Five key tech trends for 2019, part 3: Big Tech

Continuing our key tech trends to watch out for in 2019, today is Big Tech’s turn.

2018 was not kind to Big Tech, mostly because it was exposed as not being kind to us, its users.

But not just its users, in fact. The general public, and its own employees, too.

We love to see a fall from grace. And in 2018, Big Tech provided.

None of the big names escaped unscathed.

Amazon drew fire after it emerged it was selling its facial recognition software (Rekognition) to police.

In October an anonymous Amazon employee wrote an open letter on Medium in an effort to blow the whistle.

The letter revealed that 450 Amazon employees had signed a letter urging Jeff Bezos to stop selling Rekognition to the cops.

Amazon is designing, marketing, and selling a system for dangerous mass surveillance right now. Amazon’s website brags of the system’s ability to store and search tens of millions of faces at a time. Law enforcement has already started using facial recognition with virtually no public oversight or debate or restrictions on use from Amazon.

We know from history that new and powerful surveillance tools left unchecked in the hands of the state have been used to target people who have done nothing wrong; in the United States, a lack of public accountability already results in outsized impacts and over-policing of communities of color, immigrants, and people exercising their First Amendment rights. Ignoring these urgent concerns while deploying powerful technologies to government and law enforcement agencies is dangerous and irresponsible.

Google, which recently dropped its “don’t be evil motto” – many would argue because it decided to start “being evil” – was not spared either.

In March, Dylan Curran revealed that Google was in fact much more invasive than Facebook could hope to be.

Google:

  • Stores every location you’ve ever visited with your phone.
  • Stores all your search history across all your devices. So even if you delete your searches on your phone, they’ll still be on your computer.
  • Creates an advertisement profile based on your location, age, hobbies, career, interests, relationship status, possible weight and income. So it can better target ads.
  • Stores information on every app and extension you use. Where you use them, how often, and who you use them to interact with.
  • Stores all your YouTube history – every video you’ve ever watched or partially watched. From this it can work out your political views, and mental state.
  • Has a file with all your data that will be around 3 million Word documents big.
  • Also records and stores any images and files you download while browsing.
  • Stores every event you’ve ever put in your calendar, whether you attended and at what time you got there.
  • Stores all your deleted Google Drive files.
  • Stores every photo and video you’ve ever watched or taken with your phone, if you’re using Google Photos.
  • Has a file of every ad you’ve ever clicked or viewed.
  • Stores every email you’ve ever received, including ones you’ve deleted or marked as spam.

As I said in May, Paul Buchheit, who came up with Google’s “don’t be evil” motto, did so as: “A bit of a jab at a lot of the other companies, especially our competitors, who at the time, in our opinion, were kind of exploiting the users to some extent.”

Read that paragraph again and then reread those bullet points. I would say Google is certainly “kind of exploiting” its users.

But this was far from the worst Google endured over 2018. In April news surfaced it was working with the US military on something called Project Maven.

Google selling the US military artificial intelligence that would help it to kill people more efficiently.

Google employees were outraged and more than a dozen quit. It later came out, in an open letter signed by 300 academics, that 3,100 Google employees were opposed to Google’s participation in Project Maven.

2018 was not a great year for Google’s public image. But it was nothing compared to the year Facebook had.

Facebook has undoubtedly fared the worst of all the big Tech companies – in terms of public perception at least.

Facebook has been accused of everything from swaying the US election to convincing people to vote for Brexit.

Personally, I find it ludicrous that people genuinely believe Russian hackers, with the help of Facebook and Cambridge Analytica, had any tangible result on any of our lives.

But, it certainly made a good story for journalists to be outraged at.

Ona more realistic note, though, 2018 was the year that everyone seemed to realise how Facebook’s business model works.

Facebook’s users are its currency. It mines data on them and sells it to advertisers. And it sells targeted ad space on its own platform to said advertisers.

Promoted posts and straight-up ads clogged people’s news feeds. Users got sick of seeing posts from “pages” and not from their friends.

People stopped logging in. Then deleting your Facebook account – and telling everyone about it – became cool.

For the first time ever, it emerged Facebook’s growth was slowing. The Delete Facebook movements were actually having an effect.

Adding to this was the court cases against Facebook in both the US and UK. Mark Zuckerberg himself was forced to give evidence in front of a technologically illiterate senate. He didn’t come out of it well. His company didn’t come out of it well.

Losing the zeitgeist

Facebook is no longer the social media darling it once was. In fact, social media itself is no longer the darling it once was.

Something changed last year in the public’s perception of Facebook and Big Tech in general. I’ve referred to it a few times as the Big Tech backlash.

It’s been like a collective disenchantment. It’s almost like when a political party slowly disappoints everyone that voted for it.

You want to believe they are working for your best interests, but as the evidence mounts and the scandals surface, you slowly realise they were only ever out for themselves.

In 2018 we realised Big Tech is no better than our employers, the banks and our government. It is only out for what it can take from us.

It didn’t start out like that. I certainly most Big Tech companies set out to “make the world a better place.” But somewhere along the line they lost their way.

The Telegraph touched on this idea in an article earlier in the week:

An exciting company with a clear mission launches a product which grows rapidly. The demand for this product means the company requires more capital, and new shareholders jump in, sold on the idea of even faster growth. What was once a broad company mission becomes narrowly focused and, before you know it, the management compromising principles, even bending rules, to achieve unsustainable outcomes. 

Like I said earlier, it’s not just users that are disgruntled with these Big Tech firms, it’s their employees, too.

What will the founders do next?

Now as we look ahead, I think we will see a change in how new tech darlings grow.

In the past, Big Tech would simply buy up its competitors before they became a problem. Facebook famously bought both Instagram and WhatsApp. Google bought YouTube.

At the time, analysts baulked at the vast sums Google and Facebook shelled out for those upstarts. A few years later, and those same analysts were congratulating Google and Facebook for their shrewd business sense.

But when you make a deal with the devil, you eventually pay the price. Isn’t that how the story always goes? The devil’s deals are priced in souls. And so are Big Tech’s.

WhatsApp’s founders, for instance championed privacy. Privacy is not good for advertisers. And Facebook is paid for by advertisers. So, WhatsApp’s privacy focus became an issue. A big one.

To their credit, WhatsApp’s founders, Jan Koum and Brian Acton, stuck to their guns. They refused to betray their users. Instead they both quit the company, giving up $400 million and $850 million respectively.

Now that’s integrity.

Then in September, Instagram’s founders, Kevin Systrom and Mike Krieger, both unexpectedly quit.

They vaguely described their reasons for leaving in a blog post:

We’re planning on taking some time off to explore our curiosity and creativity again. Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do.

The big question now is, what are these companies’ founders going to start next?

Given their histories, there’s every chance it will be a big success.

And given that they have proven their integrity – something social media users love – people may be much more inclined to trust these new platforms than Facebook or Google.

That is, assuming they do go on to develop rival platforms.

Given all of the events above, I also think that the next tech darling will be much, much less likely to sell out to any of the Big Tech incumbents.

If that happens, we could start to see some real competition in the world of Big Tech and social media.

Snapchat famously refused to sell to Google or Facebook. And so Facebook set about crushing it. But Snap is still alive, and listed on the stockmarket.

The main thing I expect to see from the Big Tech sector in 2019 is damage control and new upstarts.

And in the world of tech, a new upstart has the potential to usurp the current king, no matter how big that king is at the time. Just think back to Myspace.

I fully expect Facebook and other Big Tech names will face their own Myspace moments in the coming years.

And chances are those moments will be brought to bear by companies created by former Facebook employees.

Everyone loves a fall from grace, and everyone loves to see an underdog win.

As I said yesterday, if you’d like to know how you could make money from Big Tech’s fall from grace, you need to get your name down for Nick Hubble’s Predictable Profits Summit on Tuesday.

Nick will be sharing a number of tried techniques to make money as markets fall, as well as a host of other investment secrets he’s developed over his career.

If that sounds like something you’d be interested in, you can get your name down for it here.


Until next time,

Harry Hamburg
Editor, Exponential Investor

PS I’ve only really touched the surface here on what we can expect from Big Tech in the future. My publisher Nick O’Connor has gone a lot further. He has written a whole book on it, in fact. So if this is an area you’re interested in – and if you’ve read this far then I’m guessing you are – claim your copy of Nick’s book now.

Category: Technology

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