AuthorTorbert, Preston M.
PositionP. COV-142

Part 1 of 2

CONTENTS Part One: Morality 1 I. Introduction 1 II. Markets and Morals 3 III. Advertising 6 A. Then and Now 6 B. The Advertising-based Business Model 9 IV. The History of Google 10 A. Before Advertising 10 B. After Advertising 12 V. The History of Facebook 20 A. Before Advertising 20 B. After Advertising 26 1. Formation, 2004-2012: The Issue of Privacy 26 2. Consolidation, 2012-present: The Issue of Autonomy 30 a. Addiction 31 b. Surveillance 34 c. Manipulation 36 d. Loss of Autonomy 38 C. The Behavioral-Advertising Business Model and Its 41 Implications 1. The Economics of the Behavioral-Advertising Business 41 Model 2. The Morality of the Behavioral-Advertising Business 42 Model 3. Disregard for Moral Issues 43 4. Exploitation of Human Weakness 48 5. Users as Lab Animals 49 6. Unhappiness 50 7. Critical Silence 51 8. Frictionless Sharing 54 9. Data Exhaust 56 10. Threat to Democratic Practice 58 11. Threat to Rule of Law 61 Part Two: Legality 63 I. Contract Law and the Behavioral-Advertising Business Model 63 A. Inalienable Rights 63 B. Illegal Contracts: The Precedent of the Peonage Contract 70 C. Types of Illegal Contracts 81 1. Contracts Contrary to Good Morals 82 2. Unconscionable Contracts 90 3. Contracts Against Public Policy 96 D. Illegality 103 1. Factors Affecting A Decision on Illegality 103 a. Federal Government Inaction 103 b. Tradition of Judicial Activism 109 c. Procedural Issues 111 d. Changing Mores 115 e. Changes to the Business Model 119 f. Threat to Personhood 123 g. Threats to Democratic Society and Theory 126 i. Democratic Society 126 ii. Democratic Theory 129 h. Paternalism 131 i. Uncontrolled Experiment 133 j. Bad Beliefs and Bad Behavior 136 2. Consequences of Illegality 142 a. Contract Unenforceable and Void 142 b. Statutory Violation or Common Law Tort? 144 c. Alternative Business Model 149 d. Ownership of Data 153 e. Bankruptcy 157 f. International Consequences 158 Part Three: Conclusion 161 I. Morality 161 II. Legality 167 PART ONE: MORALITY


    Many internet service companies have a business model that relies on advertising. A user enters into a contract with the company by accessing the appropriate web page and clicking on the consent button to confirm that the user agrees to the company's Terms of Service. A contract between the user and the company is established. (1) Under the contract, the user consents to the company's collection, aggregation, and handling of the user's personal data and the company sells the attention (2) of the user to advertisers, political parties, and others. Essentially, the user barters his or her personal information in exchange for free use of the service. Under this model, the users are not the company's customers, the advertisers are. (3) This has become the predominant business model for internet service companies.

    This business model has attracted criticism. some say that the model will inevitably be misused; that it is harmful to the health of the public sphere and politics; that under it crucial decisions are made unilaterally, without recourse, and without accountability; (4) that it leads the companies to consciously addict their users; (5) that it is at cross-purposes with healthy technology usage; (6) that it involves surveillance marketing; (7) and that it involves mass behavior modification. (8) But it seems that no commentator has overtly criticized the morality of this business model and questioned the validity of the contracts that underly it. (9) Many critics have suggested legislative or administrative solutions to the problems noted above, but no one seems to have suggested a judicial solution through the interpretation of contract law. That is what this article does for the contracts of the two giants of internet advertising, Google and Facebook. (10)

    These two companies were chosen for two reasons: (1) they developed the current model of behavioral advertising, take in over half of all worldwide digital advertising, and earn the overwhelming percentage of their revenues from advertising (about 90% for Google, 95% for Facebook); (11) (2) they are very powerful. According to Marc Rotenberg, Executive Director of the Electronic Privacy Information Center, "[i]t's difficult to imagine a more complete hegemony. Google and Facebook control eight of the top 10 internet services... They are among the five largest corporations in the world. They face no competition. And their power came about through the unregulated collection and use of personal data." (12) It has been said that they have reengineered the internet into vast preference manipulation platforms (13) on which "Google defines what we think" and "Facebook defines who we are." (14)


    What are the moral limits of the market in a liberal democracy? Do we want market forces to spread into the most "intimate spheres of life"? (15) These are the fundamental moral questions behind the behavioral-advertising business model. unfortunately, they have not been raised or publicly debated since the creation of these digital platforms. In the legal field, the immediate reason for this silence may be "market imperialism," (16) the triumph in the law schools during the last fifty years of market reasoning (17) and its role as the predominant analytical tool. This market view of life also lies at the heart of computer-centered technology and culture; internet boosters often speak in the language of economics. (18) The major presumption of market reasoning certainly is not without justification: that people in their market roles express important motivations and attitudes and even some fundamental truths of human nature. (19) But it has been extended to the supposition that in all spheres of life, human behavior can be explained by assuming that people decide how to act by weighing the costs and benefits of the choices before them and choosing the one that will give them the greatest welfare or utility. (20) This extension is the concept of "universal commodification." (21) This presumption and supposition, however, avoid the fundamental question: does it make sense at all to use market norms to govern our conduct regarding a particular good? (22)

    This is essentially a moral question, but both the market (23) and technology (24) lack a moral basis, so they turn every question into an analysis of costs and benefits--the greatest welfare or utility. (25) Market imperialism and technology empty public life of moral argument, and any attempts at moral thinking tend to devolve into utilitarian analyses of the costs and benefits of probable scenarios. (26) The scholar who seems to have thought about this issue most deeply, Professor Margaret Jane Radin of the University of Michigan Law School, believes that the characteristic rhetoric of economic analysis, when it is put forward as the sole discourse of human life, is "morally wrong." (27) In fact, freedom and autonomy require that certain goods be outside market relations. Michael Walzer of the Institute for Advanced Study has made the most extensive list of dealings outside market relations. (28) They include the purchase and sale of human beings; political power and influence; criminal justice; freedom of speech, press, religion, and assembly; marriage and procreation rights; etc. (29) He also includes simony, bribery, and prostitution. (30) Even this extensive list may not be complete. It does not seem to include judges selling their decisions to the highest bidder or the enforcement of unconscionable contracts. To acknowledge that the market has limits is to recognize that it has a proper role in analyzing human life. The challenge is to reap the advantages of the market while confining its analysis to those areas suited to it. (31)

    Market imperialism has not only expanded market thinking to all areas of human experience, it has also necessarily resulted in precluding discussion of moral issues. The British historian Tony Judt has explained that since the 1970s, "[i]ntellectuals don't ask if something is right or wrong, but whether it is efficient or inefficient. They don't ask if a measure is good or bad, but whether or not it improves productivity." (32) The insightful internet critic Evgeny Morozov reached a similar conclusion about the last few decades. He believes that one of the greatest misconceptions of this period has been "the idea that technology ought not to intrude on questions of morality... [m]orality here, technology there: the two shall never overlap." (33) The veneration of technology has also precluded the discussion of moral issues because it presumes that technical innovation has only positive effects. (34)

    But this preclusion of moral analysis ultimately undermines the moral legitimacy of the market economy. It is generally recognized that a market economy, even in its purest form, requires some restrictions on self-interest to prevent theft, fraud, and contracts contrary to the public interest, as well as the corruption of legislators and judges. Truth, trust, restraint, and obligation are social virtues grounded in religious belief that play a central role in a market economy. Such an economy requires morality to assure that the law is obeyed and those aspects of life not covered by the law are governed by some rules. By trying to fill the vacuum left by the decline of religion and the preclusion of morality, market values weaken moral sanctions and sabotage their own legitimacy. (35)

    Given that some activities are off limits to the market, might they include the behavioral-advertising business model for internet services? We can attempt to answer this question by using our common-sense moral intuitions and by allowing our moral judgments to be guided as much as possible by the reasons that can be given for opposing views. (36) Although the digital behavioral-advertising business model is in many respects unprecedented, analogies to familiar practices can be...

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