Information, Please?

What do Exxon, the world's largest corporation, General Motors, the largest manufacturing corporation, Citicorp, the largest bank, and Schlumberger, the largest service corporation have in common? Among other things, they each have major investments in the development and manufacturing of information technology. They are not alone. Governments, ranging from France and Japan to India and Brazil increasingly are betting their economic futures on coordinating their own development of these same technologies-the major ingredient in "high tech." There can now be little doubt that "info tech" and the possibilities it creates will dominate the strategies, structures, and economies of global corporations and nations over the next few decades.

A generation ago, technologies such as printing, filing, calculating, telegraphy, photography, and even mechanization were thought of as separate. Today, these are coalescing into a single, unified information technology through such links as the microprocessor, digitized signals, and communications satellites. A series of developments in the physics of the very small that occurred in the first third of this century have now been adapted to permit information, whether in visual, audio, mechanical, or purely symbolic form, to be translated into a series of uniform on or off signals-binary digital code. The code in turn can be translated into any of the other forms.

Why are corporations and governments looking to these technical advances for expansion of their technological and economic base? The basic reasons are fairly clear.

• First, corporations and governments have come to depend on ever larger flows of information and have spawned and encouraged this technology.
• Second, the expansion of multinational corporations into all parts of the world and nearly all lines of business has underlined the fact that resources, particularly energy resources, are limited. The apparent exception is information. Using information is often seen as a way of replacing other resources, as when large offices use computerized temperature sensors to cut down on heating bills or communicate with distant offices by computer to limit paper use and fuel costs for mailing and shipping.
• Third, there is not only an endless supply, but also an ever-expanding demand for information. To stay ahead of competition in any form, corporations (and nations) need to know as much as their rivals.
• Finally, government and corporatesponsored research and development have become increasingly interconnected through communications and computers. This has spawned the growth of millions of computer programs (often known as "software") and with them the skill and understanding to apply these programs to an ever growing range of purposes.

Planning, coordination, and communications-the essential tasks of management-are all increasingly complex for a modern giant corporation. Without satellite communications, the growth of multinationals in the sixties and seventies would probably have been far slower. Without computers, intricate financial dealings and record keeping would be ponderous if not impossible; there would be no way to divide companies neatly into their various profit units. Likewise, planning for the distribution of thousands of different parts would have to be left to detailed transactions between skilled workers were it not for the capacities of the new technology.

As information technology continues to become cheaper, corporations are increasingly able to centralize various aspects of planning and to maintain tight control over distant projects. Mining in New Guinea, for example, can be controlled directly from New York. The technology is also used to increase corporation's overall flexibility to move where the profits will be greatest.

The new information technologies enormously increase the possibility of automation or of transferring jobs from one plant or country to another. As the noted economist Wassily Leontieff has pointed out, any routine task can be automated in principle. In practice, the number of tasks being simplified for eventual automation is growing every day. Correspondingly, traditional jobs are becoming more and more mundane, requiring training periods as short as 15 minutes.

By increasing the variety and scope of both marketing and advertising, information technology is also a crucial part of a company's relations with its customers. Direct computer links permit supermarket chains, for example, to convert records of consumer purchases into their own orders for supplies to replenish their shelves, thereby replacing buyers and salespeople. Cheap, flexible computer systems can now be used to keep records of huge numbers of mail order customers, convert that information into estimates of the individual consumer's patterns of motivation, and send specially tailored letters or phone messages directly to the most likely targets, thus bypassing the mass media. Large banks, especially Citicorp, are currently aggressively expanding into new markets with such techniques.

This capability of picking only the most profitable of customers may ultimately imperil the financial basis of the mass media. Television, radio, and newspapers in many countries depend on advertising revenue to support all their programming. Despite their shortcomings, these media are the main information source for most of the public.

Finally, corporations use the computer and other forms of information technology as the basis of research and development of new products and services. Some of the new high tech products to emerge from this process are consumer goods like watches and clocks, or industrial goods such as business jets or robots. But perhaps the most notable kind of new commodity to emerge is information itself. It is sold as part of a telephone accessible computerized "database," as computer "software" (the instructions that allow computers to perform particular tasks), as instructional or entertaining videocassettes, or as a variety of other items.

The key to economic growth in the info tech era will be the tiny "knowledge businesses" accessible through telephone systems. These will be the "free enterprise" end of an industry in which the multinational corporations at the opposite pole already include a surprising variety of giants, such as Reader's Digest with its "Source" databank and Lockheed with its "Dialog" information bank, among others. Among the consequences of the growth of such businesses will be a battle, already starting, over the nature of property.

In every period of major social change, the legal definition of property seems to also undergo sharp changes. The American Civil War was in part touched off by the U.S. Supreme Court ruling in the Dred Scott case that if a slave were someone's property in the South, then he or she must also be property in the North, and would have to be returned to the slaveowner. The Supreme Court has had an equally controversial case on its hands concerning an apparently trivial matter: are people who use video recorders to copy movies from television violating copyright law by denying film rights to the production company? The court finally issued a ruling permitting home recording-considered a victory by the major producers of video recorders such as Sony-but with enough hedging that the case does not set a clear precedent.

This is just one example of the many uncertainties that the new information technologies are creating. The same developments that have promised immense profits also undercut that promise by making information incredibly easy to "steal." Preserving property rights may mean the policing of private homes to guard against copying of computer programs. Ironically, the hoped for rebirth of "free enterprise" can't happen unless copyright and other forms of intellectual property law are enforced by a massive new policing apparatus.

In fact, signs of such a system are already visible in examples such as Intel corporation's lawsuit against its former engineers for "stealing" the ideas they worked on, to raids on teenage computer buffs' homes for using home computers to break into large computer systems without authorization. Universities have been sued for reproducing books; "bootleg" cassette recording operations have been raided in the same manner as drug smugglers. Just as legal standards of copyright and patent protection are being rewritten to cover computers, so the scope of a search warrant is being extended to permit authorities to search for allegedly stolen property in the memory banks of computers.

The new struggle over redefining property also has an international dimension. Multinational corporations have been determined to suppress copying wherever it takes place. They have pressed the governments of Panama, Costa Rica, and Colombia into closing down local cassette copying operations in raids identical to ones in the U.S. Caribbean islands can pick up U.S. satellite television signals, and several enterprising local groups have started taping programs from broadcasts. The copyright owners have reacted by enforcing a clause in the legislation for the Caribbean Basin Initiative denying aid or favorable treatment to the countries that permit such "piracy."

Enforcing adoption of a uniform and growing body of intellectual property laws is one basis for multinationals to preserve their trade dominance in the Third World. After Apple Computer was able to convince a federal court to widen the scope of copyright law to consider computer programs "literature," they were able to get the government of Taiwan to apply this same law on their behalf when Taiwanese manufacturers copied Apple programs. Due to lax legal enforcement, however, piracy continues at a high rate in Taiwan.

Beneficial creativity no doubt deserves its rewards. But the intellectual property laws have become an increasingly dangerous and cumbersome way to do this and they assure, more significantly, that the new wealth of information be under the control of multinational corporations.

Information Is Their Business The information industry, never confined to a single line of business, now runs the gamut from microchip production to computer manufacturing, software production, database management, video communications, printing and publishing, and more. Many of the largest companies - ITT, Philips, Siemens, and Hitachi, for example-are conglomerates with a variety of other products and services. Most large corporations have their own information management departments, while the financial service industries, including banks, are essentially giant information exchanges. Among the firms that derive a large part of their revenue from information technology, however, IBM dominates the field, ranking as the world's most profitable company in 1982 with $4.4 billion in profits. Following IBM are General Electric, Siemens, Hitachi, Philips Electric, ITT, Matsushita, Thomson-Brandt, Mitsubishi Electric, and Schlumberger. In the semiconductor chip industry, sales leaders are Texas Instruments, National Semiconductor, Philips, Motorola, Intel, Hitachi, Toshiba, NEC, and Siemens Computers. Computers are divided into four categories- supercomputers, mainframe, mini, and personal computers. American firms such as IBM, Control Data, Digital Electronics, Hewlett Packard, and Apple, currently dominate each category, with Japanese firms like Fujitsu and Hitachi competing vigorously. Other major branches of the information industry include telephone, telegraph, broadcasting, video equipment, postal service, private information delivery, electronic components, pulp and paper manufacturing, and more. The increasing integration of this industry has led at least one economist to estimate that 50 percent of American workers hold jobs that fall one way or another into the information sector, ranging from file clerks to paper manufacturers. By another estimate, the number of total U.S. workers in the industry is projected to top 10.5 billion by 1990. In areas ranging from chips to personal computers to software to consulting, the small scale of the technology still permits tiny firms to survive, and sometimes to be the source of innovations that sweep the whole industry. They are frequently hailed as ushering in a rebirth of the free enterprise spirit. In Silicon Valley alone, these new enterprises number in the thousands and range from tiny two person operations to medium sized companies with hundreds of employees. A number of young information technology businesses owe their creation to the inertia and inflexibility with which huge corporations adapt to a quickly changing environment. Large firms may invest heavily in research and development, but often only to prevent competition by controlling patents rather than to introduce new products or processes. Consequently, large firms have witnessed an exodus of skilled personnel who seek to develop their own innovations and so launch their own companies. This has sometimes led to a long series of spin-offs, as each growing enterprise gives way to a more specialized or advanced outfits. For example, William Shockley, one of the inventors of the transistor, the forerunner of the modern day semiconductor, left AT&T's Bell Laboratories in the late 1950s to set up Shockley Laboratories. Several years later, several Shockley employees left to set up a division of Fairchild Industries to produce integrated circuits, which in turn spawned Intel Corporation, now one of the world's largest microprocessor producers. Several Silicon Valley firms, including Advanced Micro Devices, have spun off Intel in recent years. But with capital needs high, small firms often depend on investment from large corporations or from venture capitalists. Thus Apple Computer obtained a large fraction of its capital from VenRock, the Rockefeller family's venture capital firm. And Intel recently sold 12 percent of its stock to IBM while Zilog, another chip maker, was entirely taken over by Exxon several years ago. The interest in such deals is mutual because large companies often rely on small specialized firms to supply a range of diverse technologies and functions while small firms look to larger companies for a larger customer base, sales and service capabilities and productive capacities they cannot afford on their own. That is not to say the smaller corporations aren't becoming formidable enterprises in their own right. Many have been multinational from the beginning of their operations. Intel, for example, is a multinational firm with thousands of employees from Ireland to the Philippines. But while an Apple or an Intel may succeed in protecting its flanks from huge companies such as IBM or AT&T, the smaller, specialized computer, communications and semiconductor companies may end up aligning themselves with large companies through joint ventures, investments, and cooperative deals. This growing trend may be leading to a large-scale consolidation in the industry. - M. G.