A distinguished professor of communications at the University of Illinois at Champaign, Robert McChesney has been a largely under-recognized writer (outside of specialists in the area), educator and activist about the dangers of corporation consolidation controlling the media and stifling democracy.
Not confined to the ivory tower, McChesney was a co-founder of the vitally important FreePress.net. He also had hosted a radio program for many years discussing media democracy.
McChesney has been an unrelenting and enlightened critic of the nefarious influence of corporate profits on a press that enhances democracy. In the excerpt from his newest book, “Digital Disconnect: How Capitalism is Turning the Internet Against Democracy,” McChesney warns of the looming danger of a corporate controlled and censored Internet.
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In this “Digital Disconnect” excerpt, provided courtesy of McChesney and The New Press, he writes of the growing corrupting influence of advertising on the net. It goes a long way in providing compelling background for why Truthout and BuzzFlash do not accept advertising of any sort.
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Our Master’s Voice—Loud and Clear?
In 1934 journalist and ex-adman James Rorty’s seminal work, Our Master’s Voice: Advertising, was published. This was a historical moment when advertising was relatively unpopular and more than a little controversial. Reformers were marshaling widespread antipathy to broadcast advertising in their campaign to establish a large nonprofit and noncommercial sector in American radio. Radio inventor Lee DeForest so detested broadcast advertising and its “moronic fare” that in the early 1930s he attempted to invent a device that would automatically mute radio advertisements and then return the volume to audible levels when the programming resumed. The consumer movement, as Inger L. Stole has chronicled, organized campaigns for federal laws that would provide rigorous regulation of advertising so that it would provide accurate and useful information to consumers, not propaganda to confuse them. Rorty’s jeremiad against his former profession ultimately came down to one crucial point: advertising was the voice of corporations and the wealthy who owned them; its ultimate effect was to spawn a culture that cemented their power. In particular, its role as paying the piper gave the masters control over the very media system a free people required to address corporate power.
This radical critique of advertising and the attendant political movements receded from public view in the postwar decades, but advertising remained largely suspect, fodder for comedy due to its insincerity, absurdity, and asininity, as piles of Mad magazines or parodies on Saturday Night Live attest. Meanwhile, considerable scholarship examined the dubious contribution of advertising to the content of American entertainment and journalism. When the Internet emerged, the notion that it would be a distinctly noncommercial space was uncontroversial and widely embraced. I was there and I can tell you that in the early 1990s no one was bellyaching about a lack of advertising on the Internet, or a shortage of advertising anywhere else for that matter.
But the notion of a commercial-free Internet was quickly challenged in the 1990s on two fronts. First, major advertising corporations, Rorty’s “masters,” were alarmed by the idea that they could not effectively market their products to prospective consumers online. Procter & Gamble CEO Edwin Artzt had the “chilling thought,” as Joseph Turow chronicles in his superb book The Daily You, “that emerging technologies were giving people the opportunity to escape from advertising’s grasp altogether.” By the mid-1990s, Artzt had made this a central concern, and he implored major advertisers to respond to the threat of the Internet in the same way advertising had conquered previous media: “Let’s grab all this new technology in our teeth once again and turn it into a bonanza for advertising.”
One way to make the Internet more ad-friendly would be to support the creation of technical standards for cookies, small files secretly downloaded to users’ computers that would make it possible to track Internet users surreptitiously and create profiles of their activities so as to segment them for marketing. Websites could then “quietly determine the number of separate individuals entering various parts of their domains and clicking on their ads. The counterculture types at the Internet Society’s Internet Engineering Task Force had an adverse reaction, offering a proposal that cookies “should be shut off unless someone decides they’re willing to accept them.” This standards battle became the first policy fight over advertising. As one ad industry executive said, “What concerns us is the tone of the proposal, which is that advertising is not good for us, so we want to avoid it.” Netscape and Microsoft bowed to the commercial pressures in designing their Web browsers. Though scholars, activists, and Internet purists expressed alarm about invasions of privacy, in one fell swoop, the nature and logic of the Internet had been turned on its head—though it would not be fully apparent for at least a decade.
But this still did not solve the problem. Most of the corporate advertising done online in the late 1990s was ineffectual. One expert termed the clickthrough rates on Internet ads as “miserable,” less than one half of one percent. Maybe the idealists were right and the Internet simply was not going to be a sales medium because users could not be held hostage.
The second factor behind the drive to make advertising effective online was the need to have a source of revenue for online content and services. The idea of converting the computers into vending machines and having a pay-per-view system was unrealistic for the foreseeable future. On the one hand, the Internet founders would never approve such a radical change in the system, nor would the public, as it had already tasted the openness of the Web. On the other hand, if websites tried to sell access to their content, usage tracking quickly established that most Internet users would ignore those sites and move on to the infinite world of free content. A handful of prominent brands like the Wall Street Journal or ESPN might make a go of it, but for everyone else, fuhgetaboutit. As all the other alternatives stepped backward, advertising was left as the only answer to the question of how the commercial Internet could be funded. The emergence of widespread broadband early in the 2000s helped the cause a lot; now advertising could use compelling audiovisual messages as on television. Tools for surreptitious monitoring, like cookies, were augmented and dramatically improved. But the problem remained: how to get people to pay attention to and respond to the commercials; all hands were summoned to the task. “The best minds of my generation,” an early Facebook employee told The Atlantic’s Alexis Madrigal, “are thinking about how to make people click ads.”
The great development in recent years has been the emergence of advertising that targets people based upon detailed information gleaned surreptitiously from their Internet activities. “What was once an anonymous medium where anyone could be anyone,” Eli Pariser wrote in 2011, “is now a tool for soliciting and analyzing our personal data.” U.S. Internet advertising totaled $40 billion in 2012—topping the total amount going to all print media for the first time—and was expected to increase to as much as $60 billion in 2014 and then $80 billion annually by 2016. Borrell Associates estimates that ads placed on mobile apps will increase from $1.25 billion in 2011 to $21.2 billion in 2016. (The United States accounts for just under one half of global Internet advertising.) Internet advertising is on an explosive trajectory to gobble up an ever increasing portion of all advertising expenditures for the foreseeable future, and television advertising, to the extent it remains distinct, is becoming much more like Internet advertising.
Nothing exemplifies this emergence of advertising on the Internet more than the meteoric rise of Google. Google search advertising accounts for one half of all U.S. Internet advertising revenues—the other type of online advertising is called display advertising—and Google generated $36 billion in global ad revenue in 2011. It has taken the logic of commercial broadcasting—”If you’re not paying for something, you’re not the customer; you’re the product being sold”—and elevated it to unimagined heights. Or, as Bruce Schneier puts it, “Google has great customer service. Problem is, you’re not the customer.” With scores of distinct Internet services collecting data on people online, Google can target advertising as no other firm has ever been able to do.
Except for Facebook. Beyond the hubbub surrounding its dramatic 2012 IPO, with its equally dramatic ascension and decline, something extraordinaryis occurring with social media. Facebook is “more than the world’s largest social network, it is a fast-churning data machine that captures and processes every click and interaction on its platform.” By 2011 Facebook became the first website with a trillion page views in a month. More than half of its more than one billion users check it every day; in America half of eighteen- to thirty-four-year-olds check it within minutes of waking up, and 28 percent do so before getting out of bed. Americans spend, on average, 20 percent of their online time exclusively on Facebook. In a single day, 300 million photographs are uploaded; on the weekend, the figure jumps to 750 million. “Facebook will have more traffic than anyone else, and they’ll have more data than anyone else,” one investment analyst observed in 2012. “So, unless they are impervious to learning how to monetize that data, they should be the most valuable property on the Internet, eventually.” Corporate America is excited to burrow its way into this mother lode of data. “We’re going to get a ton of new ideas,” Frito-Lay’s North American chief marketing officer stated. “Facebook is unilaterally redefining the social contract,” Lori Andrews writes, “making the private now public and the public now private.”
The digital advertising industry goes far beyond Google and Facebook. Turow documents how Madison Avenue ad agencies have been reconfigured so that media buying, once the somewhat perfunctory function of locating media to place ads, has become arguably the most important part of the operation. Moreover, Google, Microsoft, Yahoo!, and AOL have each established advertising networks to place advertising on websites. This Big Four accounted for 28 percent of online display ad revenue in 2008.
Gathering as much information as possible on Internet users and knowing where to reach them online is the key to securing ad dollars. Turow calls it “one of history’s most massive efforts in stealth marketing.” Our era has come to be “epitomized by Big Data,” a report in The Guardian states. “Personal data is the oil of the information age,” writes a New York Times reporter. “Every day most if not all Americans who use the Internet,” Turow notes, “are being quietly peeked at, poked, analyzed, and tagged as they move through the online world.”The online advertising industry, says Jeff Chester, has turned the Internet into “a digital data vacuum cleaner on steroids.”
And it’s not just Google or Facebook or the ISP cartel tracking people. “Your smooth new iPhone knows exactly where you go, whom you call, what you read,” Pariser writes. “With its built-in microphone, gyroscope, and GPS, it can tell whether you’re walking or in a car or at a party.” Two investigative reporters for ProPublica concluded their examination of smartphones by writing, “Let’s stop calling them phones. They are trackers.” A 2010 Wall Street Journal investigation of 101 smartphone apps for Apple iPhone and Android found that 56 of these apps “transmitted the phone’s unique device ID to other companies without users’ awareness; 47 transmitted the phone’s location in some way,” and 5 sent “age, gender and other personal details to outsiders.” On the Internet, the Wall Street Journal concluded, businesses know immense amounts about individuals, who remain “anonymous in name only.”
In fact, it is more accurate to say that the Internet is swarming with mostly anonymous and unaccountable companies tracking anything that moves. The Wall Street Journal examination determined that the top fifty websites in the United States installed, on average, sixty-four pieces of tracking technology on the computers of visitors. In 2012 The Atlantic’s Madrigal investigated who exactly was monitoring his online activities over a thirty-six-hour period. He discovered there were 105 companies that were tracking him and collecting data. Many of the companies were collecting the data to sell to other companies. “Right now,” he concluded, “a huge chunk of what you’ve ever looked at on the Internet is sitting in databases all across the world.” What individual anonymity that remains is little consolation to Madrigal. “The results of this process are ineluctable. Left to their own devices, ad tracking firms will eventually be able to connect your various data selves. And then they will break down the name wall, if they are allowed to.” A month after Microsoft purchased Skype in 2011, Microsoft patented a “legal intercept” technology that could “silently copy” every communication done on VOiP services like Skype. Microsoft refuses to say whether the technology is integrated into Skype’s architecture.
Viktor Mayer-Schönberger regards this as nothing less than a “redistribution of information power from the powerless to the powerful.” The greatest fear of Schneier’s—arguably the leading global expert on computer security—is not cyberterrorism, cybercrime, identity theft, WikiLeaks, or illegal downloads of music and Hollywood films. According to the New York Times, it is “ubiquitous surveillance” conducted by “private companies and government agencies advancing their own interests, whether for surveillance or commerce.” “You need to know one simple truth,” investigative journalist David Rosen wrote after a detailed examination of the subject: “You have no privacy with regard to your electronic communications. Nothing you do online, via a wireline telephone or over a wireless device is outside the reach of government security agencies and private corporations.” “Given enough data, intelligence and power,” one technology journalist said, “corporations and governments can connect dots in ways that only previously existed in science fiction.” Need it be added that this was invariably dystopian science fiction?
This may be the great Achilles’ heel of the Internet under capitalism: the money comes from surreptitiously violating any known understanding of privacy. The business model for Google and Facebook, and to a certain extent for all Internet firms, as Jaron Lanier put it, requires “a magic formula to appear in which some method of violating privacy and dignity becomes acceptable.” As the New York Times’s Keller puts it, the challenge these firms face is “how to sell us on without creeping us out.” This is not an issue the Internet giants are keen to open up for public discussion or debate, and for good reason. When Senator Claire McCaskill (D-MO) held a privacy hearing in 2010, she was astounded to learn how the Internet actually functioned. “I understand that advertising supports the Internet, but I am a little spooked out,” she said. “This is creepy.” An industry consultant acknowledged that as marketers pushed ever further into the data, there was an “ick factor.”
Polling data confirms widespread antipathy to online attacks on privacy. A 2008 survey by Consumer Reports found that “93 percent thought Internet companies should always ask for permission before using personal information, and 72 percent wanted the right to opt out of online tracking.” A 2009 study by Princeton Survey Research Associates found that 69 percent thought the United States should adopt a law “giving people the right to learn everything a website knows about them.” A 2012 survey of U.S. smartphone users found 94 percent consider online privacy an important issue and 55 percent say it is something they think of often. Sixty-two percent of respondents were aware they were being tracked by advertisers—though not necessarily aware of the extent of the tracking—but only 1 percent “liked” being surreptitiously pursued. Turow has conducted a series of surveys over the past seven years and generated similar results. He found that “unlike what many have suggested, attitudes toward privacy expressed by American young adults (age eighteen to twenty-four) are not nearly so different from older adults.” In short, young people immersed in smartphones and social media want their privacy too. If the will of people were honored, Internet advertising as it has evolved might be effectively ended. The Internet giants “sell this extremely creepy intrusion as a great boon to your life because they can tailor services to your needs,” a legal expert in privacy and computer crime told the New York Times in 2012. “But do most people want to give that much away? No.”
The system appears safe from political challenge, however, and the polling data offers a good part of the answer there too. Surveys reveal spectacular ignorance by most Americans about what is actually occurring to them and their data online. Turow calls the ignorance level “distressing” and notes that it is worse among younger people and that it has not improved with increased exposure to the Internet. Only a small number of people are aware, for example, that over half of the roughly 84 data categories Facebook collects about its users are not available for them to see. One source estimates that only 29 percent of the information Facebook possesses on any given user is available through the site’s tools. Nor is there any right under U.S. law to ask a company to hand over the information it holds on you. When a person follows the online protocol to opt out and thinks she has stopped data tracking, she has stopped getting targeted ads from only the one specific company. Data tracking continues unabated and there is no way to stop being tracked online. In part, these misconceptions are due to the lack of media coverage or political interest in the matter. In part they are due to the official “privacy statements” of firms like Google and Facebook, which are worthless. A 2008 study by Carnegie-Mellon researchers concluded that these privacy statements are “hard to read, read infrequently, and do not support rational decision making.” “Legal and technology researchers,” the New York Times reported in 2012, “estimate that it would take about a month for Internet users to read the privacy policies of all the Web sites they visit in a year.”
The Internet giants apparently reckon that their political muscle, combined with the importance of the Internet to the economy, makes their datatracking systems untouchable. One investors’ report states that “government regulations and consumer pushback” over privacy are a, perhaps the, core threat to Internet advertising. As The Economist put it, at this point anything that handcuffed Internet advertising “would severely disrupt the internet economy.” In February 2012, the Obama administration said that privacy standards were important, but they had to allow “electronic commerce to grow.”
In Washington, industry self-regulation is the preferred foundation for any solution to the privacy issue, and the FTC acknowledges the centrality of “strong and enforceable self-regulatory initiatives.” Smarter figures in the Internet community know this is a problem that needs to be addressed to assuage growing public concerns. “Privacy is a source of tremendous tension and anxiety in big data,” a Microsoft executive acknowledged. “Technologists need to re‑engage with regulators.” Microsoft went so far as to make the FTC’s favored “Do Not Track” the default option in its Internet Explorer 10 in 2012. This works like the Do Not Call registry. This will not stop tracking, but it might limit some targeted advertising, although the system seems to be largely voluntary and difficult to enforce. It is a public relations victory, though, almost certainly sufficient for politicians to go back to sleep on the matter. The Atlantic’s Madrigal, after going through a maze of these corporate self-regulatory privacy schemes, came to regard them as self-serving time wasters. If Congress does eventually adopt formal online privacy protections, it will do so only in a manner that will get a sign-off from Google, Microsoft, Apple, and the other giants, according to the New York Times.
We should also expect world-class public relations campaigns extolling all the rights consumers have online, how strong the privacy standards are, and how wonderful the Internet is, thanks to advertising. It is not going to be an easy campaign. As The Economist puts it: “Everyone hates digital ads.” A report on digital commerce by Forrester Research led to this conclusion: “Consumers aren’t saying, ‘Oh, I really want to be able to connect with companies and brands.’ ” Some liberals and progressives will trumpet corporate self-regulation as well, for a variety of reasons. Jeff Jarvis, for example, argues that we should not “become too obsessed with privacy.” A key reason is that Jarvis admits he is an “apologist of advertising”—even though “most advertising sucks”—because “advertising is the most visible means of support for journalism and media” online. But this attitude raises a question: is advertising generating sufficiently useful online content to justify the price people are paying?
The commercial media system online is nascent in some respects and will not crystallize for many years, so there are unforeseeable twists and turns ahead. But the preliminary indications are that the relationship of advertising to content production is going to be rather different online than it was for twentieth-century media, and that Jarvis’s defense is unlikely to apply. Recall from chapter 3 that during most of the twentieth century, the relationship of advertising to media was ambiguous. On the one hand, it did provide the funds that subsidized much of the media on recognized terms. “The social contract between advertisers and publishers used to be that publications gathered particular types of people into something called an audience,” Madrigal writes, “then advertisers purchased ads in that publication to reach that audience.” The same was true for broadcasters. Advertisers were, in effect, forced to bankroll media content if they wanted to reach their target audience. Because the media firms had leverage in the oligopolistic marketplace, they “often saw value in maintaining credibility with audiences, advocacy groups, and government regulators by adopting policies and principles that sometimes conflicted with the advertisers’ direct interest in getting the most for their money.”
However, one should not exaggerate how much integrity and commitment to public service these media firms had in their relationships with advertisers. It is probably more accurate to say that they had enough leverage to pursue sufficiently credible editorial policies that protected their longterm profitability by not succumbing to short-term commercial pressures or opportunities. Moreover, as has been amply demonstrated in the literature, advertising had a powerful direct and indirect effect on the nature of media content in the predigital era, often for the worse. It was hardly a form of support that came without strings attached.
The balance of power began shifting with the emergence of cable and then satellite television systems, with their plethora of channels. Although most of the channels were owned by the same handful of conglomerates, each of the channels still was competing for advertising dollars, so there was a lot more “supply,” and advertisers now had more options. When digital video recorders came along, advertisers became concerned that their ads were going to be skipped over by empowered viewers. Marketers began to demand and get “product placement” in programs. The media conglomerates were eager to make money, so there was no apparent period of moral angst as they weighed their options. “Branded” entertainment became more common. This meant “embedding products in the plots of television shows and movies, making it difficult to ignore them.”
The Internet supercharges this tendency, as there are countless websites chasing after a finite pool of ad dollars. “If publishers of all sorts—print, electronic, digital—want to survive on advertising,” ad agency executive Rishad Tobaccowala explained to Turow, “they will have to adapt to their advertising masters’ new demands.” Media firms are aggressively pursuing advertisers to get programming along these lines, and it is now so common online that it is barely noticed any longer. “Rather than doing advertising and P.R. only,” a corporate brand manager working on Web entertainment stated in 2012, “we are part of the cultural conversation. When you encounter the brand through entertainment content, the conversation at the water cooler is very different.” The chief creative officer at BBDO North America said, “Hollywood and advertising agencies have tried to work together before, but this time has been a positive transmogrification to something really different, and the walls came down, and now there’s this.”
In short, the balance of power has shifted, giving advertisers much greater explicit influence over media content. “The new system is forcing many media firms to sell their soul for ad money,” Turow states. This on its own is an astonishing development that, according to most scholarship, portends grave consequences for the quality and nature of journalism and entertainment media.
But that is hardly the worst of it. The Internet has not simply made media outlets more desperate to please advertisers; it has made them increasingly irrelevant. “Marketers haven’t ever wanted to underwrite the content industry,” Tobaccowala told Turow. “They’ve been forced.” Those days are over. “Advertisers are increasingly indifferent to the context in which messages appear” online, “at least compared with other media,” the Pivotal Research Group reported in 2012. Online media—or “publishers” in the emerging vernacular—no longer sell many of the ads appearing on their websites. “Up to 80% of interactive ads are sold and resold through third parties,” one industry source reports, “and advertisers don’t always know where their ads have run.” Turow notes that the evidence suggests that in an environment where advertisers purchase ads in real time (meaning they appear almost immediately), reaching untold numbers of target demographic members, they are mostly indifferent to the quality of the surrounding content on any of the thousands of places their ads might instantly appear. The system allows advertisers to “buy” desired individuals “automatically, and in real time, on whatever page they’ve landed.” As Madrigal puts it, “Now you can buy the audience without the publication.” Media in the traditional sense are almost unnecessary.
In 2003 digital publishers “received most of every dollar advertisers spent on their sites,” Pariser reports. In “2010, they only received $.20.” The missing 80 percent was going to ad networks and people who handle data. For publishers who want to attract ads, it is becoming more important to have quality detailed data on their Web clientele that can be packaged and sold by third party wholesalers than it is to have quality content, or any content at all. Smart or targeted advertising is the term for what is emerging, and it is quickly becoming the basis for much of Internet advertising. For that reason, retail websites like Target.com are now becoming major advertising sites because they have so much traffic and collect such extensive data. “Content is no longer king,” The Economist proclaims. “Information about users is what really matters.” Turow concludes, “The emerging trajectory suggests that apart from a relatively few elite-oriented publishers (New York Times, Atlantic, and the like), the pressure to bring personalization synced to marketing goals will be difficult for companies to avoid if they want to survive.” This should not really be a surprise; advertisers always supported media for opportunistic reasons, because they had no better options. Now they have better options, and consequently much of the media can get thrown overboard.
The profit motive pushes this process into new and dangerous frontiers quickly. Increasingly, research—”persuasion profiling”—determines what types of sales pitches are most effective with each individual, and ads are tailored accordingly. Moreover, researchers are now working on “sentiment analysis,” to see what mood a person is in at a particular moment and what products and sales pitches would be most effective. Advertisers are at work developing emotional analysis software so webcams can monitor how one’s face responds to what is on the screen. “One way to persuade internet users to grant access to their images,” The Economist notes, “would be to offer them discounts or subscriptions to websites.” Pariser chronicles a range of developments on the horizon, including making machines more “human.” Such machines-cum-humans can then establish “relationships” with actual people and get even more information from them.
Nielsen research reveals that people put far more stock in peer recommendations and crowd-powered ratings than they do in traditional advertising, so considerable effort is going into making covert sales pitches. Commercializing friendship is a killer app. Facebook is ideal for this. “On Facebook, you take friends into account,” an ad executive explained to Turow. “So-andso liked this; you will too. People find that creepy in the beginning, but . . . they slowly get used to it.” A 2011 Duke University survey of corporate marketing officers found that they expected to allocate no less than 18 percent of their advertising budgets to social media within five years.
The problems faced by traditional media do not mean that advertisers and the emerging system are entirely agnostic about content. Preliminary research suggests that the content of a website does influence the success of an ad. The issue is whether the effect is enough to justify any subsidy of the media content by the advertiser. Sometimes advertisers simply “cut out the middleman” and produce the content themselves in a manner that has the sole objective of selling the product. The logic of the system is that it personalizes content for individuals, and the content is selected based on what is considered most likely to assist the sale. Pariser’s Filter Bubble documented how the Internet is quickly becoming a personalized experience wherein people get different results on Google searches for identical queries, based on their history. They are soon to get different websites on the screen than other people who enter the same URL. These developments are driven in toto by advertising and commercialism. Indeed, with the appearance of “content farms,” an industry has emerged that produces content on demand to provide access to desired consumers for advertisers. Google’s former CEO Eric Schmidt notes that individual targeting “will be so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them.”
All of this has a long way to go, but some things are already crystal clear: the notion in the 1990s that the Internet would empower individuals and make them masters of their digital fate has been turned on its head. The idea that people would join together in a shared global commonwealth is a distant memory. “The way the Internet has gone sour,” Lanier laments, “is truly perverse.” While “in many cases this provides for happier, healthier lives,” Pariser concludes, “it also provides for the commercialization of everything—even of our sensory apparatus itself.” And much as Rorty framed the matter in 1934, Turow concludes that the evidence points in one direction: “The centrality of corporate power is a direct reality at the very heart of the digital age.” In 1935, New Republic editor Bruce Bliven characterized himself as among those “who find advertising so obnoxious that they wish the radio had never been invented.” One wonders if the Internet will produce its modern Blivenites—or if, as with broadcasting, people will come to accept its degradation as the natural way of the world and barely recognize, let alone question, what is taking place.
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Copyright (2012) by Robert W. McChesney. This excerpt originally appeared in “Digital Disconnect: How Capitalism Is Turning the Internet Against Democracy,” published by the New Press and reprinted here with permission.