Guest Post: The Two Worlds of Data Infrastructure

Leave no dark corner

China is building a digital dictatorship to exert control over its 1.4 billion citizens. For some, “social credit” will bring privileges — for others, punishment.

– by Matthew Carney, Australian Broadcast Corp, September 18

[Ben’s note: I don’t think there’s any more important issue in the world than the way our personal data flows through global data infrastructure and is controlled by owners of that infrastructure. China, of course, is constructing the Black Mirror version of all this, but I don’t feel like we’re too far behind in the West. So I asked my friend Neville Crawley, who is the single smartest person I know on questions of data infrastructure in general and data infrastructure in China in particular, for his thoughts. What Neville describes below as The Alternative System is worth everyone’s time, attention and effort. It certainly has mine.] 


Last week Eric Schmidt (the former CEO of Google and former exec chairman of Alphabet) made news when Tyler Cowen (an economist) asked him “What’s the chance, say, 10 to 15 years, we have just three to four separate internets?”.

In response Schmidt mused:

“If you look at China, and I was just there, the scale of the companies that are being built, the services being built, the wealth that is being created is phenomenal. Chinese Internet is a greater percentage of the GDP of China, which is a big number, than the same percentage of the US, which is also a big number.

If you think of China as like ‘Oh yeah, they’re good with the Internet,’ you’re missing the point. Globalization means that they get to play too. I think you’re going to see fantastic leadership in products and services from China. There’s a real danger that along with those products and services comes a different leadership regime from government, with censorship, controls, etc.

Look at the way BRI works – their Belt and Road Initiative, which involves 60-ish countries – it’s perfectly possible those countries will begin to take on the infrastructure that China has with some loss of freedom.”

I don’t disagree with any of this, but I do think that we are entering a much bigger and more important competition than one between two sets of internet services with marginal loss of freedom with the adoption of ‘the Chinese system’.

In my view the competition is not about internet services, it’s about foundational data infrastructure and protocols and whether they are designed for self-sovereignty and privacy or whether they are designed for centralized oversight and control.

‘The Chinese System’

‘The Chinese system’ looks broadly like:

  • Very high adoption of mobile services for core life needs (communications, payments, transport etc.)
  • Real name, government issued ID a requirement for all services
  • Centralized databases of consumer data that the government can access

If you have spent  time in China recently and used the WeChat ecosystem it should be pretty clear that the government has (or at least could have if it chooses) perfect knowledge of who you are, what you are doing, and who you are doing it with.

If you haven’t been to China, imagine using the same real name ID under one sign on for Facebook, Uber/Lyft, Amazon, Netflix, Airbnb, Tinder, all Apple and all Google products and services, and that all data produced by these services is perfectly available to the government in real time and is being processed by a really good version of Palantir (rather than a kind of lame Cambridge Analytica).

The ultimate feature (or bug, depending where you sit) of this system is that it allows hyper-targeted sanctions at the individual level.

For illustration, check out this recent super early beta implementation by China of using ‘social credit score’ to ban Chinese citizens from planes, trains and dating apps.

However, the problem isn’t with the crude beta implementation described in the Brookings article above. The issue is that as this system matures and sophisticated link and predictive algorithms are deployed across the many data sets, citizens learn what the algos are likely to deem as undesirable behavior. Then self-censoring kicks in, which is even more controlling than the direct government sanctions.

For example, Ben invites me for a beer on a Tuesday night, but I think he may have been hanging out with dissidents on the weekend, so I politely decline so that our WeChat accounts don’t show up at the same bar at the same time. I’d love to think that I’m above caving into this self-censorship but honestly, with a young family, a decent middle class life and a well performing stock market, maybe I’ll just skip the beer.

This is absolutely happening in China today.

‘The Alternative System’:

I’m calling it ‘The Alternative System’ rather than ‘The American System’ as Schmidt does, because the West doesn’t run on this system (it runs on a kind of fragmented, semi-private-ish version of the Chinese system)

‘The Alternative System’ looks broadly like:

  • Very high adoption of mobile services for core life needs (communications, payments, transport etc.)
  • Self-sovereign identity
  • Distributed data
  • Each individual with a unique encryption key to join ID to data, and the sole right to do so

The beauty of this system is that you as an individual have the sole discretion to reveal what you want to reveal, to whom, when you want. And because your personal data (credit history, for example) is distributed across a decentralized ledger, it’s impossible for governments to prevent you from revealing it. See, it’s not just the ability to keep your data private from government control that’s so important, but also the ability to reveal it without government permission.

To be clear, this system has not emerged yet. But it IS emerging with hundreds of scattered projects working on discrete self-sovereign digital identity and distributed ledger technology.

This is absolutely happening outside of China today.

I can’t really give a good, concrete example of what this would be like because, well, it would just be like being a regular human going about your day-to-day life using lots of technology, but with no one using your data to control you.

It would be kind like a really convenient version of the 90s, I guess. Imagine that!

— Neville Crawley

[Ben’s note: When he’s not writing guest posts for Epsilon Theory, Neville is the CEO of Kiva, which is an amazing company that you should get to know.]


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