least match the power of, the Internet network behemoths? Who will build the systems and structures to serve as the guarantors of individual and worker data autonomy in a world where our data is increasingly controlled by corporate powerbrokers?

I served on the technology advisory committee for Eric Adams in his transition to become Mayor of New York City in 2021-22. It was my, perhaps naïve, hope that this incoming Mayor might seize the moment and work to establish NYC as a protector or NYC residents’ data against corporate and government exploitation. Mayor Adams had a fresh moment to enable NYC’s residents to trust that their data would be secured and to even profit from use of their data and to self-determine when, where, how, and why corporate and government actors could use their data. Imagine NYC as a data trust, a data intermediary, a data fiduciary. I imagined a scenario in which NYC, on behalf of its residents, could build a platform and repository to store, encrypt, and secure the data of each NYC resident and to ensure that no other government or corporate actor could use, misuse, transmit, or exploit resident data without the explicit permission of the resident and without sharing the profits derived from resident data. 

The Third-Party Doctrine and Government Access and Exploitation of User Data

Not only do corporate actors exploit user data, so, too, do government actors, particularly once the data has been obtained by corporate intermediaries. Once data is given over “freely” to corporate entities, government actors are able, through a legal construct known as the “Third Party Doctrine,” to access user data, under the guise that the user no longer has an expectation of privacy or control over their data because the user willingly gave the data to a third-party intermediary. The Third-Party Doctrine essentially eviscerates citizen Fourth Amendment protections against unreasonable search and seizure in any digital or online context under the argument that the user willingly gave their data to an online intermediary (e.g., Google, Facebook) and therefore the user has abandoned their expectation of privacy and control of their data.

If NYC were to establish itself as a data trust, a data fiduciary, or other flavor of data intermediary and bind itself by agreement with its residents not to share resident data except to the extent explicitly authorized by each resident, then the Government – local, state, and Federal – could not circumvent the Fourth Amendment and access user data through application of the Third-Party Doctrine. The City as data fiduciary would serve as a stop-gap against Federal Government surveillance of NYC residents. The Third-Party Doctrine would fail to apply when an intermediary is obligated to preserve user data privacy.

Data Coops, Algorithms, and Virtuous Use of Individual and Aggregated Data

Even if it were too grand a starting point to establish NYC as a Public Data Fiduciary, NYC resident groups could simply create some data fiduciary testbeds to prove out the concept. Perhaps the MTA or the NYC Municipal Credit Union could establish themselves as Data Coops to secure NYC resident data and to use that data only for purposes agreed upon by the members and users of the MTA or Credit Union. 

In addition to securing resident data, such a Data Coop could advance any data science or smart city initiatives NYC might want to deploy. Each member of the Coop could deposit their data with the Coop. Each individual would be able to participate in aggregated data usage to build algorithms that would enable the Coop to understand how to build a more functional city or community. If our health data, financial data, travel data were secure but accessible for algorithmic interpretation, imagine how we could improve city services and processes. Historically, it seemed technologically untenable to build such a trustworthy, secure system. It now seems like we could join the enabling powers of Blockchain technology and platform coops to build a functional Data Coop.

Perhaps even the NYC Municipal Credit Union or the MTA are too big for the first experiments in user-protecting, community-enhancing Data Coops. There are smaller data hungry ecosystems, like hospitals or schools, that could serve as viable testbeds through which the community could harness data from a large community, without compromising individual data, to better serve the needs of the community through better analysis, synthesis, and application of data to help the members individually. At least hospitals and schools are statutorily and regulatorily bound by heightened obligations to secure user data.

The easiest path to establish a functional, useful Data Coop might be simply to tap into existing coops (e.g., telecom, Wi-Fi, energy user cooperatives), which already have cooperative mindsets and commitments to sharing. Such user cooperatives could expand their mandate to collect user data, encrypt and anonymize the individual data, the aggregated data, and the metadata, and use the data for whatever purposes dictated by the understanding between the users and the coop. They could even license out the data to third-party data exchanges or aggregators or other data-hungry third-parties, if allowed and pursuant to the coop rules. The rules governing use of data, both individualized and aggregated, could be as broadly, as narrowly, or as mutably defined as the coop rules provide. This is where Blockchain becomes a useful tool by allowing for automated smart contracts that could precisely tailor where, when, how, to whom, for how long, for what purpose, and for what economic or social purpose the mutually agreed upon algorithm dictates or triggers.

These data coops could even be set up as multi-stakeholder cooperatives, in which parties other than the data providers could have a stake (e.g., subject matter experts, public health officials, school administrators, transit and urban designers) if agreed upon by the coop members.

An Opportunity for Lawyers as Trustees and Escrow Agents

As a final thought, which, itself, triggers a host of issues, we could establish officially-sanctioned data fiduciaries to serve as trustees or escrow agents for the data. Lawyers already have obligations to safeguard client funds and information. Tacking on a role for state barred lawyers to function as data fiduciaries is not much of a stretch for forward-looking state bar associations to explore.

But, once again, I feel like Charlie Brown making his latest approach to Lucy’s football. It seems logical that Blockchain-based, worker/user owned and controlled distributed cooperatives — or City-controlled entities obligated to secure resident data — should win. But, once again, history suggests user/worker-controlled networks will lose to the centralized server-spoke model of the Silicon-Valley data brokers.

Jonathan Askin is a DCI Innovation Law and Policy Fellow and a Professor at Brooklyn Law School in New York. 


[1] Perhaps, it’s less a battle and more of a dance marathon, in which the recurring dance move is something like one step forward, two steps back, a sideways zig, a dosido, and a leapfrog forward.

[2] The lack of functional Blockchain storage and networking capabilities was not the only hurdle for our intrepid would-be disruptors and social entrepreneurs. There were preliminary corporate structure concerns. My students and I researched whether there were corporate structures that might enable the client to pursue both financial success and a broader public benefit agenda. The noble venturers ultimately chose a traditional Delaware C-Corp structure in the hope of enticing venture capital funding and to avoid legal uncertainty. The problem for this venture was that it failed to consider its revenue model, competing against other social networks (e.g., Facebook) that could offer their services for “free” because they sold user data to third party marketing partners.

[3] Distributed Autonomous Organizations are alliances built, owned, controlled by users without centralized ownership and management, typically using Blockchain technology and processes for organization and governance. DAOs typically have no central governing body and the members have common goals and attempt to act in the best interest of the entity. In most jurisdictions DAOs are not (at least, not yet) recognized as officially corporate entities.

[4] Ownership in a cooperative is based on equity contribution or how much of the products or services the member purchases. Profits and earnings generated by the cooperative are distributed among the members, or user-owners. People typically join a cooperative business to enjoy the benefits of group purchasing, pooled risk, and the empowerment of owning and controlling the company. Cooperatives differ from other forms of businesses because they operate more for the benefit of members than to earn profits for investors. All members are expected to participate and share the responsibility of running the organization. 

A platform coop is a coop in which the coop, itself, serves as a digital intermediary to offer their products, services, or content, where user members contribute and/or purchase the service. Platform coops may be owned and controlled by users, by workers, or by some broader communities of connected participants. Imagine Uber if the drivers owned and controlled the platform, or DoorDash if some combination of the local restaurants, the deliverers, and the consumers owned and controlled the platform. 

Perhaps, to the detriment of the attorney bar/guild, it would serve the broader community if states were to streamline the process to establish cooperative structures. Ventures and lawyers rarely think that a coop is a viable corporate structure. If the process were streamlined, perhaps coops would be more of a default corporate structure.

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