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The past 12 months have been fairly turbulent in emerging markets, but a number of factors support emerging market performance.  Read More (PDF)

The Darker Side of AI

September 25, 2018 | Global/Emerging Markets


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Despite its potential, artificial intelligence, which is disrupting existing business models, placing new demands on infrastructure, and even breaking down societal institutions, has its limitations. But there is a darker side to artificial intelligence, the ramifications of which we are just now experiencing.

We are beginning to see a backlash against the way social media companies use data.

Social Media Galvanized Populist Movements

Earlier in the decade, there was much discussion about ground-up democracy in the form of social media galvanizing popular movements and making political change possible in Egypt and Ukraine. More recently we have experienced similar societal trends with the Donald Trump campaign and Brexit.

Social media companies gather and generate a tremendous amount of data, and they use that data to tweak and promote content so it goes viral. They are happy to monetize that knowledge by selling it to advertisers and political campaigns.

It is not an accident that during the Brexit referendum this methodology was used extensively by the “Leave” campaign, which generated more than 1 billion Facebook messages designed to drive its desired outcome.

The Trump campaign took this strategy to another level, averaging between 50,000 and 60,000 messages per day. Targeting is so specific, it can pinpoint a dozen people in a particular jurisdiction who are likely to respond to a message.

Backlash Starting

This is affecting the information we consume, and ultimately, the decisions we make—so not surprisingly, we are beginning to see a backlash against the way social media companies use data. A bill currently in Congress, the Honest Ads Act, would require internet companies to disclose more about their advertisers and store copies of all political ads for the public to view.

Essentially, it wants social media to be held to the same standards as other forms of media, be it print, television, or radio.

But many people believe that does not go far enough. In Germany, for example, social media sites must either take down fake news and hateful content within 24 hours of its appearance or pay a €50 million fine.

There are even more radical proposals on the table, such as social media companies changing their business models so they receive revenue not from advertisers and purchasers of proprietary information but subscriptions. Some even want social media companies to be regulated like public utilities.

We are likely to hear more about this in the years to come, because, as expressed in a November 2017 article in The Economist, “History suggests that [our democratic societies] should be able to weather the storms of social media” but “as with books and broadcasts, the process is likely to transform that which it seeks to preserve.”’

Olga Bitel, partner, is a global strategist on William Blair's Global Equity team.