Friday 17 April 2015

SMARTS update: Bye Bye Democracy/Or How Your Tax Dollars Paid A Boggle of Billionaires to Invade Your Privacy

For those born after 1975, the smart technologies that enable our social interactions and leave us wide open to the right malware seem to have been here forever. Yet forever is only about fifteen years. Those of us born earlier ask, in slack-jawed astonishment, how these new technologies become so ubiquitous so fast. The answer is the privatization of spying via a boggle of billionaires. The spies put up your tax money and some smart guys who were once just as poor as the rest of  us used it to develop clever computer algorithms, adaptive phones, and interactive apps that keep track of  us all whether we like it or not.And they became billionaires in the process. The government has been in the thick of it from the beginning, investing public money in private dreams, making private persons rich beyond the grasp of Midas. Remember that whenever someone opens his mouth to descry the suppression of innovation by the dead hand of government.

As I mentioned last week, some of the Silicon Valley billionaires central to the Smart revolution found their first money--the hard money-- in the same place. They got it directly or indirectly from a non profit company, created and funded by the CIA, called In-Q-Tel. To see how In-Q-Tel explains itself and to see which companies it has funded, go here.

In-Q-Tel was set up in 1999 at the cusp of the Clinton era .com bubble, just as the Internet became the New Frontier, a place beyond borders and rules where fortunes could be made in no time. The CIA hoped that if it invested in the right minds, at the right moment, it would get first dibs on the fast-moving technologies of communication, computation, and bioinformatics. The hope was that this would vault the CIA to the pinnacle of the intelligence heap.  In-Q-Tel prides itself on being the first money in. Because In-Q-Tel vets the technology and the business plans first, private investors are happy to come on board later. In-Q-Tel’s involvement is like a guarantee that if a new technology works, it will be purchased by the CIA and other agencies of the “IC”. IC stands for Intelligence Community. The IC community includes at least 16 different agencies with chequebooks at the ready. Little wonder that In-Q-Tel claims that just one of their dollars draws in nine more from private investors.

Spy-driven innovation has been instrumental in computer development from the start. The first digital universal computer was built to meet the desperate need of the British government in World War II. As I recount in SMARTS, (on sale at the end of this month) the Germans used an unbreakable machine-generated code to communicate with their U-boats which were sinking the merchant ships bringing food and materials to Britain. Britain was at the edge of starvation when Alan Turing invented a mechanized way to break the German navy’s Enigma codes. Turing worked for the British Government Code and Cypher School (now known as GCHQ), which was then under the wing of SIS, now known as MI-6. At Bletchley Park, Turing’s colleagues built the first universal digital computer (based on his design), and then the first electronic universal digital computer, Colossus, which broke all the rest of the Nazi’s coded communications. The American’s first version of a computer, developed under John von Neumann, was also funded by a government at war. The ENIAC was finished just in time to do the calculations necessary to build the first Bomb.

The difference between the Turing period and this one lies in our spies’ current use of public funds to spur private companies to achieve technological innovation in a hurry. Turing and his friends did not get private contracts to do the government’s bidding. They did not become millionaires, let alone billionaires. It is the current mix of public and private interest that has combined to lay all our secrets open-- not just to spooks, but to every merchant looking for a customer. The Internet, brought to you first by ARPA, the US Army’s first version of DARPA (see this post and this post for more on DARPA), connects everyone to everything. That whoosh you hear is the sound of all our keystrokes being sucked up by the Five Eyes signals spooks poking for information about our intentions.

So: why are billionaires whose companies are neck deep in this business, who personally benefited from this public investment, also avowed libertarians? Are they just hypocrites? Or are they engaged in a long game of misdirection?

Some people think of the Internet as akin to a planetary Mind, a constantly interactive, adaptive, and therefore smart, phenomenon. It is certainly utterly vital to the civilization we are making now. It has become the world’s spinal cord, a pseudo-neural infrastructure that carries most of our social and commercial interactions.  It is a greater-than-the-sum-of-the-parts accumulation of systems and networks that we train to think even as we tell and show each other everything through it. It haunts us, it entertains us, it links us. It permits global commerce and it also puts us in danger as the University of Toronto’s Citizen Lab has made clear. Because our whole system of trade, banking, information exchange, and all of our major infrastructures are managed by computers, and computers are almost all net connected, this spinal cord is also hackable. All our States, our national Leviathans as Hobbes once called them, depend upon the Internet now, so the State, is also vulnerable through it. We -- the many who make up our national Leviathans-- are vulnerable too.

In the beginning, nobody really understood what the Internet could do, or what could be done with it. Yet by 1996, as I recount in SMARTS, people in the cable industry understood that there would soon be a vast two-way flow of information carried at the speed of light along fiber optic networks where the Internet would thrive. They called this the information superhighway. That same year, a group of young men (well mostly men), many educated in computer science at Stanford University, (dead in the center of what is called Silicon Valley), began to get glimmers of how money could be made there. The Google guys, Sergey Brin and Larry Page, invented algorithms to organize and search early webpages according to the needs of the searcher. Their goal was so laudable: to gather all the world’s knowledge in one place and make it searchable for free. But their business plan offered the searchers—us-- to advertisers for a big fat fee. Their motto was “don’t be evil,” meaning they understood they were creating the means by which evil could be done. They may have failed to live up to their own standard: this week the European Union, after a five year investigation, declared its intent to prosecute Google for anti-competitive behavior.

Let’s name some other billionaires who got started  in this period. They include: Pierre Omidyar, Peter Thiel, Jeffrey Skoll, Elon Musk, Mark Zuckerman. Their companies, or former companies, include:  Palantir, PayPal, eBay, Participation Media, Facebook. They sit on each others boards, make common cause through philanthropies aimed at changing the world. They have  acquired  ownership of the means of storytelling, of the means to exchange objects and money, and of the means by which we exchange personal information and ideas.  They are the Carnegies and the Rockefellers or the Smart Era.

Two—Omidayr and Skoll-- are direct actors in the Snowden story. Omidyar put up $250 million to create First Look Media and The Intercept where Glenn Greenwald and Laura Poitras continue to publish stories based on Edward Snowden’s stolen archive. Skoll, a Canadian engineering graduate of the University of Toronto with a Stanford MBA, wrote eBay’s business plan which is the source of his billions. He left eBay early on and started Participant Media in the early 2000s. As he has described it, he went from having some money, to almost overnight having an overwhelming amount. His company produces films which tell the world what has to change.  Participant Media produced Inconvenient Truth. (Oddly, the Stephen Harper government named him an Officer of the Order of Canada in 2011.) Participant Media produced Laura Poitras’ film, Citizenfour, about whistle-blowing on government spying, and specifically about Edward Snowden and what he had to tell us. Google Laura Poitras+Glenn Greenwald+Academy Awards to see  pictures of  Glenn Greenwald, Laura Poitras, and Snowden’s very well-dressed girlfriend holding  Oscars at this year’s ceremony.

The avowed libertarian in the billionaire boggle is Peter Thiel, co-founder of  PayPal. After he sold control to eBay, Thiel and his former PayPal partners went on to found a new company called Palantir Technologies in 2004. Its first funder, other than Thiel’s new investment company, was the CIA’s In-Q-Tel. Under the direction of In-Q-Tel, and in order to serve the CIA’s needs, Palantir perfected a technology, first imagined at PayPal, which permits the connection of disparate databases, allowing the CIA to hook its own databases to the FBI’s and search them both, for example. For the first three years, only the CIA was privy to Palantir’s work product. But after that, Palantir began to grow by selling its software and services to other government spy agencies. Still a private company, it is said to be worth about $15 billion. It is unlikely to go public due to the nature of its business. That value has been generated mainly from large government contracts. Thiel is its largest shareholder.

Palantir was started in the same year Thiel became the first outside investor in  Facebook, putting up around $400,000. He was invited to serve on its board.(He is still on it though he sold most of his shares after Facebook went public.) Google went public the next year, and someone from In-Q-Tel apparently went on its board.

At some point, Palantir “donated” some of its special software for use by what is now called the Citizen Lab at University of Toronto. Back then Citizen Lab was a joint venture, a scholarly outfit apparently independent of all governments and especially spies. Its partner is a British based group called SecDev. Back then too it styled itself as the Information Warfare Monitor, which no longer exists.

The Lab's co-founder Ronald Deibert describes in his latest book, Black Code, the work done by Information Warfare Monitor to bring to the world’s attention the  global threat represented by our totally connected and hackable world. Deibert’s book describes how the Monitor people learned some of what Snowden later explained -- that anybody with the right software can hack into your computer, grab your files, watch you through your  computer’s camera, listen to you through your cell phone, etc.  These conclusions came out of an investigation the Monitor did using the Dalai Lama’s computers. The Monitor’s results were so explosive that they made the front pages of the New York Times in 2009.

Deibert’s group described how the Monitor snooped on snoopers stealing files from the Dalai Lama’s computers while leaving no tracks: they traced these snoopers back to friends or associates of  Chinese military signals intelligence. The book is vague on the intricacies of how their investigation was done. Deibert mentions only once that the Information Warfare Monitor was helped along by the donation of certain tracking software owned by Palantir Technologies. He then acknowledges that Palantir was partly funded by the CIA’s In-Q-Tel. Deibert  downplays the value of the donation and there is no other mention of Palantir in his book. Yet, as a 2013 Forbes article on Alex Karp, the CEO of Palantir, put it, in addition to helping track and kill Osama Bin Ladan, “Palantir’s software …tracked down hackers who installed spyware on the computer of the Dalai Lama.”  So how independent is Citizen Lab? And what to make of Nart Villeneuve, a computation expert within the Information Warfare Monitor group? Villeneuve now works for a company called Fire Eye Inc.  It too has been funded by In-Q-Tel.

Which brings me back to Peter Thiel. He is not a computer scientist. He was born in Germany ( his father was a chemical engineer) but he grew up in the States where he was a young chess champion.  He arrived at Stanford as a convinced Libertarian ( and Christian). He studied philosophy, and in his first year founded the Stanford Review, a libertarian vehicle to fight political correctness in all its forms. Thiel graduated in law, clerked for a judge, then traded derivatives for three years for Credit Suisse in New York.  He is on the record as saying he then created PayPal as a vehicle to help rich people get their money across borders and into safe currencies. PayPal soon became an escape vehicle for Russian mobster money. Algorithms had to be invented to make sure that the criminal element was spotted, and denied use rights. This is where Palantier Technologies' innovations got their start. Thiel left PayPal with about $55 million which he used to start a money management fund, and shortly after that, Palantir.

The Palantir story (as told in Forbes) is that none of the Silicon Valley venture capitalists circa 2004 were interested in investing.  After several failures to get more money in the door, Thiel and his group hired Alex Karp to run the company and help raise money.  Karp is not a libertarian: he has a philosophy PhD acquired under the stewardship of Jurgen Habermas.

Somebody suggested In-Q-Tel.Karp and Palantir were welcomed there. For three years,Palantir did the CIAs bidding. Then they branched out.Apparently, in 2011, after the Wiki-leaks dump of classified information onto the Internet, Palantir participated in a plan, launched by several client companies of the American intelligence community, to deal with Wiki-leaks and smear blogger Glenn Greenwald. Greenwald had been tearing strips off the intelligence community’s wholesale invasion of the privacy of Americans for some time. The IC was annoyed. When this smear plan was leaked, Karp sent the engineer responsible for it for a time out, apologized, and shut down Palantir’s relationships with the co- conspirators. 

Was it his own ideals that dictated this action, or did it come as an order from Thiel, the libertarian, who perhaps saw in Greenwald a man with a common cause? Greenwald, at the end of 2011, advanced in public his interesting argument in support of the ideas of libertarian Ron Paul. Thiel had funded Paul’s failed campaign for the presidency in 2008 and was his biggest backer again in 2012. Snowden gave to Paul as well. After his flight to Moscow, Snowden received a prize offered by an organization of student Libertarians who had previously awarded the same to Thiel.

What do we have here, a group of Libertarians? Or people sharing a train?

Thiel fully expressed his Libertarian views in 2009, in a piece he wrote called “The Education of a Libertarian,” published in Cato - Unbound.By then, Thiel said, he had given up on earlier attempts to convince the voting public to think as he does, to see that modern governments are the root of much that is awful. By then, he had given up on democracy too. He wanted freedom, the freedom of markets, the freedom of capitalism unbound by government rules. Democracy just got in the way.
“I no longer believe that freedom and democracy are compatible”  is how he opened his argument. "For those of us who are libertarian in 2009,” he continued, “our education culminates with the knowledge that the broader education of the body politic has become a fool’s errand.”  

He explained that for years he had been looking for some way to escape the nation state’s clutches. He had founded PayPal to create “ a new world currency free from all government control and dilution—-the end of monetary sovereignty, as it were.”  That didn’t work out so well. He helped build Facebook so as to create “ a space for new modes of dissent and new ways to form communities not bounded by historical nation-states.  By starting a new Internet business,” he continued, “an entrepreneur may create a new world. The hope of the Internet is that these new worlds will impact and force change on the existing social and political order.”  On the other hand, virtual is as virtual does, and virtual can force nothing, so escape via the Internet “may be more imaginary than real.” 

He’d also considered outer space as a possibility. Elon Musk, another member of the PayPal mafia,was trying hard to make outer space a new frontier. Elon Musk is the driving force behind SpaceX. (Just this week, SpaceX delivered a specially designed espresso machine to the space station, yet failed in its attempt to get the first stage of its rocket to touch down gently  on a tug at sea so it might be reused.)An escape to space is impractical: will take too long, said Thiel.

In Thiel’s view, that left the sea as the only practical free zone.There, one might create whole communities where adventuresome people could invent new forms of governance more fitting for this era. Politics, as he put it, is in a deadly race with technology, and technological utopians may not win. That is why, along with the grandson of Milton Friedman, the dead guru of unrestrained markets, he had been helping fund and build an organization called Seasteading. For fellow Seasteaders the ocean is the real expanding frontier where new societies formed on platforms outside any nation’s interference might grasp freedom anew. Libertarians will be housed out there someday, on concrete stilts.

The CIA has indirectly funded this nuttiness, enabled it. Directly and indirectly they helped enrich a man who wants to escape modern,democractic national governments.Until that blessed day comes, he is using some of his shiny,new billions to advance those who agree with even a part of his critique.Such as those displaying Snowden’s archive to us us all. An archive acquired via the innovations of companies like Palantir.

Thinking to arm the nation with the newest, shiniest information technologies, the CIA transferred public money to people determined to trash the nation and all its works. They then produced the means to spy on us all.

It boggles the mind.


  1. "Libertarians" fell into the trap like so many others... I heard Gavin McInnes say he guessed he was libertarian the other day [he's joined recently] ... when I spent time with no internet for over 8 months in Ontario's frozen north a few years back I was lucky enough to fall into more information and truth about global governance / communitarianism .. like a well buried treasure .. but just there under our noses as blatant as your 'local community' newspaper.... such a great post again Elaine... I enjoy your work immensely! Your 3 great books arrived in at the bookstore this past week for me .. waaahoooo! Can't wait for SMARTS .. cheers, Sal x