With Rapid Tech Advancement, Beware the Pitfalls of Centralization

Johannes C. 0 Tallied Votes 48 Views Share

Technology has become a dominant force in how we interact and operate. Now more than ever, we need to be aware of the dangers of centralization – including the risks of overdependency.


What do Facebook and North Korea have in common? They're both heavily centralized systems. The dangers of over-centralization were highlighted just a few years ago when a single server failure at a Meta data center in California caused a global outage for Facebook, Instagram, WhatsApp, and other services. With corporate AI on the rise and ChatGPT poised to become an integral part of your iPhone, it's time to take a closer look at centralized systems and their inherent vulnerabilities.

So, buckle up for an excursion into the domain of system theory, where we will explore the fundamental differences between centralized and decentralized organization and uncover what makes centralized systems so vulnerable. Armed with this knowledge, we'll ponder whether concentrating AI development in the hands of a few corporate giants is a smart move or a recipe for waking up in a Philip K. Dick novel.

The System Theory of Centralization vs. Decentralization

System science aims to understand the function of different components within complex systems to enhance overall efficiency and reliability. My first encounter with this field was when blockchain technology emerged. Here’s an excerpt from an article I wrote at that time, which should clarify the concept of centralization versus decentralization and why blockchain was a revolutionary concept for system scientists (although the latter is not the point of this article)

Try asking Google whether the earth is flat. The answer is clearly a simple ‘no’, but the search results will include plenty of dissenting opinions. This is because the Internet is decentralized in both its organization and logic. The fact that it is not subject to a central authority has many advantages, but also means that there is no one to vouch for any of the information it offers.

Most states are the polar opposite of this, they have a centralized logic and organization. They are subject to the control of an institution (i.e. the government) that vouches for content and prescribes procedures (e.g. through laws).

Then there are systems with centralized organization and decentralized logic. They are managed institutionally but allow for individual use. A Word file is a good example, as it can be processed on any computer outfitted with the same software. The workflows are predefined by the program, while the contents can be individually edited by each user.

This is the system theory that underlies our experience of everyday life. A fourth option – a system that is logically centralized and organizationally decentralized, hence independent and yet reliable – seemed improbable. Then along came blockchain.

Source: Goethe Institute

Many corporations today incorporate processes that are logically decentralized (e.g., independent decision-making within departments) yet they are organizationally centralized, making their components heavily interdependent. Such centralized corporate structures have advantages, including clear command chains and streamlined processes. However, their vulnerability and over-dependence by users pose significant risks.

The Dangers of Centralization

At the heart of the debate between centralization and decentralization lies the question of efficient resource management, with centralized systems often claiming greater efficiency. For instance, it’s more straightforward for everyone to line up at the school cafeteria and receive their lunch rather than everyone preparing their own meal individually. However, the academic debate on whether centralized or decentralized systems are more efficient remains unresolved and varies depending on the type of system in question. It’s important to clarify that my focus on centralization here concerns globally available services controlled by a handful of large corporate entities. So, we're not discussing the logistics within a single school cafeteria, but rather a hypothetical global network of cafeterias relying on a singular distribution chain, where one point of failure could leave all kids without lunch.

This leads us to a fundamental issue that renders centralized systems highly vulnerable: if the central node is compromised or fails, the entire system collapses—a single point of failure can bring down the whole network. Consider the example of GPS. Whether you use Google Maps, Waze, or another navigation app, they all depend on GPS. If GPS were to fail due to a cyberattack or another unforeseen issue, you’d better know how to read a map.

In addition to risks associated with single points of failure and overdependency, centralized systems have other significant drawbacks. They can stifle innovation, reduce operational flexibility, create bureaucratic inefficiencies, and limit responsiveness to individual needs. Furthermore, the concentration of power within centralized systems can make them not just vulnerable but also potentially dangerous. Economist Leopold Kohr, who fled the Nazi regime, devoted his life to arguing that overly large systems are the root of many societal evils. In his book The Breakdown of Nations (1957), he states:

…there seems only one cause behind all forms of social misery: bigness. Oversimplified as this may seem, we shall find the idea more easily acceptable if we consider that bigness, or oversize, is really much more than just a social problem. It appears to be the one and only problem permeating all creation. Wherever something is wrong, something is too big.

He then builds an extensive argument that there are natural boundaries to growth—a sentiment that was further elaborated on by The Limits of Growth some 15 years later, and is shared by many economists today. The solution, Kohr argues, is healthy decentralization. In respect to governance systems, that means a division into small states, resulting in a system where less power is divided into more hands, which could theoretically prevent atrocities like nuclear warfare and genocides that historically have been the hallmarks of large nations and empires.

Such dangers are still relevant today, and due to technological advances and the rise of global communication networks, the notion of threatening ‘bigness’ has entered an entirely new domain. Today, a handful of tech giants control most of our communication, our personal data, what we see, what we hear, and where we go. Besides the Orwellian vibes, this concentration of power bears serious dependency risks. And with AI development being controlled and driven by the exact same data-oligarchs, we’d better be careful all this rapid technological growth does not eventually backfire.

Just imagine if all Google services went down for a day. The implications would extend far beyond the inconvenience of using another search engine. Your browser data and passwords, your authentication apps, your calendars, everything you have stored in the cloud—if all that disappeared, chaos would surely ensue in one form or another.


Yes, humanity would most likely recover from such disruptions, but it is crucial to recognize that we are currently in the early stages of a great technological transformation, comparable to the Industrial Revolution. AI is rapidly evolving, improving, and increasingly blurring the boundaries between what’s real and what’s not. The biggest stakeholders are the usual suspects: Google/Alphabet, Meta, Apple, and Microsoft—with OpenAI morphing into the unexpected lovechild of the latter two. As technology advances and markets become monopolized, further centralization and concentration of power are almost inevitable.

So, what can we do about this? Admittedly, from an individual standpoint, there are no simple solutions. While smaller alternatives to all the major services exist, convenience often outweighs the effort required to diversify—because it is simply easier to use one account for everything, get all services from one provider, and store all files in the same cloud. However, spreading awareness about the dangers of centralization is essential. It enables individuals to balance convenience against the risks of over-dependency and make informed decisions. Ultimately, it is up to each of us to ensure we do not become overly reliant on any single platform, tool, or corporation—and to prevent systems from becoming too big.

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