As an internet phenomenon, algorithms have a very good name. And their creators are held in very high esteem by their employers and the community at large. Algorithms are the “secret sauces” of the new economy; the USPs of many online businesses; the stuff behind the entrepreneurial stampede in a modern-day gold rush.
As in the early days of every gold rush, this one is still a wild, free-for-all, with the imagination as the only limit.
This will eventually change. Algorithms and their makers will eventually be regulated. But, not before Joe Block understands that algorithms can also be wrong, dangerous, damaging and illegal.
Classified sites employ algorithms in many ways, and new uses are found almost daily. Online credit extension (loans) may well be the next, big fad. In this use of the algorithm, IT people wrest the task of credit extension from banks (for as long as we can remember, the only institution with the expertise and experience to decide who gets credit, and how much). On the internet, the human element is cut out of the decision. This can’t have a happy ending.
Strangely, bankers aren’t defending themselves against this “theft of their core business”. But, that doesn’t make algorithm use for consumer credit extension less dangerous.
For an interesting article on the dangers of algorithms in general (with examples in which classifieds, such as Zillow, are mentioned), and why algorithms should be regulated, read Cathy O’Neil’s latest article in TheGuardian.com. O’Neil is the author of the book Weapons of Math Destruction.