Tech investors David and Daniil Liberman (Brothers Ventures): Users should be free to choose where to keep their data

After Russian authorities introduced a host of controversial Internet-related laws throughout 2014, angel investor brothers David and Daniil Liberman published a daring manifest in Vedomosti, Russia’s leading business daily. Going against spying governments and calculative Internet giants, the authors proposed to provide users with a right to decide where to store their digital data. Digital Report interviewed the IT-philosophers on the real and the ideal relationships between the state, the Internet companies, and users.

The Brothers Ventures’ investments include a looped micro video service COUB, hailed by one of Russia’s top entertainment outlets Afisha as “the most successful phenomenon in Russian Internet of the past years,” and a cult RuNet online community d3.ru, a precursor to 4chan and reddit. Previously, the brothers ran a game development company Sibilant Interactive and were behind a satirical animated series “Personality Mult,” which was broadcasted on Russia’s largest TV network and received the country’s top television award.

One of the top COUB videos of 2014 with nearly 5 million views

Let’s begin with the basics. What is the value of data—both material and immaterial—for a user, an Internet corporation, and a state?  

The value of personal data emerges the second it becomes available to someone else– this is the most basic and evident property of data. Then, everything gets much more complicated. But even this is enough to realize that we are dealing with a special substance, to which familiar ideas on law and pricing might not apply.

Besides accessibility, data’s value comes from its verifiability by a reliable source. For a long time, the state acted as an indispensable verifier of personal data but in the modern world verification moves beyond the state level. The state gradually loses its constructive role and increasingly turns to regulatory functions, in trying to pose as a better protector of users’ interests than users themselves.

But the most interesting recent developments lie in the relationships between users and Internet companies. Technological progress made the creation of data value—collection, verification, and delivery to a third party—advantageous to all sides involved. The user and the online service provider understand that they both have to be involved in the process for data to acquire value. However, the question of “ownership” of this data creates a conflict, since there is no simple moral solution to this issue.

We can’t claim that, if someone sees us on the street, they are obliged to keep our whereabouts a secret because that information supposedly belongs to us. Yet it is also incorrect to assert that the information collected on us by an online service belongs to that resource. Solving this dilemma requires a new social contract. Internet companies could make an important first step in the right direction by letting the user decide where to store their information.

“All over the world nation-states are more assertively beginning to meddle in the workings of the Web,” your article notes. Why such heightened governmental interest all of a sudden, hasn’t the Internet’s potential been evident for a while now? Why have the Russian authorities in particular arrived late to the Internet realm, since they have paid very close attention to all other media platforms over the past 15 years?   

The Internet’s potential is hardly all that evident—and it certainly hasn’t been evident in the past. The Internet is only nominally an independent market of its own: rather, it is a shared environment for innovators in various spheres, and innovators are always overlooked at first. Financially, the Internet has not attracted much attention yet. Thus, there are only two Internet firms among the world’s Top 20 companies by market capitalization (Google and Facebook; Alibaba is 21st), and none by sales and profits. As media, the Internet first revealed its true potential during the Arab Spring. Altogether, then, we have around four years since nation-states have taken an active interest.

At the same time, their interest is explainable. We live in a democratic world where authority is based on the support of the majority, so officials are naturally interested in their constituents’ concerns. Governmental interest, however, may be fraught with dangerous consequences, especially when neither the society nor, quite possibly, even the Internet entrepreneurs have a full understanding of the digital potential.

Russian authorities, in this sense, are a good case study worth following. They have not been late to the Internet realm at all. On the contrary, thanks to the overwhelming popular mandate, they have been aggressive overrun all spheres of life, including the Internet. For a while, we were “spared,” because the authorities thought of the Internet as just another media channel. The state would consolidate in their hands the resources they were capable of understanding —and always by the time these media already became outdated and outrun by the more innovative competition .

But the idea of regulating the location of user data storage was truly “innovative,” illustrating just how fragile our freedom had been. This was admittedly a clever move towards nationalization of the Internet and, if the online community doesn’t want to find itself at a checkpoint to enter the Internet, we all have to think seriously about preventive steps.

Governments have vastly intensified Internet regulation, yet you write that “the laws are being passed hastily with practically no consultations with the Internet companies” and call their approach wild. Why is the state so hesitant to cooperate? What can the IT community do to foster a trusting and productive relationship with the state?    

At the recent summit on cybersecurity, organized by the US government, President Obama called the Internet the Wild West—and then went on to sign a “cooperation” agreement all by himself, with no heads of major Internet companies in the room. These official steps come across as wild because we have already seen a more civilized cooperation in the digital world.

The Internet is an environment of collaboration and collective creativity among a multitude of people. Here, a top-down authoritative approach to setting the rules is inefficient. Participants in this collaborative environment are trying to entice into using their services millions of people who are not bound by their nationality or location when choosing a product. In this unique atmosphere, Internet entrepreneurs find it challenging to switch to governmental ways and approaches.

In Russia, for example, we saw how the authorities “set up” Twitter representatives by announcing through the media that the company promised to pass user data to the government. The information was supposed to remain secret. This lesson should lead us to more openness. Internet companies can’t build a trusting relationship with the state behind users’ backs. It is better to channel the companies’ efforts into fostering relationships with the users.

You consider governmental regulative and restrictive approach to Internet giants to be inefficient. Maelle Gavet, CEO of Russia’s largest online retailer Ozon, disagrees with you. In her recent Wired article, Gavet asserts that Googles and Facebooks of the world have to be regulated by governments, citing the dangers of data theft, opaqueness of pricing, and market monopolization. How would you respond to that?       

Facebook and Google sell targeted advertising based on user data. This is advantageous for the user because the seller is able to quicker find their target audience, spend less ad money along the way—and therefore lower the overall product price due to lower ad expenses. However, we certainly could be concerned with opaque pricing and monopolism of the giants. Perhaps, the ad price could be even lower, were others, and not just Google, to also receive information on user demands.

It is precisely the asymmetry in access of Internet companies to user information that forms the monopoly. Users are the ones creating this asymmetry: only they choose, which resource they want to inform on whether they are searching for a Mexican restaurant or auto insurance and no one can dictate this choice to them. Only by fostering a freer and wider dissemination of information can we eliminate conditions for monopoly formation. A direct conversation between the resources and the users could achieve much more than the regulation from the outside.

Critique of the relationship between the user and Internet corporations also comes from the left. For example, Christian Fuchs, one of the world’s leading critical researchers of social media, puts forward a familiar thesis: capitalist corporations exploit users, because it is the users’ online activity that creates corporate surplus value.

Simplification and scapegoating are not likely to constructively contribute to the contemporary situation, where notions of the past are of little use. Here is what is happening presently: I provide more personal information to a corporation—for example, a search engine—which brings down the seller’s advertising expenses and therefore ultimately I receive the product or service at a lower price. Who is exploiting whom in this scenario?

And if I think that Google is asking more for the ads than the surplus value they created, I should think of creating competition by providing my data to someone else. We believe that these solutions will be born through cooperation between service providers and users. Technologies provide a consumer with fundamentally new opportunities and voting rights, which neither capitalist, nor socialist paradigm could offer.

You see the solution in letting the users decide, which country they want to keep their data in. How exactly would this work?

We see the only option for Internet companies in letting the user decide, who best represents their interests: their favorite online resource or the state. And the authorities will have hard time going against such conscious and free choice of a specific user, because it would mean violating the rights of their constituents and not just some corporation. As for the specific mechanism, all major online resources distribute  data through servers across the globe, so as to increase proximity to the end user. So the algorithm is there, but the companies don’t yet offer the question to the user. Yet.

And what do users make of all this, is there a popular demand to change the nature of the relationship among users, corporations, and states? Some surveys, for instance, suggest that the majority of users are perfectly happy to opt for national jurisdiction in matters of Internet regulation and data storage in particular.

Of course, users have their own ideas on where they want to store data, and these ideas may differ from those of online service providers or states. “I don’t care” is also a legitimate stance. Surveys help to imagine how the users would act, if they had the right to choose—but the fact remains that they still don’t have such a right. In sociological surveys, you don’t find a direct question: “Are you opposed to having the right to choose where to store your data?” It is pretty evident why they wouldn’t pose such a question, isn’t it?

Coming back from philosophical matters to more immediate developments: do you know how the talks between the Internet giants and Russian authorities regarding the data storage issue are going? How realistic is it for some of these global services to leave Russia?

The law has been passed and, as far as we know, the talks are no longer being held. However, it was difficult to call this an equal conversation from the start: the state had on their side popular mandate and even the results of the surveys that you brought up, while the Internet companies could not counter with the users’ decisions. Russia is not an important market for the Internet giants, so global services are not too concerned about the possibility of having to leave, or rather with being blocked.

The giants are much more concerned with problems they face in Europe or the United States, where they run into the same issues. A recent suit of users against Facebook, which also became the largest class action in European history, also comes down to data use policy. It is difficult to estimate, when the relationship paradigm between the resources and the users will change. As for us, we believe in the inevitability of the shift and are building our own projects around the conviction that the change will come soon.