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Laurie Penny on a tale of two cities: how San Francisco's tech boom is widening the gap between rich and poor

San Francisco is awash with tech money. Yet this city of innovation is also a place where you have to step over the homeless to buy a $20 artisan coffee.

Ivory towers: the cost of living in San Francisco is soaring - but the city is also a magnet for the long-term homeless.
Photograph: Abbie Trayler-Smith/Panos.

“They took my shopping cart.”

On Market Street in downtown San Francisco, an old man with long, dirty hair has dropped his collection can. Coins and scraps of paper spill across the sidewalk and into the road. Nobody is helping.

Every day, between two and four in the morning, cleaners with high-powered water jets come out to hose Market Street clean of urine, rubbish and, sometimes, men, women and children who have nowhere else to go. Bags and belongings are confiscated in an effort to discourage one of America’s most intransigent homeless populations from sleeping on sidewalks that are now slap in the centre of the most desirable neighbourhood in one of the nation’s most expensive cities. This is where Twitter has its headquarters. This is where the best and brightest young minds in the world come to work as engineers, designers, visionaries. It’s just a shame that the smell of shit and guilty consciences is hard to soak away.

The story of how the hi-tech industry has brought rapid social change to San Francisco has been written before, by journalists and authors who have lived their entire lives in the Bay Area and watched the city struggle through successive industrial bubbles and survive. That story has been so well covered in recent months that the San Francisco Chronicle published a short guide “to help our brethren who have flocked here to write the latest ‘How the tech boom is changing San Francisco’ opus”: “It is a tale of two cities. It’s a city of very rich people and very poor people . . . A city losing its soul. Sleek, black Uber cars that whisk hipsters from bar to bar . . . Thirteen-dollar sandwiches. Google Glass. That’s your opening paragraph, visiting journalists. You’re welcome.”

The question of whether rampant social inequality is changing San Francisco is a straightforward one, and the answer to it is yes. Yes, tech money is driving the freaks, the queers, the broke artists and ordinary working-class families out of the city, helped along by 30 years of backward housing policies, greedy landlords and inefficient social care. That much is obvious.

What is just as interesting to those with an eye on the digital future is how the local politics of San Francisco is changing technology. The industry that is having the most profound effects on the way all of us live, that is changing what it means to be social, has its geographic hub in a place where social tensions have never been higher.

When “techies” and tech reporters talk about San Francisco, what they usually mean is a small chunk of this already small city – the central bustle of the Mission, the Tenderloin and the sprawling former docklands south of Market Street (SoMa). Twitter is located here, thanks to a generous tax break from the city authorities; it’s where lots of the start-ups are based, and it’s where a great many of the tens of thousands of new tech employees who have moved here in the past few years are choosing to live. It’s also where the tension between the dazzling digital future and the grotty hypocrisy of the present is most cartoonish.

On my first day, walking past a pop-up futurist conference called Quantum Leap, I am obliged to step around several homeless men sleeping in the baking sun. A few yards away, in the line for artisanal coffee whose $20 price tag is apparently justified by a special brewing method, young entrepreneurs discuss their starting salaries while an elderly woman dressed in grimy plastic bags yells, “How dare you?” at nobody in particular. San Franciscans are rightly annoyed when recent visitors boggle at their city’s social contradictions. Unfortunately, it’s the first thing you notice. When you get used to not noticing it – because otherwise you’d never be able to drink your coffee and get on with your day – that’s a different problem altogether.

There is something slightly creepy about the bourgeois cybertopia of Start-up City, all hi-tech doodahs and rustic jumpers. Valencia Street is where good hipsters go when they die. There are a lot of little dogs, but not a lot of little children. There are artisanal cheese parlours, “destination” bakeries and tasteful shops where you can buy a variety of specialist instruments for disappearing up your own backside, or those of others. The weather is always beautiful, a perpetual late spring where it’s never quite cold enough to wear your fanciest overcoat.

It’s all a little bit Pleasantville – if you ignore the vagrants, addicts and angry activists. That’s the sort of ignoring that takes practice. “In downtown SF the degenerates gather like hyenas, spit, urinate, taunt you, sell drugs, get rowdy, they act like they own the centre of the city,” wrote Greg Gopman, a former start-up CEO, on his Facebook wall last December. “There is nothing positive gained from having them so close to us.” One of his friends replied that the presence of so many homeless people was an embarrassment when “we’re supposed to be a gleaming utopia of what a city could be”.

There are half a million long-term homeless people in the US, and a third of them live in California. Still suffering from the stripping of inpatient mental health facilities in the Reagan years, people with nowhere else to go often find themselves in downtown San Francisco, with its clement weather – specifically, they find themselves in SoMa and the Tenderloin, which is where many of the non-profits set up to meet their needs are based.
 

****
 

Howard Street, where I’m staying, has many short-term-occupancy hotels and charity hostels. The street reeks of excrement; the lack of public toilets is an ongoing problem, and the many homeless people in the area have no choice but to relieve themselves in the street. Next door to the bedsit hostels is Startup House, a dormitory-style live-work space where hopeful young tech entrepreneurs from outside the city can rent a bunk bed for more than the cost of an apartment in other American cities. Over two weeks I lose count of the times I am warned, as a small white woman, not to walk down the street by myself; there is a sense of mutual hostility, of different communities that, with more or less reason, can’t look one another in the eye.

The place where I’m staying is a repurposed warehouse full of artists and start-up kids, all of them progressive, alternative weirdos who would be weirder still in a town where rainbow-coloured hair, veganism and a fondness for music that goes bleep weren’t entirely mainstream. They have far more in common with me, a foreign reporter from thousands of miles away, than they do with their next-door neighbours. I know them (how else?) from the internet, and they would probably be perplexed to hear anyone describe them as cool kids – like nearly everyone else in this city, they see themselves as outsiders, as people who have fought hard to find their place in a mean and vicious world. They are still fighting.

Tale of two cities: San Franciso's hi-tech boom is widening the gulf between rich and poor

My friends aren’t millionaires but some of their friends are, and they’re all hustling to make enough money to stay in the city where some of them have lived since they were born. Half of them are running a new company together through Y Combinator, the most prestigious of the start-up “accelerators” that lend seed capital to fledgling companies and that helped launch Airbnb, Dropbox and Scribd, along with hundreds of companies that haven’t made millions.

Bay Area venture capitalism has its own dialect; the frequency with which people employ it is a reasonable indicator of how much of the Kool-Aid they’ve drunk. That’s another buzzword, as it happens; during the last tech boom, the catchphrase “Keep drinking the Kool-Aid” was used by dotcom workers encouraging one another to stay in the game, a reference both to the Jonestown massacre and to Tom Wolfe’s Electric Kool-Aid Acid Test. In the San Francisco of legend, the one I grew up reading about, the drugs were acid, sex and weed. Now the artists are off their heads on calamity capitalism and very expensive coffee.
 

****
 

“Make something people want”, the Y Combinator slogan, is one of the unofficial mottoes of Startupland. On Folsom and Ninth, behind a nondescript warehouse door, is Heavybit – a start-up incubator hosting newborn companies that are designing widgets and magic gizmos straight out of Star Trek. “Incubator” is the right word; this is an intensive-care nursery of Bay Area capitalism, where baby start-ups are tended to by mentors and investors and kept functioning with a constant supply of coffee and nutrition bars.

The young people working here are fashionable, multiracial, excited. I’m not allowed to tell you what they’re developing. When I ask, several hardware engineers compete to come up with things they might be making: “America’s first unicorn breeding programme!” “Instagram for cats!” “A fitness tracker for your invisible friend!”

“Start-up kids” aren’t all white and Asian men in their twenties and thirties but that’s mostly who we’re talking about. The conversation about why the tech boom has rewarded a very specific, privileged demographic is everywhere in San Francisco, in cafés and bars and on the blogs and journalism start-ups read by the scene, and the reasons given are always the same: women didn’t learn to code early enough, black and Hispanic families don’t value education in the same way. Tech success is most likely to look like a nerdy white guy in a hoodie – a lot like the Facebook founder, Mark Zuckerberg. Of course, not every Bay Area bazillionaire is a nerdy white, middle-class guy in a hoodie, but enough of them are that the class, gender and racial disparities are uncomfortably obvious, especially if you’re new in town.

SoMa is the Wall Street of the Twenty-Teens, populated by venture capitalists and well-dressed young hopefuls, although that’s likely to mean a slightly more expensive hoodie rather than a suit. Smart, ambitious young people now go into tech in the way that they once went into banking – because their mothers told them to go the hell out there and make some money.

“This new breed, they’re not hackers,” says Jamie Zawinski, who left the tech industry to run the DNA Lounge, one of the most popular music venues downtown. “Not in the true, original sense of the word. They’re not interested in taking things apart, in exploring, in building things. They got into this line of work because someone told them it was a good career, and it’s disgusting – and that’s why I don’t do it any more.”

Zawinski was one of the founders of Netscape, “the first web browser that mattered”, and is often touted as an example of a techie who has worked to keep San Francisco’s vaudevillian weirdscape alive and dancing, rather than just getting out with his pile.

“I’m interested in building things, in how technology can change the world and the way we interact with each other, and how these weird little prosthetics they’re building can improve your life,” Zawinski says. “They’re interested in cashing out. Fifty per cent of their conversation is about finances. I don’t think they even realise it. It’s a dramatic failure of imagination.”

He warms to his theme. “That’s all any of these fuckers talk about. It’s disgusting. They’re just so focused on cashing out and making money, not actually building anything real, just working hard enough to get by. That changed around ’97, ’98, but it got really bad about four years ago. It’s the second bubble.”

There are two things every child knows about bubbles: they are beautiful, and they burst. Time and again, I am told that San Francisco is “a bubble” – referring both to the gorgeous, insular never-neverland where workers in the city’s tech and associated industries live and play and to the localised economic boom that has fuelled the fat years. Those who have been around for a decade or more remember what happened when the dotcom bubble of the 1990s finally popped: a lot of people lost their jobs and homes, and rental prices in the city came down, but not drastically. Rents are now higher than ever – rising more than three times faster than the national average – and despite intra-industry deals of dubious legality to keep tech wages down, they show no sign of dropping.

Zawinski is right: money is more important than ever to San Francisco’s fast-moving youth cohort. But if you lived in the most expensive city for yuppies in America, where you need a $70,000 salary just to pay your debts and make the rent, you might be worried about money, too.

“We want to make money because here, we have to,” says one photographer who now works as an engineer at a start-up, and hence is able to afford lunch. “By here, I mean San Francisco, but also America. Our generation is fucked. We’ll get no social security, we have no retirement, no savings, no job security.”

The young people entering the tech industry today are of a generation that does not necessarily long for riches, but desperately wants to be able to afford a decent standard of living without having to avoid its reflection in the mirror every morning.

“Most of us tech people will never be the 1 per cent,” says the photographer. “We’re aiming for the 10 per cent, which might allow us to have our parents’ lifestyle. We’re just trying to get by in a world that’s not giving us the same chances the baby boomers had. What did I do as an artist? I went and got an engineering degree.”

Sometimes when you’re dying of thirst, you have to drink the Kool-Aid.

If today’s tech industry is what yesterday’s financial sector was, there is one important difference. In finance, making money is the ideology, as well as the effect of that ideology. By contrast, much of the tech sector is driven by an ethos that is liberal, or at least progressively libertarian – it’s supposed to be about making things, breaking things, challenging conventional power and its monopoly over information. It’s about disruption.

There are even decent numbers of self-described anarchists filing on to the unmarked Google buses that have become the default symbol of how tech money is taking over the city. (I won’t go on about them here, in case I fall foul of the San Francisco Chronicle, but the short version is that these buses, which ferry workers from the city to the tech giants’ suburban campuses, have become the focus of the campaign against new money.)

At the heart of the San Franciscan tech industry is a paradox. It’s a paradox about creativity coming to terms with its place in capitalism. Hacking, computer engineering, the entire ethos of changing the world with communications technology, is supposed to be about more than money – but money is what a job for a big tech firm now means. And money changes things. “Don’t be evil” was the mantra of Google, but there is some anxiety that “evil”, or at least callousness, is attaching itself to tech corporations anyway. Google, like other Bay Area firms, is anxious to preserve its benign social reputation; none of its employees was allowed to speak to me on the record about gentrification and cultural anxiety. Tech workers don’t want to see the Mission emptied of poor families. But it’s happening anyway.

Tech still sees itself as an upstart industry challenging power, even when it has become that power. It sees itself as a field of outsiders, which is why it is difficult for tech workers to comprehend that they are now the privileged insiders who are resented by artists and communities of colour. The graffito “Techies go home”, scrawled on the sidewalk outside one business in Oakland, was posted on Twitter by an angry, anguished tech worker who explained that she was “born here”.

San Francisco’s growing inequality has been described, inaccurately, as a culture war; in fact, it’s a simple class war. The cultural anxiety is experienced almost entirely by tech workers, their associates and friends. Most of the tech entrepreneurs you meet in San Francisco are alternately embarrassed and defiant about money, whether they have it or merely hope to have it, and struggling to come to terms with what that money is doing to the city they love. In line for another overpriced coffee – hey, I never said the Kool-Aid wasn’t tasty – another start-up employee tells me he’s thinking about making a video game based on gentrification. The gamer would play a local
resident trying to build schools and cheap grocery stores as the incoming bourgeoisie sets up cocktail bars. It’s a joke. It isn’t meant to be cruel.
 


 

Bubbles are fragile, but from the outside they can seem hard to breach. I take a drive through the city with my friend Meredith, another artist who is struggling to stay afloat in San Francisco. “Financially, this city just exhausts creative people that don’t have a lot of money supporting their art, somehow. Everybody else is hustling constantly just to break even.” Her current sublet – a small, leaky room with no kitchen on a houseboat in Sausalito, for $600 a month – is up in 30 days. She still hasn’t found another place to live. “I don’t know if I’ll stay.”

Meredith is a fixture on the San Francisco arts scene, the former editor of the underground magazine Coilhouse, and a recording artist on, of all things, the theremin. “I spend a lot of time staring at the city from across the bridge,” she says. “I spend a lot of time wishing I felt like I belonged.”

Artists aren’t the only people locked out of this “gleaming utopia”. Raquel Donoso, of the Latino Community Foundation, tells me that “about 40 per cent of Latino families do not have a computer and internet access at home. That included East Palo Alto. This is in Silicon Valley, where there’s tremendous opportunities and tons of money. People are losing their jobs and they can’t even get unemployment insurance, because everything is online. Our families are basically locked out of that world.”

There is nothing wrong with making things that people want. The problem is that personhood and desire are constrained by capital; money affects whose wants appear to matter. The kids in Startup House may want a pizza delivery drone, but not in the same way low-income families want health care, or the elderly men lying in their own faeces on Howard Street want a safe place to sleep. There is nothing wrong with making things people want. It’s just that too little attention is being paid to the things people need.

The wants and needs of young, healthy, middle-class people with connections and a reasonable amount of spare cash are overrepresented among Start-up City’s priorities. For one thing, those are the problems with solutions that sell. For another, given a few million dollars and a team of semi-geniuses, those problems are easy to solve. Structural social injustice and systemic racism are harder to tackle – and that’s where the tech sector has, until recently, thrown up its hands.

“We can’t do anything about it” is what I hear, time and time again, from business representatives and rich individuals. And no – individuals can’t do a great deal about 30 years of awful housing policies and structural tax exemptions that prevent wealth from being redistributed. But corporations that are now wealthier than many national economies might be able to do something.

Google, in response to the Google bus protests, has just announced a scheme to subsidise public transport for schoolchildren. It’ll cost millions, but that’s a snip for a firm that earned $16.86bn in the last quarter of 2013. “I don’t think that just because gentrification happens, people can sit back and say it’s OK,” Donoso says. “Forcing people out of their homes is not OK. We have to have a discussion about what kind of community we want to build and live in, and how to maintain that community.”
 

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“Eviction after 20 years”, reads a hand-drawn sign in an apartment window on Market Street. A few doors down, the shopfronts of the late-night Whole Foods – an expensive organic supermarket which is, apparently, also a major cruising spot – display large, stylish posters of smiling peasant farmers in faraway countries with cheerful motifs about “ending poverty”. Poverty many thousands of miles away can and should be alleviated, preferably with a small donation at the checkout. Poverty that you have to step over to get into your office is disturbing, and then embarrassing, and then – finally – annoying.

The likes of Google and Twitter make much of their commitment to philanthropy. Until recently, however, that generosity has not extended to their own backyard.

“Think about the Carnegies, the Mellons, the Fords. Even here in the city, Levi Strauss started here,” Donoso says. “All of those businesses really made philanthropy a part of their DNA and it was about solving our local issues. I don’t necessarily see that in the [hi-tech] sector. People see themselves as more global.”

A large part of what political theorists term “the Californian Ideology” – a heady brew of progressive techno-libertarianism and laissez-faire capitalism – is based on lack of faith in governments to solve social problems. “The centre of power is here,” said the venture capitalist Chamath Palihapitiya during last year’s US government shutdown, in an interview with the website This Week in Startups. “Where value is created is no longer in New York, it’s no longer in Washington, it’s no longer in LA. It’s in San Francisco and the Bay Area . . . Companies are transcending power now. We are becoming the eminent vehicles for change and influence, and capital structures that matter.”

“This anti-government ethos is really troubling and short-sighted on the part of those techies who hold it,” says Gary Kamiya, a journalist and lifelong San Franciscan and the author of the guidebook Cool Gray City of Love. “They don’t understand certain basic things about how society functions, like the concept of the tragedy of the commons – that if everybody is only out for themselves, you’re unable to come together to create things that can only be done by joint action.”

For the luckier San Franciscans, the argument that techno-capitalism is a good substitute for the state isn’t hard to make – not when their employers provide everything social democrats expect the state to supply, from transport and health care to yoga rooms, video arcades and laundry service at the office. There is little reason to believe in solving local problems collectively when evidence of the failure of collectivism is sleeping in the sun on every sidewalk.

What would the tech industry look like if it weren’t being cannibalised by capitalism? According to Mitch Altman, an inventor and founder of the Noisebridge hackerspace in the Mission, it would be much more exciting. “In the hacker scene all over the world, the vast majority are doing things because they think it’s awesome – they love it, they’re passionate about it,” says Altman, who is a figurehead of the hackerspace movement, a global network of free spaces where people of all abilities can work together on tech, art and engineering projects. “When people do things because they love it, they’re putting things into the world that wouldn’t be there. Not every techie is rich. Some of them are scraping by on a few hundred dollars a month, and some are squatting.”

Noisebridge has been open since 2007, and is tucked away above a taquería in the middle of the Mission, where gentrification is doing its worst cultural violence. Up a dingy flight of stairs is a wide, bright space, stuffed to the rafters with arcane computer components, matchstick sculptures, 3D printers and wired-looking young people typing frenetically on many-stickered laptops. It looks like a scene from a mid-Nineties movie about hackers.

“There’s a reason why Noisebridge started in the Bay Area,” says Altman, whose long, greying hair is dyed pink and blue. “Since the Gold Rush this has been a place which has attracted weirdos. That’s one of the reasons I love it here. I’m a total misfit and I love being surrounded by misfits. The people who live here mostly really want to live here, even though the people who are moving in with lots of money with Google jobs and things like that [also] want to be here.”

There are still a great many people in the Bay Area who believe that information should be free, even when a two-bedroomed flat in the Haight is eye-wateringly expensive. There are still hackers and engineers whose first priority is to take the lid off society and put it back together more efficiently, and those hackers, according to Altman, “need community. Even introverted geeks need community, and it’s hard to find community. It’s always going to be hard work.”

Community is the key. The biggest tech firms in the Bay Area have capitalised on the social value of community. From Google, Facebook and Twitter to Instagram and WhatsApp, the power of networks is being monetised even as the communities in which those businesses are based twist and change. What they are trying to work out now – what everyone in the Bay Area is trying to work out – is what it means to build community. “It isn’t as if there is a template or an accepted rule for how we’re all supposed to be members of a polis,” Kamiya says. “A city is a very peculiar thing.”

San Francisco is more peculiar than most. For better or worse, the class and cultural anxieties of this city are sending ripples around the globe. Tech is not what’s tearing San Francisco apart. America is what’s tearing San Francisco apart – America, and the vanishing chance it offers its citizens to build pleasant lives without brutalising others by proxy. The paradox at the heart of the hi-tech industry, the struggle between idealism and the inhumanities of capital, will leave its mark on the technologies future generations inherit. 

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

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Are smart toys spying on children?

If you thought stepping on a Lego was bad, consider the new ways in which toys can hurt and harm families.

In January 1999, the president of Tiger Electronics, Roger Shiffman, was forced to issue a statement clearing the name of the company’s hottest new toy. “Furby is not a spy,” he announced to the waiting world.

Shiffman was speaking out after America’s National Security Agency (NSA) banned the toy from its premises. The ban was its response to a playground rumour that Furbies could be taught to speak, and therefore could record and repeat human speech. “The NSA did not do their homework,” said Shiffman at the time.

But if America’s security agencies are still in the habit of banning toys that can record, spy, and store private information, then the list of contraband items must be getting exceptionally long. Nearly 18 years after TE were forced to deny Furby’s secret agent credentials, EU and US consumer watchdogs are filing complaints about a number of WiFi and Bluetooth connected interactive toys, also known as smart toys, which have hit the shelves. Equipped with microphones and an internet connection, many have the power to invade both children’s and adults’ private lives.

***

“We wanted a smart toy that could learn and grow with a child,” says JP Benini, the co-founder of the CogniToys “Dino”, an interactive WiFi-enabled plastic dinosaur that can hold conversations with children and answer their questions. Benini and his team won the 2014 Watson Mobile Developer Challenge, allowing them to use the question-answering software IBM Watson to develop the Dino. As such, unlike the “interactive” toys of the Nineties and Noughties, Dino doesn’t simply reiterate a host of pre-recorded stock phrases, but has real, organic conversations. “We grew it from something that was like a Siri for kids to something that was more conversational in nature.”

In order for this to work, Dino has a speaker in one nostril and a microphone in the other, and once a child presses the button on his belly, everything they say is processed by the internet-connected toy. The audio files are turned into statistical data and transcripts, which are then anonymised and encrypted. Most of this data is, in Benini’s words, “tossed out”, but his company, Elemental Path, which owns CogniToys, do store statistical data about a child, which they call “Play Data”. “We keep pieces from the interaction, not the full interaction itself,” he tells me.

“Play Data” are things like a child’s favourite colour or sport, which are used to make a profile of the child. This data is then available for the company to view, use, and pass on to third parties, and for parents to see on a “Parental Panel”. For example, if a child tells Dino their favourite colour is “red”, their mother or father will be able to see this on their app, and Elemental Path will be able to use this information to, Benini says, “make a better toy”.

Currently, the company has no plans to use the data with any external marketers, though it is becoming more and more common for smart toys to store and sell data about how they are played with. “This isn’t meant to be just another monitoring device that's using the information that it gathers to sell it back to its user,” says Benini.

Sometimes, however, Elemental Path does save, store, and use the raw audio files of what a child has said to the toy. “If the Dino is asked a question that it doesn’t know, we take that question and separate it from the actual child that’s asking it and it goes into this giant bucket of unresolved questions and we can analyse that over time,” says Benini. It is worth noting, however, that Amazon reviews of the toy claim it is frequently unable to answer questions, meaning there is potentially an abundance of audio saved, rather than it being an occasional occurrence.

CogniToys have a relatively transparent Privacy Policy on their website, and it is clear that Benini has considered privacy at length. He admits that the company has been back and forth about how much data to store, originally offering parents the opportunity to see full transcripts of what their child had been saying, until many fed back that they found this “creepy”. Dino is not the first smart toy to be criticised in this way.

Hello Barbie is the world’s first interactive Barbie doll, and when it was released by Mattel in 2015, it was met with scorn by parents’ rights groups and privacy campaigners. Like Dino, the doll holds conversations with children and stores data about them which it passes back to the parents, and articles expressing concerns about the toy featured on CNN, the Guardian, and the New York Times. Despite Dino’s similarities, however, Benini’s toy received almost no negative attention, while Hello Barbie won the Campaign for a Commercial-Free Childhood’s prize for worst toy of the year 2015.

“We were lucky with that one,” he says, “Like the whole story of the early bird gets the worm but the second worm doesn’t get eaten. Coming second on all of this allowed us to be prepared to address the privacy concerns in greater depth.”

Nonetheless, Dino is in many ways essentially the same as Hello Barbie. Both toys allow companies and parents to spy on children’s private playtimes, and while the former might seem more troubling, the latter is not without its problems. A feature on the Parental Panel of the Dino also allows parents to see the exact wording of questions children have asked about certain difficult topics, such as sex or bullying. In many ways, this is the modern equivalent of a parent reading their child's diary. 

“Giving parents the opportunity to side-step their basic responsibility of talking to, engaging with, encouraging and reassuring their child is a terrifying glimpse into a society where plastic dinosaurs rule and humans are little more than machines providing the babies for the reptile robots to nurture,” says Renate Samson, the chief executive of privacy campaign group Big Brother Watch. “We are used to technology providing convenience in our lives to the detriment of our privacy, but allowing your child to be taught, consoled and even told to meditate by a WiFi connected talking dinosaur really is a step in the wrong direction.”

***

Toy companies and parents are one thing, however, and to many it might seem trivial for a child’s privacy to be comprised in this way. Yet many smart toys are also vulnerable to hackers, meaning security and privacy are under threat in a much more direct way. Ken Munro, of Pen Test Partners, is an ethical hacker who exposed security flaws in the interactive smart toy “My Friend Cayla” by making her say, among other things, “Calm down or I will kick the shit out of you.”

“We just thought ‘Wow’, the opportunity to get a talking doll to swear was too good,” he says. “It was the kid in me. But there were deeper concerns.”

Munro explains that any device could connect to the doll over Bluetooth, provided it was in range, as the set-up didn’t require a pin or password. He also found issues with the encryption processes used by the company. “You can say anything to a child through the doll because there's no security,” he says. “That means you've got a device that can potentially be used to groom a child and that's really creepy.”

Pen Test Partners tells companies about the flaws they find with their products in a process they call “responsible disclosure”. Most of the time, companies are grateful for the information, and work through ways to fix the problem. Munro feels that Vivid Toy Group, the company behind Cayla, did a “poor job” at fixing the issue. “All they did was put one more step in the process of getting it to swear for us.”

It is one thing for a hacker to speak to a child through a toy and another for them to hear them. Early this year, a hack on baby monitors ignited such concerns. But any toy with speech recognition that is connected to the internet is also vulnerable to being hacked. The data that is stored about how children play with smart toys is also under threat, as Fisher Price found out this year when a security company managed to obtain the names, ages, birthdays, and genders of children who had played with its smart toys. In 2015, VTech also admitted that five million of its customers had their data breached in a hack.

“The idea that your child shares their playtime with a device which could potentially be hacked, leaving your child’s inane or maybe intimate and revealing questions exposed is profoundly worrying,” says Samson. Today, the US Electronic Privacy Information Center (EPIC) said in a statement that smart toys “pose an imminent and immediate threat to the safety and security of children in the United States”. 

Munro says big brands are usually great at tackling these issues, but warns about smaller, cheaper brands who have less to lose than companies like Disney or Fisher Price. “I’m not saying they get it right but if someone does find a problem they’ve got a huge incentive to get it right subsequently,” he says of larger companies. Thankfully, Munro says that he found Dino to be secure. “I would be happy for my kids to play with it,” he says. “We did find a couple of bugs but we had a chat with them and they’re a good bunch. They aren’t perfect but I think they’ve done a hell of a lot of a better job than some other smart toy vendors.”

Benini appears alert to security and the credibility it gives his company. “We took the security very, very seriously,” he says. “We were still building our systems whilst these horror stories were coming about so I already set pipelines and parameters in place. With a lot of devices out there it seems that security takes a backseat to the idea, which is really unfortunate when you’re inviting these devices into your home.”

As well as being wary of smaller brands, Munro advises that parents should look out for Bluetooth toys without a secure pairing process (ie. any device can pair with the toy if near enough), and to think twice about which toys you connect to your WiFi. He also advises to use unique passwords for toys and their corresponding apps.

“You might think ‘It's just a toy, so I can use the same password I put in everything else’ – dog’s name, football club, whatever – but actually if that ever got hacked you’d end up getting all your accounts that use that same password hacked,” he says.

Despite his security advice, Munro describes himself as “on the fence” about internet-connected smart toys as a whole. “Most internet of things devices can be hacked in one way or another,” he says. “I would urge caution.”

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Is all of this legal? Companies might not be doing enough ethically to protect the privacy of children, but are they acting responsibly within the confines of the law?

Benini explains that Dino complies with the United States Children's Online Privacy Protection Act (COPPA) of which there is no real equivalent in the UK. COPPA says that companies must have parental permission to collect personal information over the internet about children under 13 years of age. “We’ve tried to go above and beyond the original layout of COPPA,” says Benini, when describing CogniToys transparent privacy documents. Parents give their consent for Elemental Path to collect their children’s data when they download the app that pairs with the toy.

Dino bears a striking similarity to Amazon Echo and Google Home, smart speakers that listen out for commands and questions in your home. Everything that is said to Amazon Echo is recorded and sent to the cloud, and an investigation by the Guardian earlier this year discovered that this does not comply with COPPA. We are therefore now in a strange position whereby many internet of things home devices are legally considered a threat to a child’s privacy, whereas toys with the same capabilities are not. This is an issue because many parents may not actually be aware that they are handing over their children’s data when installing a new toy.

As of today, EU consumer rights groups are also launching complaints against certain smart toys, claiming they breach the EU Unfair Contract Terms Directive and the EU Data Protection Directive, as well as potentially the Toy Safety Directive. Though smart toys may be better regulated in Europe, there are no signs that the problem is being tackled in the UK. 

At a time when the UK government are implementing unprecedented measures to survey its citizens on the internet and Jeremy Hunt wants companies to scour teens’ phones for sexts, it seems unlikely that any legislation will be enacted that protects children’s privacy from being violated by toy companies. Indeed, many internet of things companies – including Elemental Path – admit they will hand over your data to government and law enforcement officials when asked.

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As smart toys develop, the threat they pose to children only becomes greater. The inclusion of sensors and cameras means even more data can be collected about children, and their privacy can and will be compromised in worrying ways.

Companies, hackers, and even parents are denying children their individual right to privacy and private play. “Children need to feel that they can play in their own place,” says Samson. It is worrying to set a precedent where children get used to surveillance early on. All of this is to say nothing of the educational problems of owning a toy that will tell you (rather than teach you) how to spell “space” and figure out “5+8”.

In a 1999 episode of The Simpsons, “Grift of the Magi”, a toy company takes over Springfield Elementary and spies on children in order to create the perfect toy, Funzo. It is designed to destroy all other toys, just in time for Christmas. Many at the time criticised the plot for being absurd. Like the show's prediction of President Trump, however, it seems that we are living in a world where satire slowly becomes reality.

Amelia Tait is a technology and digital culture writer at the New Statesman.