The political economy in the digital era : a comparative case study of Google and Alibaba's surveillance practices

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The Political Economy in the Digital Era

– a comparative case study of Google and

Alibaba’s surveillance practices

Ellida Risan

Research Project – 21st Century Power Shift:

China’s Rise in the Global Political Economy

Department of Political Science

Faculty of Social and Behavioural Sciences

UNIVERSITY OF AMSTERDAM

Supervisor: Dr. J.Y. Gruin

Second reader: Dr. R. Bellanova

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Acknowledgement

First, I would like to thank my supervisor Julian Gruin. Your academic guidance and feedback during this process have been much appreciated.

Lastly, I would like thank my family for their infinite support and who made it possible for me to take a year of study in Amsterdam.

I am solely responsible for any mistakes or misinterpretations.

Ellida Risan

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Abbreviations

AI Artificial Intelligence

CC Comparative Capitalism

CCP Chinese Communist Party

CME Co-ordinated Market Economy

CNNIC China Internet Network Information Center

GDPR General Data Protection Regulation

ICP Internet Content Provider

ICT Information and Communication Technology

IoT Internet of Things

LME Liberal Market Economy

MIIT Ministry of Industry and Information Technology

PRC People’s Republic of China

SAIC State Administration for Industry and Commerce

SASAC State Assets Supervision and Administration Commission

SCS The Social Credit System

SOE State-Owned Enterprise

SPC The Supreme People’s Court VoC Varieties of Capitalism

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1 Introduction

The internet and digitalization have changed society in a fundamental way over the last few decades. This technology has become a widespread platform for information and communication that permeates both the society and the economy. In advanced economies, data-driven innovation is possibly one of the most significant drivers of future economic growth. More data is now being produced every week than it was during the whole last millennium (OECD 2015). Large amounts of data are part of production processes and business models that are becoming increasingly valuable for countries’ economies. The development is driven by increased data capacity and computational power and includes technologies such as the Internet of Things (IoT), algorithms, big data, cloud solutions and artificial intelligence (OECD 2015). These technologies provide unparalleled opportunities for monitoring, managing and analysing information and communications for different ends. Data collection is imperative. However, it is the ability to convert data into insights that will determine which industries and companies that will succeed.

Surveillance can take many forms and have various effects, depending on the social and economic logics that bring them to life. One of the most important political questions about technology and society is how, and to what extent, technology affects our society. This may be a critical issue, since every technology gains its value in terms of its effect upon other parts of the social system. A rapidly accelerating phase of capitalism based on asymmetrical data accumulation poses significant concerns for the entirety of our societies, right down to each and every individual member of society (Cinnamon 2017: 609). There is power in the ability to sort, rank and highlight information. Social and digital platforms quantify and classify information that has previously not been quantified, such as how many times you have liked the posts of a particular topic or friend. And these platforms build business models based on this user data. Information and data is in this context recognised as power, where digital technologies have changed in the ways in which economic value is produced and distributed and commodities conceptualised. The competition for surveillance revenues, challenges human autonomy in a battle for power and profit (Zuboff 2019: 11).

The contemporary digital platforms of the Web, retail and electronic commerce (e-commerce), mobile telecommunications and smart infrastructure systems produce vast

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amounts of data about users – their preferences as consumers, their spatial and temporal patterns and behaviours, their hope, beliefs and desires (Cinnamon 2017: 609). Huge economic value is generated for the corporations that control these architectures since data are produced whiteout financial compensation to users, and additionally enable competitive advantage (Cinnamon 2017: 609). Technology innovation is testing everything from privacy and security policies to state control for turnover. This makes tech companies such as Baidu, Alibaba, Tencent (often referred to as BAT) and Google, Facebook, Apple and Amazon (the Big Four) a topical research matter. Tech firms make profit on consumers’ algorithmic identities and have given scholars a profound opportunity to reassess the underpinnings of contemporary surveillance theory.

This paper focuses on the ongoing and extensive digitalisation in society and what it means that computer technologies and associated infrastructures permeate everything. The development of digital platforms has complex social consequences and raises questions when it comes to digital surveillance in relation to motivations and practices that corporations and states develop and implement. The thesis addresses a comprehensive account of digital surveillance practices for commercial purposes, and how tech companies construct and contest digital surveillance within a political economy framework. It approaches digital surveillance as a topical political and economic matter, specifically since digital platforms are constructed under the technological principle that collects, stores, and analyse personal data – these digital platforms enable both commercial and state surveillance of consumers (Fuchs 2012c: 533). This surge of technologies in the 21st century, which enables information sharing in an unprecedented scale have unclear social, political and economic implications.

This thesis will provide a theoretical and conceptual framework to unpack the state/corporate relationship in both the US and China, and thus, shed light on the different ways in which power is exercised through the collection and utilisation of big data. Power derived from knowledge about citizens through digital surveillance have changed the ways political influence and economic value unfolds in commercial and social environments.

1.1 Research Question

Surveillance is an ever-expanding practice which I argue should be addressed and assessed in relation to social, political and economic interests. This thesis attempt to analyse the dynamic

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relationship between surveillance and capital. A critical juncture is the confrontation between the vast power of giant high-tech companies and their governments. The aim for this thesis is to analyse to what extent political economies inform contemporary policies and practices of digital surveillance. To operationalise this, I will study the mechanisms behind surveillance in two tech companies; Alibaba and Google.

Based on the aforementioned information, my main research question is as follows:

To what extent does the political economy of a country influence surveillance practices of its tech companies?

This research matter is a theoretical and interpretive approach to the use of surveillance in the digital era.

1.2 Theoretical Framework

Providing an overview of surveillance and monitoring techniques that are rapidly emerging as central elements in modern information society, we can put tech companies and their practices in a broader social science context. Moving from classical theories about the visual via recent re-theorizations of surveillance that take account of new information technologies and big data. By employing the proposed theoretical perspective of a political economy of surveillance, this thesis draws on a Foucauldian framework – panopticon, biopower and governmentality – and Comparative Capitalism in order to unveil the current surveillance practices by major, semi-monopolistic tech corporations. Comparative political economy as such, revolves around the conceptual framework to understand institutional variations across nations. The analysis will apply this theoretical framework with regards to how (socio)economic systems unfold different surveillance practises of tech companies.

Based on Foucault’s three perspectives, panopticon, biopower and governmentality, I demonstrate how states and corporations alike, utilise digital surveillance as a tool for power. I would like to emphasise that the theoretical framework does not cover all factors behind surveillance. However, the framework covers key factors for actions based on surveillance studies and comparative capitalism literature that inform political and economic decisions.

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1.3 Case Selection and Research Method

To make this study feasible within the time and space constraints of a master thesis, I will compare two tech companies; Alibaba Group Holding Limited, a Chinese corporation and Google Inc., an American company. Tech companies in the US and China respectively, will be compared to better elucidate the extent a political economy of a country influence surveillance practices. The aim for the study is to explore the mechanisms behind digital surveillance in order to unpack the corporate-state relationship. In other words, how is surveillance situated in a wider political and economic context and to what extent political economies inform policies and practices of digital surveillance in tech companies.

This thesis provides a qualitative text analysis of Alibaba and Google in relation to their respective nation states. The analysis consists of two parts: i) Alibaba and Google’s policy documents and ii) white papers from the US and China, giving information and proposal on relevant matter. Based on the paper’s demarcation and relevance, the thesis will primarily use available data. Alibaba and Google, will be essential for the compilation of existing data. Document-based research design is chosen to review and analyse relevant documents and strategies according to the research question. In social sciences, document-based research is used to investigate how political science research relates to text, and in what way the approach is used to examine empirical material. In this way, document-based research facilitates systematic review of relevant documents, which through interpretation promotes insight and develops empirical knowledge related to the research matter. Accordingly, the empirical material was retrieved from Alibaba and Google’s online webpages, and constitute the main bulk of the data. This was supplemented with white papers, from both nations (the US and China). The resemblance of the empirical material simplified the comparison of the two cases and hopefully led to fewer errors.

1.4 Outline of the Thesis

The thesis is based on two main parts consisting of a total of seven chapters. The following sections provide an overview of the paper’s further exposition and structure.

The first part of the thesis refers to the selection of the theoretical framework and the selection of relevant literature for review. Chapter two consist of a literature review of

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development of the theoretical approach is explained. The theoretical review of surveillance studies in relation to comparative capitalism, on the account of tech companies provides indicators of a trend of development that raises the surveillance dilemma. Furthermore, the thesis’s methodological approach is presented in chapter four, and discloses the paper’s research agenda.

The second part, consists of chapter five and six, and refers to relevant empirical data that actualise the research question and the theoretical approach. The findings will be analysed and explained, rooted in relevant theory that is present in chapter three. Here, the questions are answered to the papers main research question, with corresponding sub-conclusions. In chapter seven, the conclusion of the thesis is presented and gives an answer to the defined research question.

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2 Literature Review

The literature review presented here offer a backdrop of digital surveillance that provides states and corporations with a technology of power that ensures their economic and political interests. This thesis is influenced by surveillance studies, an interdisciplinary research field that views big data, as an instrument for digital surveillance (e.g. Zuboff 2019). The chapter gives a brief overview of some of the relevant literature on the socio-technical and political-economic conditions that have given rise to the specific kinds of surveillance we are experiencing in the 21st century. The purpose is to provide some insight into what drives the demand for surveillance. Furthermore, the objective is to investigate the effect of capitalist systems on surveillance practices in tech companies. Development in technology has created a new wave of opportunity for economic and societal value creation (World Economic Forum 2011: 5). This chapter show where tech companies might be situated in context of digital surveillance, big data and capitalist development. Additionally, a clarification of key terms and concepts will be introduced in the following sections.

2.1 Surveillance

The concept surveillance runs like a leitmotif throughout this thesis and needs to be elucidated for making it analytically comprehensible. Classic surveillance studies have to a large extent been inspired by Foucault, and have thus, mainly focused on surveillance as a means for discipline as a goal (Lyon 2015: 69). Surveillance after Foucault has, as follows, been considered as a way of controlling populations, through discipline and self-discipline, but one is now talking about surveillance as a means of controlling behaviour (Lyon 2015: 69-70). The noun surveillance literally means to ‘watch over’ and the term describes different methods for observing people or places (Lyon 2006). According to Salter (2010: 189), surveillance is not just reconnaissance of an opponent’s position, but also includes attempts or intent to control behaviour to those observed. Surveillance is thus defined as “the focused, systematic and routine attention of personal details for purposes of influence, management, protection or direction” (Lyon 2007: 14). While surveillance evolves around direct watching or monitoring, it also consists of a much wider range of practices and technology. Mathiesen (2012: xviii-xix) emphasizes what is new now is surveillance that is hidden, unseen, and impossible to trace. Surveillance is the cardinal point of the Internet.

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The nuances of contemporary surveillance are many, and it is important to highlight this concept beyond Foucault’s perspectives to make it analytically intelligible. Development in technology, administration practices, trade and regimes have culminated in surveillance in their various manifestations that has become a dominant organisational practice in today’s society (Lyon 2006). Surveillance is now an inevitable phenomenon, and how this is used provides some of the most pressing political and ethical issues of our time. The term surveillance that is used in this thesis is essentially technological: digital electronical data monitoring, as opposed to analogue. The type of surveillance deliberated here is supported, enabled, or assisted by information and communication technologies (ICTs).

A diversification of surveillance has taken place against the backdrop of a widening range of information architectures in the latter parts of the 20th century (Mathiesen 2013). Fast developing technologies combined with governmental and commercial interests and strategies, means that new modes of surveillance proliferate (Lyon 2009: 449-450). The ongoing and extensive digitalization have increasingly been employed for obtaining personal information – the collection, analysis and application of personal data, permits surveillance. Through the storage and control of information, we find surveillance as the assembling of administrative power (Fuchs 2011a: 112). In the same manner, ICTs are utilised to increase the power, reach, and capacity of surveillance systems (Lyon 2009: 450-451). Surveillance is “the coding of information relevant to the administration of subject populations, plus their direct supervision by officials and administrators of all sorts” (Giddens 1984: 183-184). Technology’s marriage to surveillance, will in this paper be understood as the processing of personal data for the purpose of care or control, is used to influence or manage persons and populations (Lyon 2009: 450). Power relations are inherent to surveillance processes.

By themselves, data and technology are recognized as neutral. It is their use that can generate value. Data, however, is just that – data – until they are analysed and used to inform decision making. Advances in digital technology have enhanced the ability to collect, store, and analyse massive collections of diverse data – known as Big Data. Big data refers to a “capacity to search, aggregate, and cross-reference large data sets” (Boyd and Crawford 2012: 663). Lyon (2015: 69) emphasises that big data encompass the ways to handle data practices and processes. Big data is an analytical tool where in the first instance there is a collection of large amounts of data from different sources, then algorithms and analyses are

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mobilized to understand previous sequences and events, but also to predict and intervene in a pre-emptive manner (Lyon 2015: 69). As such, big data is a technology that covers the entire value chain; data collection, storage, processing, analysis and visualization of results (Zuboff 2015). In other words, big data is about the exploitation of large amounts of data.

For Lyon (2015), big data has changed the character of surveillance we experience today and is responsible for the shift from targeted surveillance of groups and individuals to mass monitoring. Dependence on big data techniques has a significant impact for understanding the character of contemporary surveillance (Lyon 2014: 1). Big data has emerged as a system of knowledge that is changing the objects of knowledge, while also having the power to inform how we understand human networks and community (Boyd and Crawford 2012: 665). The economic and social value of big data comes from the ways in which individual bits of data can be interconnected to reveal new insights with the potential to transform our economy and society. Big data’s supportive relationship with surveillance must be understood in this light.

2.2 Surveillance Capitalism

OECD (2015) claim that big data represents a paradigm shift, towards a more data-driven economy, where the assembly and analysis of large data volumes can improve economic competitiveness, drive innovation, and contribute to fair distribution and sustainable development. This is in stark contrast with surveillance studies scholar Shoshana Zuboff (2015: 75), who proposition that big data is above all the foundational component in a deeply intentional and highly consequential new logic of accumulation that she calls surveillance

capitalism. While big data may be set to various uses, Zuboff (2015: 75) argues that ‘big

data’ is not a technology or an inevitable technology effect. It originates in the social, and it is there we must find it and know it. This new form of information capitalism aims to predict and modify human behaviour as a means to produce revenue and market control (Zuboff 2015: 75). Consumption as an additional side of surveillance. According to Lyon (2014: 9) big data represents a convergence of commercial and governmental interests; its political economy resonates with neo-liberalism. Yet, surveillance capitalism marks a sharp divergence from neoliberal ideas about the market as inherently unknowable (Cinnamon 2017: 610). As Zuboff (2015: 83) observe:

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“Surveillance capitalists have skilfully exploited a lag in social evolution as the rapid development of their abilities to surveil for profit outrun public understanding and the eventual development of law and regulation that it produces.”

Zuboff (2015; 2019) tries to find answers to an important fundamental question: Who profits from the boundlessness knowledge and the new power of information technologies? Zuboff describes a new economic paradigm. The development of a new and more radical form of capitalism which she labels surveillance capitalism. It is no longer based on human work and the well-known Marx imperative, where the owner of the means of production owns power, but bases his economic interest in a comprehensive and all-encompassing monitoring of human actions and behaviour, both in digital and analogue contexts (Zuboff 2019). In this system, human behaviour is understood as a limitless, indestructible commodity available in an unregulated area, which can be used and transformed into financial gain.

Zuboff points to various control mechanisms that the new information technologies allow. The interaction between technology’s inherent qualities and human choice is also influenced by social, political and economic interests with both predictable and unpredictable outcomes. Tech companies as such, are situated in the existing literature review as technological avant-garde and according to Zuboff, challenge the world order as we know it. In the explanation of the different ways in which power is exercised through the collection and utilisation of information technologies we find tech companies. This will be explored further, in a theoretical framework that looks at different political and economic interests and whether this have influence over specific surveillance practices, which the next chapter will present.

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3 Theory

This thesis examines to what extent socioeconomic systems unfold different surveillance practices of tech companies. The thesis’ research question will be elucidated through a combination of two different theoretical perspectives: surveillance studies and comparative political economy – that will later form the basis for the analysis and discussion of the data material. Theoretically I will examine the ways in which tech companies relate to the state, within the field of comparative political economy and employ the ‘comparative capitalisms’ literature. This will provide a theoretical and conceptual framework to unpack the state/corporate relationship in both the US and China, and thus shed light on the different ways in which power is exercised through the collection and utilisation of big data. Furthermore, information and data is in this context recognised as power, where digital technologies have changed in the ways in which economic value is produced and distributed and commodities conceptualised. Using classical surveillance theory, while exploring this phenomenon more generally, contributes to the epistemic community of surveillance studies. And moreover, contribute to the study of changing forms of surveillance and how they are related to capitalist dynamics.

3.1 Comparative Capitalism

In the field of comparative political economy, one recognises the comparative study of capitalism as a socioeconomic system, looking at differences in the social organisation, the institutional embeddedness and the governance of capitalist economies in different societies, and their effect on economic performance in a competitive world market. The comparative capitalism approach (CC) claims that different forms of capitalism institutionalize particular economic rules of the game that shape strategies, structures, and competitiveness of firms (Morgan 2011: 14). Comparative political economy as such, revolves around the conceptual frameworks used to understand institutional variations across nations (Hall and Soskice 2001: 1). This approach is a fruitful starting point for other theories and analyses.

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Capitalism can be defined as a social and economic system based on the economic activity being organised by capital owners, who use their capital to procure means of production and commodities, and to pay workers, as compensation for exploiting their labour (Bannock and Baxter 2011: 47). The private ownership of property and the decision rights that come with that ownership is further emphasised. Likewise, reliance on competition, profit maximization and self-interest to discipline market participants are other characteristics that recognize capitalism. Most people who use the concept of capitalism normatively, as something one support or oppose, often use the word with a meaning that corresponds to the term market economy, an economic system associated with free markets and economic liberalism – and a limited state whose primary task is to protect citizens’ lives, liberty and property, as well as enforce laws in accordance with the rule of law (Kocka 2018). In this respect, capitalism is in direct opposition to a socialist system where all means of production are governed and owned by the state.

In the broadest sense, capitalism is about enriching itself. The unique thing about modern capitalism is that this is ideally seen through market-oriented, value-creating activities. Kocka (2018: 24-25) points to three dimensions: i) individual property rights and result-oriented decisions that bring both profit and loss. Profit is thus accepted as a benchmark. By ‘individual’ is meant not only individuals, but also groups, companies or associations of companies; ii) coordination of economic actors take place primarily through markets, through the buying and selling, regulated by supply and demand; iii) capital is fundamental to business, it involves investing and reinvesting savings and profits in the present with a view to achieve benefits for the future. Economist Joseph Schumpeter defined in his famous book ‘Capitalism, Socialism and Democracy’ (1943) capitalism:

“The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process. … Capitalism, then, is by nature a form of method of economic change and not only is but never can be stationary. … The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumer goods, the new methods of production or transportation, the new markets, the new form of industrial organization that the capitalist enterprise creates” (Schumpeter 1943: 81-82)

Schumpeter described here, dynamic and innovative market processes. Moreover, Douglass North (1991) argues that the success of capitalist societies is dependent on institutions, whose rules have been changing throughout history in order to reduce uncertainty in the process of

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economic exchange. Capitalism as such, is therefore not a monolithic institution. For example, in China the state has an extensive role in shaping the rules of the market and is a significant partaker in the economy, while in the US, the state represents a more limited role in economic decisions (Tsai and Naughton 2015).

3.1.2 The Role of Institutions

The basic understanding of institutions, and of the interdependence between capitalism and other social and political structures, provides an outline for comparative political economy. Institutions have thus been recognized within the political economy as an imperative source of economic prosperity, rather than the adoption of free markets in isolation – e.g. ‘Washington Consensus’. Empirically as states that implemented Washington Consensus failed to do as well as anticipated, parallel with the rising economic success of the so called ‘BRICs’ (Brazil, Russia, India and China) – a combination of heavy government intervention with development of their own markets (Ban and Blyth 2013; Peck and Zhang 2013). These results support North’s assertion that institutions are exceptionally important in determining the real-world nature of markets.

Respectively, North (1991: 97) claims that institutions “are the humanly devised constraints that structure political, economic and social interaction”. Also, known as “rules of the game”, where institutions include formal rules, written laws, formal social conventions, informal norms of behaviour and shared beliefs about the world, as well as the means of enforcement (North, Wallis and Weingast 2009: 15). Bannock and Baxter (2011: 195) define institutions as “established forms of law, accepted practice and organisation which govern social and economic relationships … include, property rights, the rules governing political behaviour, commercial transactions and the organisations that conduct them, such as the judiciary”. The importance of institutions existence is that it provides incentive structures of an economy that reward productive work, investment and innovation. North (1991) compellingly argues that institutions matter insofar as they affect economic outcomes and are of great importance in governing economic performance (development).

Even though institutions consist of constraints on behaviour, and thus reducing our individual freedom, many of the same institutions are also a prerequisite for human development. To use game theoretic terms “Institutions and the effectiveness of enforcement (together with the

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technology employed) determine the cost of transacting. Effective institutions raise the benefits of cooperative solutions or the cost of defection” (North 1991: 98). Thus, institutions reduce transaction and production costs per exchange so that the potential gains from trade are attainable (North 1991: 98). In other words, political and economic institutions create an economic environment that induces increasingly productivity, reduce uncertainty and support for markets (North 1991: 98).

Institutions are a complex term and its role in society can be explained in what Hall and Jones (1999: 95) refer as social infrastructure: “By social infrastructure we mean the institutions and government policies that provide the incentives for individuals and firms in an economy”. Institutions create predictable conditions for production, technology transfer, export and trade. In a world of individual utility-maximizing behaviour and asymmetric information; institutions exist due to these uncertainties that involves human interaction. Subsequently, growth and modernization can be achieved through institutions via different economic, political and social conditions.

3.1.3 Varieties of Capitalism

Institutions conceals significant variation across nations, in the ways in which institutions have been implemented – and more specifically, in the relationship between the free market and the rest of society. The ‘Varieties of Capitalism’ (henceforth VoC) framework developed by political scientists Peter Hall and David Soskice emerges from the ‘comparative capitalism’ approach, where one has been concerned with the existence of different capitalist systems. Hall and Soskice (2001) claim that the variation between national economies is not linked to variation between individual cases, but is linked to general categories. The crucial point in the VoC framework is that political economies are characterized by various institutional infrastructures that companies’ efforts are (partly) dependent on (Hall and Soskice 2001). Hall and Soskice (2001: 15) describe it as follows: “Our point is that (institutional) structure conditions (corporate) strategy, not that it fully determines it”. This means that the production and innovation strategies that companies can pursue are dependent on the type of investment available in the economy. VoC seek to build bridges between the macro-characteristics of national political economies and the microeconomics of firm behaviour, enabling connections between the competitiveness of the firm and the ‘institutional comparative advantage’ of national economies.

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The VoC framework presents a persuasive dichotomy of the institutional foundation of capitalism: co-ordinated market economy (CME) and liberal market economy (LME) – to stylize the differences within the Western capitalist system, and with Germany and the United States as the ideal typical extremes of the two forms (Hall and Soskice 2001). In LMEs, coordination takes place primarily in markets and hierarchies with competition and formal contracts as the most important coordination mechanisms. In CMEs, non-market relations are more important for coordination between actors, and on networks of companies, suppliers, unions, customers and the government. Companies’ expertise is to a greater extent built on collaboration rather than competition. Strategic interaction among companies and with other players is relatively more important for the achievement of objectives in CME companies than for companies in LMEs where market competition dominates to a greater extent. The emphasis on competition versus coordination is relevant as both models rely on markets and relationship to varying degrees (Hall and Soskice 2001: 8). These types are constructed as ideal types of developed economies and are opposites, or the two “poles of a spectrum” (Hall and Soskice 2001: 8).

The varieties of capitalism perspective are a theoretical framework for understanding the similarities and differences between economic and political institutions in advanced industrial countries (Hall and Soskice 2001: 1). This approach to political economy is actor- and firm-centered. They are regarded as the crucial actors in a capitalist economy, as they are “key agents of adjustment in the face of technological change or international competition” (Hall and Soskice 2001: 6). The political economy is seen as being composed of multiple rational actors who act strategically. National economies are compared on the basis of how companies solve central coordination problems with other strategic actors in five different institutional spheres: employee relations, vocational training, internal structure, corporate governance and competitive relationships (Hall and Soskice 2001: 6-8). Actors depend on institutions within the market economy. The constraints placed upon firms by their national economic, political and social systems, determines whether a country has a more LME-like or CME-like system.

It is through the interaction between firms and governments that firms can act as ‘key agents of adjustment’. On the national level, the government is naturally the most significant and

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they can adjust their own strategies in order to strengthen or weaken the already existing institutions. Hall and Thelen (2009: 16) describe the institutional adjustments in developed economies as a “pas de deux between firms and governments in which each responds to different pressures but has to cope with the moves made by the other side”. In other words, the economy is structured such that we are guided to act in accordance with the patterns that surround us where we are in time and space.

The VoC tradition further emphasizes that institutional complementarities between different spheres in the economy reinforce the difference between LMEs and CMEs (Hall and Soskice 2001: 17-21). Institutions are said to be complementary when the “presence (or efficiency) of one increases the returns from (or efficiency of) the other” (Hall and Soskice 2001: 17). This means that the two types of capitalism will each have their own comparative institutional advantage, which is the idea that “the institutional structure of a particular political economy provides firms with advantages for engaging in specific types of activities there” (Hall and Soskice 2001: 37). In other words, particular modes of capitalism exhibit path dependency.

3.1.4 State Capitalism

The LME and the CME typology are suited to shed light on both the United States and the Chinese system. However, Tsai and Naughton (2015: 12) argue that the VoC literature does not adequately encompass emerging economies, and as such the Chinese case in its entirety. The central government’s role as a capital provider is a key element why China differs from such a dichotomy. Understanding state firms is imperative for interpreting essentially every aspect of China’s contemporary economy and politics (Tsai and Naughton 2015: 2). To place China in the CC typology requires some analytical modifications.

Drawing on theories and concepts in the field of comparative political economy, especially within the VoC literature, Kellee S. Tsai and Berry Naughton (2015) uses the term state

capitalism as a framework to explain the specific developments in China. China’s

contemporary history and, not least, the development of institutions are central when the authors explain state capitalism as a combination of market economy, emerging capital markets and large state-owned enterprises (SOEs) (Tsai and Naughton 2015: 2). In contrast to the VoC logic, which is fundamentally firm-centric, where institutional complementarities are predominantly perceived of as existing in a reinforcing state, in state capitalism those

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complementarities run through the actions of state actors, and is thus state-centric (Tsai and Naughton 2015: 15; McNally 2015: 3). The state capitalist system is already global in reach, but differs from other forms of capitalism in this respect.

McNally (2013: 3) describe state capitalism as “a political economy in which the state directs and controls key productive forces in an economy, yet employs capitalist practices such as market competitive pressures, stock market listings, and material incentives for corporate executives”. This is accomplished both by direct control through the central government, and through SOEs (Tsai and Naughton 2015: 4). McNally goes one step further and proposes a conceptualization of China’s political economy termed Sino-capitalism (McNally 2018: 2). Conceived of as being reproduced by a dialectical relationship: “state-coordinated capital accumulation guided top-down is juxtaposed with bottom-up network-based forms of capital accumulation that are often globally integrated and market-driven” (McNally 2018: 2).

State capitalism is a form of bureaucratically engineered capitalism particular to each government that practices it (Bremmer 2010: 250). In comparison to the VoC approach there is a clear state interference, but in a market-oriented direction. This dualistic structure of state ownership and market economy distinguishes state capitalism. Chinese state capitalism is characterized, among other things, by the fact that a large part of the economy primarily operates under market conditions, but the state controls the financial system, establishes freely companies and is the main shareholder in several of them (Tsai and Naughton 2015). Since reform-era after 1978, China has developed a distinctive form of state capitalism where SOEs remain central to its evolving model of political economy (Tsai and Naughton 2015: 3).

Nölke, ten Brink, Claar and May (2015: 542) construct an ideal type of state capitalism in large emerging economies, which they call ‘state-permeated market economy’ (SME). This model is characterized by a particular close co-operation between public and business actors that is at least indirectly based on informal personal relations – partially even family ties – supported by common values and shared social background. It is assumed that central coordinating mechanism pervades all institutional spheres in SMEs (Nölke et. al. 2015: 543). Moreover, the authors argue that the state, (in large emerging economies) is not an all-powerful, centralised, steering bureaucracy – rather, its activity rests on a close cooperation between various state and domestic business coalitions at the national and sub-national level,

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economy (Nölke et. al. 2015: 543). Another characteristic of the SME is the preference of national control over their long-term economic development path (Nölke 2018: 273). In the case of China, this is to safeguard the basic parameters for a long-term economic catch-up strategy (Nölke 2018: 274).

State capitalism is a strategy of accumulating wealth, not an intervention by the state to counteract the market. As opposed to LMEs, where companies improve their expertise best through deregulation, and often press for this. State capitalism thus represent an emerging system of global capitalism that is producing a dynamic mix of mutual dependence, symbiosis, competition, and friction with the still dominant Western modes of capitalism (McNally 2012: 769).

3.2 Comparative Capitalism, Tech Companies and Power

The comparative capitalism literature introduces a theoretical backdrop for comparing different market economies and can give some insight into why two countries can have different preferences over the structure of the same policy area. It is in this context tech companies will be placed; how a political economy influence surveillance practices of its tech companies. In other words, do different political and economic interests have influence over specific surveillance practices as a result of the difference between the Chinese and American political economies? Whether state and corporate control of information and communications technologies differ, in state capitalism and liberal market economy respectively, will be further scrutinised in the analysis. Thus, we will see how this impact the political agency of civil society.

Furthermore, in accordance with the literature review, Foucault presents a power analysis that is characteristic of the contemporary society. As society become more dependent on ICTs there is a change of power, intensity and scope (Ceyhan 2012: 38). Placing Alibaba and Google in Foucault’s power analysis allows for a more simultaneous analysis, where the actual holders of power do not exclusively belong to the state but are challenged by private corporations like Google and Alibaba. According to Garrido (2015: 155), surveillance societies have resulted from the dynamics of state and corporate priorities. Here information about billions of people is offered to everyone as material for processing and assessing without limitation, hierarchical order and precise location, consequently the emergence of a

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new way of managing and controlling individuals, their life and way of living (Ceyhan 2012: 39). The starting point is the body and a number of techniques directed solely towards this.

3.3 A Foucauldian Framework

Although the digital surveillance ecology sets new premises for research, I nonetheless argue, that a classic Foucauldian approach is beneficial to analyse and understand the power of data collection, algorithms and big data. Through surveillance studies, Michel Foucault’s theoretical perspectives contribute to analyse corporate data collection and monitoring of users. A Foucauldian framework is beneficial to examine the rationalities of surveillance in a way that is adapted to social and political change. It will be useful to consider Foucault’s seminal contribution, both indirectly and directly, in the matter of surveillance, through his analysis of power.

3.3.1 Foucault’s Power Analysis as an Explanatory Variable

Panopticon

Panoptic discipline is one of the main forms of modern power, and Foucault studied this phenomenon extensively in his book on the history of modern prison, “Discipline and Punish: The Birth of the Prison” (Foucault 1999). This form of power, Foucault has named after the utilitarian social reformer Jeremy Bentham (1748-1832), who developed an architectural model by the same name for a prison where the inmates are isolated in their respective cells under continuous surveillance (“Panopticon” means “all-seeing”) (Foucault 1999: 174-175). Bentham’s prison, an ideal model, was never built in its pure form, but according to Foucault one finds here the purest kind of power that is established in modern institutions from the end of the 18th century onwards. We refer institutions such as factories, schools, military camps, hospitals, psychiatric institutions, asylum and prisons. The result, according to Foucault, spread a fine prison-like net of surveillance and control over society – and thus restores the social order lost by the traditional society’s collapse (Foucault 1999: 123). Foucault uses the utopian idea of Bentham’s panopticon as a metaphorical representation of surveillance and control that reflects the society. Panopticon enables a new, more effective practice of power. He explains the panopticon prisoners at the receiving end of an asymmetric surveillance: “he

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is seen, but does not see; he is an object of information, never a subject in communication” (Foucault 1999: 176-177).

Panoptic disciplinary power has several functions. An essential feature is that the panoptic discipline is aimed at the body. According to Foucault (1999: 123, 256), discipline is a form of control that has permeated the institutions of society and created compliant bodies. Through organising the body’s activities in time and space, and by linking sanctions, surveillance and examination to them, a strong normalization pressure arises in the panoptical institutions (Aakvaag 2008: 316). The awareness of being under panoptic discipline makes the body exert this form of power on the self without coercion. As a worker, student, prisoner, patient, etc., in the panoptic institutions where one is subjected to a discipline that transforms the body into an obedient tool in the service of society. The point is that elements of discipline are found everywhere in society, the panoptic discipline is a form of power, a methodology, a set of techniques that not only seeks to make docile bodies, but also effective and useful; the discipline tries to let the submission be the framework for an enhancement of the body. Foucault (1999) demonstrates a power mechanism that the prison expresses through techniques of exclusion and inclusion, which is also strong in society at large. Foucault (1999: 133) remarks that it is about organising diversity, to acquire an instrument to gain an overview and dominion.

Biopower

In the “Will to Knowledge” (1978), Volume I of The History of Sexuality, Foucault introduced the term ‘biopower’, which represents the other main form of modern power. A power exercised over persons specifically in so far as they are thought of as living beings: a politics concerned with subjects as members of a population, in which issues of individual sexual and reproductive conduct interconnect with issues of national policy and power (Gordon 1991: 4-5). The biopower emphasizes how aspects of biological life – health, sexuality, diet, hygiene etc. – are controlled and regulated by the modern state and its institutions. Where the panoptic discipline of power creates order locally, within the institutions, the biopower make up a range of different power technologies in the various panoptical institutions, where it enables, produces and regulates various types of social practices, thus integrating the modern society nationally (Aakvaag 2008: 317-319). Foucault consequently reject the liberal social contract and Marxist understanding of power as

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something legal, negative and constrained by the state and the authorities (Aakvaag 2008: 317). Modern (bio)power is primarily decentred, non-legal and productive.

Unlike power theories that focus on a group’s dominance over another, Foucault’s term encompasses biopower to refer to the ways power manifests itself in everyday practice and routines where individuals self-monitor and self-discipline their own body, thus submitting themselves (Foucault 1978). Foucault (1978: 137) characterizes biopower as a ‘power over life’, “a power that exerts a positive influence on life, that endeavours to administer, optimize, and multiply it, subjecting it to precise controls and comprehensive regulations”. Biopower, is literally having power over the bodies of others, it relates to the practice of modern nation states and their regulation of their subjects through “an explosion of numerous and diverse techniques for achieving the subjugations of bodies and the control of populations” (Foucault 1978: 140). In other words, biopower constitutes the state’s administration of the population:

“The setting up, in the course of the classical age, of this great bipolar technology – anatomic and biological, individualizing and specifying, directed toward the performances of the body, with attention to the processes of life – characterized a power whose highest function was perhaps no longer to kill, but to invest life through and through” (Foucault 1978: 139).

Biopower is more specifically about different forms of technology and techniques designed to analyse, control and define people’s lives and actions. Modern power, according to Foucault, is filtered into the social practice and human behaviour. This is accomplished as the oppressed population gradually accepts the subtle rules and expectations of social order. Biopower gives way to a biological regulation of life:

“Hence, too, my main concern will be to locate the forms of power, the channels it takes, and the discourses it permeates in order to reach the most tenuous and individual modes of behavior, the paths that give it access to the rare or scarcely perceivable forms of desire, how it penetrates and controls everyday pleasure—all this entailing effects that may be those of refusal, blockage, and invalidation, but also incitement and intensification: in short, the “polymorphous techniques of power” (Foucault 1978: 11).

The affairs of politics in the 18th century shifted from the sovereign’s power over life – the power to let live or to make die – to the right to make live and to let die (Foucault 1978). This

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transition, Foucault believes, is the power over man as a biological being. In order to exercise its biopower, the state needs two things: 1) knowledge on the population and 2) power to implement the measures it finds necessary to improve the population (Aakvaag 2008: 318). The state gets both through the surveillance and disciplinary potential already established in the many panoptic institutions. Furthermore, the biopower is exercised by the fact that professions and creators of science, associated to the various panoptical institutions, produce knowledge of the faults and deficiencies of the population. Then the state develops a solution that is implemented in the panoptic institutions. The state’s coordinated use of the panoptical institutions’ knowledge and power is thus at the heart of the biopower control system (Aakvaag 2008: 318).

Governmentality

Foucault introduced the term ‘governmentality’ in the late 70s in he’s lectures at the Collège de France, as an approach to the study of power (Dean 2010). The concept is related to the notion of govern or reign. Foucault developed the term in the quest to explain how the state’s power and governance are inherent in post-industrial societies. Governmentality is Foucault’s response to a development where the ideal of the welfare state was in decline and economic neo-liberalism was advancing (Dean 2010). Foucault pointed to an evolution in the ways of ruling, from sovereignty through discipline to government. Governmentality is understood as ‘the conduct of conduct’ – a form of activity intended to shape, guide or affect the conduct of some person or persons (Gordon 1991: 2-3). The governmentality perspective is understood as a tool to understand the exercise of power in modern society and deals with how the state’s power and governance change form and expression in societies where market-liberal values are of greater importance.

Governmentality is a new type of power technique that comes in addition to and modifies the already existing power techniques that Foucault calls strategy and discipline (Neumann 2002: 13). Foucault elaborated an analysis of government through which the evolutionary rationalities and technologies governing advanced liberal societies. He found a form of governance that developed parallel with the formation of the civil society in early modern times (1500-1700s) (Neumann 2003: 13). As greater support for liberalist ideas arises, the need for a decommissioning of the state and increased use of instruments such as privatisation of services, the view of the individual as the centre of society is also reinforced,

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not the collective or the group (Neumann 2002). This relationship between the state and non-state actors is based on a logic that is different from traditional sovereignty, and Foucault shows how states govern civil society by giving freedom to individuals, but at the same time linking them to the state. This creates a mutual dependence, and power arises in these relationships rather than being exercising one-way from the state. An understanding of governmentality as a form of direct control of people and resources was superseded by an understanding of “population” and “economy” as separate domains of reality that it was possible to produce knowledge about and thereby also govern through measures based on this knowledge.

Foucault presents governmentality, as the ensemble constituted by the institutions, procedures, analyses and reflections, calculations and tactics which can support “that very specific but very complex form of power whose main target is the population, major form of knowledge is the political economy and essential technical instrument are security apparatuses” (Foucault in Ceyhan 2012: 42). Foucault’s statement illuminates how the concept governmentality refers to the governance that regulates the population’s behaviour in the form of how we are governed and governs ourselves.

Foucault suggests that neo-liberalism is understood (as he proposes) as a novel set of notions about the art of government (Gordon 1991: 6). A neo-liberal rationality of government is the ‘care of the self’ which government commends as the corrective to collective greed (Gordon 1991: 44). The state has established a number of new forms of social governance that make use of market mechanisms to distribute resources and control different types of activities. This tendency is often interpreted as if the ‘market’ takes over where the ‘state’ had previously controlled. It is then assumed that a relationship between the state and the market is a zero-sum game, where the transfer of regulatory authority from state to market entrails an absolute reduction in the state’s power (Neumann 2003: 11). However, this is not the case. The market works precisely because it has already established a whole set of practices that ensure that the market can operate: such as the police and justice system guaranteeing private property (Neumann 2003: 11). This kind of preconditions for markets is it the state that ensures.

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concrete techniques the state uses in specific relations to maintain governance (Neumann 2002: 11). The key point is to say something about how the relationship between state and market is changing, what kind of qualitative change is taking place, rather than quantitative change towards ‘less state and more market’. The term governmentality points to that power, and especially the state’s power, is exercised by something other than a monolithic state, unequivocally governed by a government (Gordon 1991: 36). In summary, governmentality shows the broad spectrum of techniques and mechanisms for shaping human behaviour in a direction where one is able to control himself – self-regulating in accordance with the governance goals.

3.4 Summary

In the simplest sense, institutions are the rules of economic and political activity. The interaction between institutions and actors can therefore not be understood synonymously with delimitations or guidelines. Rather, institutions are both coercion and possibility, delimitation and incentive. Institutions are rules and resources actors draw on in their actions. In summary, the institutional perspective claims that institutions influence which solutions are chosen. An expanded institutional view highlights how a strategic interaction between sub-spheres in the economy can determine outcome. In an institutional perspective, the companies are the actors, who develop and utilise expertise by coordinating the sub-spheres. The purpose of the CC framework is essentially heuristic, to better understand the broad contours of differences across systems. The VoC approach shows the synergy between national governments and firms. While the VoC framework shed light on the Chinese system, China does not sufficiently fit into the paradigms described by the VoC literature, but can be defended for its use in this thesis, by the fact that a LME model embrace the US as an ideal type. And therefore, relevant as a case for the United States as well as a comparison between China and the United States. China, in turn, has a system of state capitalism that revolves around a dualistic structure of state ownership and market economy.

The institutional framework in the CC literature focuses on the structure of the political economy and the coherence of this structure with political governance. This theoretical framework can explain why two countries may have different preferences over the structure of the same policy area in regards to surveillance practices. Due to the large institutional

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differences between China and the United States, there is reason to envisage substantial differences in how corporate surveillance is practiced. The institutional expectation is that sate capitalism favour firms greater room for manoeuvre, than in liberal market economies. Following the logic that state and firms are complementary and not restrictive under state capitalism. As such, Google and Alibaba’s surveillance practices will have different outcomes in different political economies.

Surveillance technology grows faster than the theories one creates, nevertheless, Foucault’s seminal concepts are considered an exciting contribution to the surveillance field, but as a theoretical backdrop for new continuations, which are adapted to the modern society’s technology development. However, in this thesis, a Foucauldian framework is beneficial to examine the rationalities of surveillance in a way that is adapted to social and political change. In the form of Panopticon, a prison diagram constructed so that the prison guard can see everyone while the inmates never know if they are surveilled or not. Through a variety of practices and techniques, a power that discipline people’s behaviour, identity, business, manners, and gestures – with the aim of improving inmates, nursing the sick, educate pupils, taking care of insane, getting unemployed back in work (Aakvaag 2008: 316). Foucault supplemented the panoptic power analysis with the exploration of a power that not only target the individual’s body, but rather is active on the population as a whole. The modern biopower is aimed at producing forces, making them grow and coordinate in a society. Governmentality, deals with the emergence of modern society. It is directed toward the art of governance and leadership of a society, with links to liberalist ideas of ‘freedom’ as well as the logic of neoliberal competition. Foucault’s governmentality can be said to forestall the dominance of neoliberalism in recent times, while at the same time having clear links with the two aforementioned approaches to power (Gordon 1991; Neumann 2002). Tech companies, according to a Foucauldian standpoint, in turn, claim these as a tool of the government.

This chapter aim to provide a theoretical understanding of the nature of the surveillance policies and practices in the digital era. An intersection of comparative political economy and surveillance studies provides an overview of the motivations and practices that states and corporations develop and implement in relation to ICT (Garrido 2015). The relation of political economy to panoptic surveillance, neoliberal governmentality and biopower

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technologies leads to posit a fruitful analysis of digital surveillance within tech companies and their respective states.

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4 Methodology

The purpose of this thesis is to apply and evaluate the theoretical framework of surveillance studies and comparative political economy. This will be done by examining Google and Alibaba as a comparative case study. The methodology informing this this thesis is based on qualitative methods. The study focuses on digital surveillance in relation to tech companies and nation states, capitalism and power. I will use a qualitative research design to compare Google and Alibaba’s variation in how they practice digital surveillance in their respective political economy. The research question has provided guidelines on the choice of design. Based on the formulation of the research question it would be challenging to answer this with a quantitative design where the use of numbers and statistical methods is standard. Likewise, a qualitative research design emphasizes “words rather than numbers in the collection and analysis of data” (Bryman 2012: 380). Furthermore, what is being scrutinised is challenging to quantify and then preform statistical analyses of the relevant material. Since I want to look at the behaviour of units, i.e. tech companies, and the processes that lead to the units’ action. This type of research design focuses on in-depth research of one or a small number of cases.

The methodological approach involves topic for analysis, data collection and the theoretical framework for the study. This chapter provides a methodological framework that includes case selection, the process of compiling the empirical data material and the categorisation used to organise and analyse the material.

4.1 Case Selection

The CC literature claims that different forms of capitalism institutionalise particular economic rules of the game that shape the strategies, structures, and competitiveness of firms (Morgan 2011: 14). Within this structure, Hall and Soskice (2001) argue that different capitalist systems have different costs and generate different outcomes. For a particular country, these outcomes may be the result of historical, cultural and political goals and tensions. The idea was to study Google and Alibaba’s policy documents to see if I could detect such differences. When studying tech companies’ interests, cases where these interests operate in seemingly opposite environment would be particular beneficial to uncover whether

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this affects their surveillance practices. In my selection of cases, Alibaba and Google are two contrasting cases that can best highlight this.

A case study may be understood as the “intensive study of a single case where the purpose of that study is – at least in part – to shed light on a larger class of cases (a population)” (Gerring 2007: 20). The idea is that an analysis of these two tech companies will be able to say something about the larger population of corporate/state relationships in relation to power, capital and surveillance. Methodically, tech companies have been selected as an example case because they constitute a so-called strategic case, loosely based on the ‘most likely’ methodology, a case that is very likely to validate the predictions of the theoretical framework, if not, it is significantly weakened (Gerring 2007: 213). The goal is to gain better understanding of the whole by focusing on a key part (Gerring 2007: 1). The companies included in the study were selected on the basis of their geographical spread as well as their dominance in the market economy. The United States and China respectively, the two largest economies in the world with two of the most dominant global tech corporations, divided by two very different institutional settings would make an interesting comparative study. This comparison is justified by the fact that there is something common, irrespective of the empirical findings. To elucidate this, Google and Alibaba were chosen as a case.

Bryman (2012: 72) described the comparative design as a study of two contrasting cases with the use of similar methods. A comparative case study is particularly suitable for this thesis’ research question, as it allows for the uncovering of divergent pathways that can shed light on what does, or does not, explain variation. Furthermore, a comparative study opens up for greater precision and brings out differences, nuances and diversity. The emphasis on depth will give a deeper insight into the key players’ perceptions, intentions motivations and strategies, which would have been lost in a large N research (Gerring 2007: 48-50).

To make this study feasible within the time and space constraints of a master thesis, a selection of two comparable cases were chosen. The cases of Alibaba and Google, while the latter is mainly a search engine the other among other things an e-commerce company, both represent two mammoth tech companies with similar ‘business model’ in two distinct economic systems. And therefore, applicable for comparison in all areas that matter for this thesis.

The political economy in the digital era : a comparative case study of Google and Alibaba's surveillance practices