Cracking the Algorithm Code

We have become married to our digital devices, with 62% of the world’s population on social media according to Smart Insights, and some 48% of British teens admit to being addicted to social media (source: University of Cambridge).   

As we move towards a society dominated by algorithms, the effects on how we shop, live, work and play must also be examined. Consumers crave convenience and as a result, brands are creating more personalised, AI-driven recommendations. But this comes at a cost, increasing surveillance over our purchases, lifestyles and personal lives.   

Another driving force behind the move towards increased technological tyranny is the geopolitical struggle for data control, largely between the US and China. Concurrently, because of this algorithmic dominance, there are concerns about a ‘flattening’ of wider culture. The trend innovation curve, for instance  – innovators, early adopters, early majority, late majority and laggards – has been shattered into multiple smaller groups, in turn affecting the creator economy and creativity in general.  

This point is further echoed in the 2023 book Technofeudalism by Yanis Varoufakis who argues that we are now at a point at which big tech overlords are extracting value from users through data and free labour, enabled by the rise of cloud computing and AI. According to Varoufakis, for the foreseeable future, we will see a prolonged struggle between big data’s control over the Internet of Things, innovation and novelty.  

Over the past 20 years, we have seen the gradual rise of big tech dictating the algorithm, controlling creators’ and small businesses’ social media performance, and subsequently their profits. Tech companies such as Amazon, Uber, Meta and Twitter exploit their users’ data. Facebook provides a free platform for people to connect and share user-generated content; however, it monetises their data and attention through targeted advertising without compensating them. Users essentially work for free by generating valuable data from which Facebook profits.     

Kyle Chayka, author of Filterworld, argues that AI-powered algorithms have turned us into passive consumers and homogenised our preferences and interests, and our culture at large.  

As people spend more time online, an attention war has been ignited, specifically between the US and China, as seen with the US government’s attempts to ban the Chinese-owned company TikTok earlier this year. The concentration of power in the hands of unelected tech bosses could pose a threat to democratic government due to the growing ability of these companies to influence public discourse and shape societal outcomes.   

We have previously examined the substantial power that influencers hold, particularly in politics and the upcoming US election, in our Power of Precision Micro-Influencing report.    

More than ever, small businesses and start-ups are dependent on the platforms of tech giants like Amazon, Google and Facebook to reach customers and conduct business. But they have little control over the policies, algorithms and fees imposed by these companies.    

Furthermore, algorithmically controlled sites can stifle originality and autonomy by making it harder for small businesses to compete with large tech organisations as their immense resources and market dominance create high barriers to entry, entrenching the established hierarchy and limiting variety and artistic freedom.  

In the era of distrust, position your brand as a leader in responsible technology by proactively addressing privacy concerns and advocating for high protection standards. Companies need to be accountable for how people’s data is used. To gain loyalty and trust, they should make transparent data practices a fundamental pillar of their business.   

As artificial intelligence improves how it creates personalised recommendations, human connection will become even more desirable and rare. Brands should strive to offer human touchpoints and human-centric AI to ensure personalisation feels intimate and genuine.    

Organisations will move towards more direct channels of communication through decentralised platforms such as Discord, and newsletter sites such as Substack, that speak to their individualism; however, this must be done with care. Understanding your brand’s unique selling point and true value within these distinct spaces will be key to harnessing trusted relationships with customers.   

Localisation and small neighbourhood businesses that are niche, community-focused and adopt an ‘if you know, you know’ attitude will be the antithesis of this movement. Brands that play into nostalgia or ‘disconnection to reconnect’ will win in this era and LS:N Global has previously analysed this subject in our Community Commerce report.   

Mindful consumers will increasingly seek out safe havens that protect them from the big, bad tech wolves hungry for their attention, time and data.

Further reading