The Economics of Algorithmic Selection on the Internet

Abstract

Algorithms have come to shape our daily lives and realities. They change the perception of the world, affect our behavior by influencing our choices, and are an important source of social order. Algorithms on the Internet have significant economic implications in newly emerging markets and for existing markets in various sectors. A wide range of our daily activities in general and our media consumption in particular are increasingly shaped by algorithms operating behind the scenes: the selection of online news via search engines and news aggregators, the consumption of music and video entertainment via recommender systems, the choice of services and products in online shops and the selection of status messages displayed on social online networks are the most prominent examples of this omnipresent trend. Algorithms suggest friends, news, songs and travel routes. Moreover, they automatically produce news articles and messages, they calculate scorings of content and people, and are employed to observe our behavior and interests as well as to predict our future needs and actions. By assigning relevance to certain pieces of information they keep consumers, companies and authorities from drowning in a growing flood of information and online data. At the same time, they mine and construct realities, guide our actions and thereby determine the economic success of products and services. Algorithms form the technofunctional basis of new services and business models that economically challenge traditional industries and business strategies. These economic changes and challenges are accompanied by and interact with significant social risks such as manipulation and bias, threats to privacy and violations of intellectual property rights that compromise the economic and social welfare effects of algorithmic selection applications. This rapidly growing Internet phenomenon is here called 'algorithmic selection'. It is a central and structuring bundle of Internet innovations in digital economies. Algorithmic selection is embedded in a variety of Internet-based services and is applied for numerous purposes. Although their modes of operation differ in detail, all of these applications are characterized by a common basic functionality: They automatically select information Management Research Paper No. 2013-4, online available http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2225359 (accessed 12 August 2014). Carr, N.

Digital Trinity – Controllable Evolution – Everyday Religion. Characteristics of the Socio-Technical Transformation of Digitalization

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“…In summary, there are potentially welfareenhancing effects, such as the creation of social and economic value, complexity reductions in everyday life, transaction-cost reductions and improvements in human decision-making. This is compromised by a number of risks that can affect well-being and welfare, such as manipulation, bias, discrimination, third-party control by and dependence on technology, abuse of market power, loss of cognitive abilities, and restrictions on freedom of communication and privacy (Latzer et al, 2016). These risks touch on fundamental rights, ethical values, the mediation of reality and social order, and the evolution of human capabilities.…”

Digitale Dreifaltigkeit – kontrollierbare Evolution – Alltagsreligion. Kennzeichen des soziotechnischen Transformationsprozesses der Digitalisierung

“…Für ihre auf algorithmischer Selektion (Latzer et al 2016) beruhenden Applikationen treiben Firmen wie Google und Amazon auch eine weitere Welle an künstlicher Intelligenz (KI) voran, die sie v.a. für Bild-und Spracherkennung einsetzen.…”

“…Erkennbare Muster in Big und Small Data werden zur zentralen Quelle der Erkenntnis erhoben. (Latzer et al 2016). Diese Risikogruppen berühren Grundrechte, ethische Werte, die Vermittlung von Wirklichkeit, soziale Ordnung und die Evolution menschlicher Fähigkeiten.…”

Public Perceptions of Public Service in European Media

“…This al so entails a shift from transmission mode to communication mode, essentially a shift from supply orientation to demand orientation (Bardoel, 2007). Ways of connecting with the public or of showing responsiveness are personalization efforts (Andersson Schwarz, 2016;Kant, 2014;Sørensen, 2013), which are increasingly facilitated by algorithmic se lection (Latzer, Hollnbuchner, Just, & Saurwein, 2016); diverse participatory formats and strategies, which are pursued for different aims from widening democratic participation to audience appeal and revenue generation (Council of Europe, 2009;Debrett, 2015;Enli, 2008;Vanhaeght, 2019;Vanhaeght & Donders, 2016); or the integration of social media (van Dijck & Poell, 2015).…”