“The world feels anxious and divided, and Facebook has a lot of work to do – whether it’s protecting our community from abuse and hate, defending against interference by nation states, or making sure that time spent on Facebook is time well spent… My personal challenge for 2018 is to focus on fixing these important issues.”
– Mark Zuckerberg, Facebook Chairman & CEO
Mark Zuckerberg’s recent blog post on Facebook’s challenges confirms what has become increasingly clear…
Silicon Valley’s “tech titans” are under attack.
(Think of the tech titans as the FAANG stocks – Facebook, Amazon, Apple, Netflix and Google.)
Last week, I attended an event organized by Intelligence Squared – a London-based facilitator of traditional Oxford-style debates.
The motion on the table was whether to break up the tech giants.
Those supporting the motion argued that too much power has become concentrated in the hands of too few tech titans.
Over the past decade, a handful of West Coast companies have come to control our data, monopolize our markets and even threaten our political order.
As with John D. Rockefeller’s Standard Oil Company in the early 20th century, regulators should break up the tech titans.
Those opposing the motion argued that the tech titans are a benign force and have immeasurably improved the fate of humanity.
Google’s and Facebook’s integration into our daily lives is a sign of the value they offer to billions across the planet.
Coming into the debate, 39% of the audience wanted to see the tech titans broken up. Only 24% were comfortable with keeping the status quo.
A massive 37% of the audience was undecided.
By the end of the evening, all but 2% of the audience had taken a side.
The final verdict was close but decisive…
Tech Titans Go “BAADD”
In the good old days of 2016, the consensus was that the tech titans were making the world a better place.
Today, regulators fine them, politicians grill them and critics worry about their unchecked influence.
The Economist even coined a new acronym for the behavior of the tech titans… “BAADD” – big, anti-competitive, addictive and destructive to democracy.
The tech titans have grown massive.
Expansive networks and exponential growth ensures they’ll become even bigger and more dominant.
Investors in the FAANG stocks know this better than most.
Today, the combined market capitalization of the FAANG companies is less than just $3 trillion.
That’s more than the GDP of India, the seventh-largest economy in the world.
The tech titans dominate their markets and lock out their competition.
Google dominates search with more than 90% of the market share in many countries.
Facebook boasts more than 2 billion users across the planet.
Amazon accounts for 40% of the U.S. e-commerce market.
NYU professor Scott Galloway singled out Amazon as a tech titan whose Machiavellian tactics are both unique and underappreciated.
For instance, Amazon paid only $1 billion in taxes over the past decade. Yet brick-and-mortar retailer Walmart paid $85 billion over the same period.
And the sheer announcement of Amazon’s relatively small acquisition of Whole Foods for $13.3 billion was enough to cause supermarket chain Kroger’s stock to collapse by 30% over the next month.
Users are addicted to the tech titans’ services.
Facebook spends billions of dollars to manipulate you into clicking on specific ads…
And just try going a week without using it (or Google or Amazon).
This addiction is similar to what nicotine addiction is for the tobacco industry.
No one forces you to use the tech titans, just as no one forces you to smoke a cigarette.
4. Destructive to Democracy
Debating Russia’s influence on the U.S. presidential election through Facebook ads has become a staple of global partisan politics.
This influence was made possible only by Facebook’s vast reach and the algorithms that silo users into a nonstop political echo chamber.
Critics of the tech titans argue that this echo chamber is responsible for the newfound rise of populism across the globe.
But political manipulation pales in comparison to the tech titans’ threats to privacy.
As Google’s Eric Schmidt put it…
“There is what I call the creepy line. The Google policy on a lot of things is to get right up to the creepy line and not cross it.”
The Titans’ Defense
The tech titans argue that they are just the media’s latest punching bag.
The real winners of the digital revolution are the users and not the titans themselves.
The reason they’ve become so big is because users prefer their services to those of other companies.
Yes, consumers may find it hard to live without the services of Amazon and Google – but that is merely evidence of the value they offer…
And some of that value is free.
Nor, they claim, are they anti-competitive. After all, alternatives are only a mouse click away.
For example, in 1998, Fortune magazine declared Yahoo – then with a market cap of $2.8 billion – the winner of the search engine wars.
Google launched a mere six months later.
Sure, they could be further regulated.
But Mark Zuckerberg’s mea culpa suggests they are well aware of the challenges (and responsibilities) they face.
Breaking up the tech titans – they would say – is an uncalled-for “nuclear” option.
And the Verdict Is…
It’s rare that an audience changes its mind as a result of a debate.
Yet that is precisely what happened.
For all the hand-wringing surrounding their power, the tech titans’ defense proved more convincing.
By the end of the night, 52% of the audience voted to keep the tech titans intact while 46% voted to break them up.
The tech titans have not only woven themselves into our lives but also garnered our goodwill.
But they will have to work hard in a competitive environment to keep that trust.
The tech titan CEOs would be wise to heed the advice uncle Ben gave to the young Peter Parker (aka Spider-Man)…
“With great power comes great responsibility.”
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