This article originally appeared in WRAL Techwire
Editor’s note: Jim Verdonik, a frequent contributor to WRAL TechWire, is co-founder of Innovate Capital Law.
RALEIGH – First a disclaimer. I have spent my life working with technology and science-based businesses and have helped them raise money to grow. If this article seems a little critical of technology, it’s simply to remind ourselves that technology isn’t inherently good or bad. It’s just a tool and history has taught us that virtually all tools can produce both good and bad results depending on the decisions made by the people using the tools. So, lets examine Big Tech from the perspective of human nature and how we relate to technology tools.
I can’t count the number of sci-fi movies based in one simple theme: Technology Destroys Mankind
When was the last film or book where technology creates a bright happy future?
Disney has an optimistic vision of our technology future in the Tomorrow Land section of its theme parks and the old cartoon show “The Jetsons” had everyone driving flying cars (By the way, I’m still waiting for my flying car). And then there’s Star Trek. That’s about it.
The pessimistic view of technology on the other hand has spawned at least 12 thousand Terminator, Jurassic Park, Planet of the Apes and Godzilla movies. Artificial Intelligence is birthing a whole new generation of sci-fi movies that end badly for mankind.
Several basic themes apply:
- There is a war between the natural world and the technological world and Nature is the good guy (Avatar)
- Humans are too stupid to control technology – we can’t be trusted with our power (often involving spread of man made diseases like in I am Legend/28 Days Later)
- The dark side of human nature causes people to put technology to bad purposes (1984)
I’m not a film critic, but its clear that these films would not have an audience that keeps returning if people didn’t have such a deep distrust of the mix of human nature, technology and the natural world.
Let’s keep that in mind as we explore Big Tech’s role in our world.
WHO IS BIG TECH?
You might add others, but here’s a list of the usual suspects
Hundreds of millions of us use them. They sell Billions of Dollars of products/services every month. So, they must deliver some value – right?
Yes they do, but . . . .
Let’s look at what they have in common to understand why more and more people think of Big Tech like Godzilla destroying Tokyo.
FIRST OF ALL, BIG TECH IS SO BIG THAT THEY USE NUMBERS MOST OF US NEVER USE.
- Customers in the hundreds of millions
- Revenue in the Billions
- Market cap in the Hundreds of Billions
- Transactions in the Trillions
So, in scale compared to most businesses they really are as big as Godzilla was to residents of Tokyo.
SECOND, BIG TECH MAKE MOST OF ITS MONEY BY SELLING THINGS NO ONE CAN TOUCH OR EVEN LOOK AT.
They don’t even sell software. They just let us use their software. Yes, Apple theoretically makes i-phones, but that’s really done in China. So, you don’t meet people who work at an Apple plant that manufactures phones. Humans depend on our senses. If we can’t see, smell, hear or touch something, we are biologically programmed to distrust it.
America was built on making tangible things. It’s a basic element of our culture and Government system. Thomas Jefferson’s political philosophy was based on a citizenry of small farmers. Later, mass production produced an urban middle class that ruled the country for almost a Century.
This not a new phenomenon. Americans have always distrusted the financial industry, because it didn’t make anything other than money. When was the last time you read a story where the hero was an investment banker?
Now, most people we know don’t make anything tangible. The disconnection between our economy and our senses causes social and political distrust. Many people have a feeling that this is all going to fall apart, because it’s so disconnected from the real world.
THIRD, BIG TECH IS CENTRALIZING EVERYTHING IT TOUCHES.
That centralization is destroying countless other businesses, eliminating competition and consumer choice and making America vulnerable.
Before Uber/Lyft there was no national taxi-cab company. It was a local industry dominated by either independent owners or fleets where the biggest players might own several hundred taxi cabs in one city. Those drivers and owners are losing their daily bread.
Amazon is driving thousands of small stores out of business and even bankrupting major national chain stores. Shopping malls are closing. Deserted shopping malls depress people.
Facebook and Twitter have changed how news is gathered and disseminated and how we communicate with one another. We don’t talk. We either send a link to a photo or an article or we yell at one another. Now, we fear Russia, China, Nazis and Terrorists manipulating our news and communications in ways that were impossible when we got our news from hundreds of independent newspapers and local radio and TV stations.
FOURTH, BIG TECH HAS OPERATED WITHOUT AS MUCH GOVERNMENT REGULATION AS THE BUSINESSES IT IS DESTROYING.
This was caused by two factors.
- Big Tech designed itself to do things in ways that were not previously regulated.
- Big Tech won special exemptions from existing regulations that did apply.
For example, local taxi industries were usually regulated by local government. Local government had no regulation that applied to an app that people used through their cell phones to contact drivers who owned their own cars and who were not employees. Likewise, FCC regulations of the media did not apply to Internet communications. In other instances, Congress passed laws that made Amazon immune from sales taxes and Facebook and Twitter immune from slander and libel laws. Even traditional public company governance principles don’t apply to Big Tech. For example, Mark Zuckerberg and other Big Tech founders created super voting power for the stock they own that allows them to call the shots even if they become minority shareholders.
Fifth, Big Tech is too big for America. It’s become an international force that owes allegiance to no single country or to the values of any country. So, Big Tech is adapting its products and practices to support censorship in China and voice and facial identification systems that will be used for purposes good and bad. Facebook is developing a trustworthiness score in parallel with China’s new social credit scoring system that will facilitate retribution against those with unpopular views and is even developing its own currency – a critical feature of being your own country.
The net result is that Big Tech:
- Is too big for most Americans to imagine or oppose
- Too big for new competitors to become real threats
- Destroying the businesses that preceded them
- Creates too few local jobs to replace those it destroys
- Exposes our society and government to foreign manipulation
- Is under regulated compared to the businesses it is replacing
- Is becoming a useful tool for minimizing freedom at home and abroad
SO, WHERE DO WE GO FROM HERE?
Over one hundred years ago, Americans fought against the excesses and manipulation of Big Oil, Big Meat, Big Steel, Big Railroads. Big Tech is ticking off a lot of people and these people are fighting back. This explains why Big Tech finds itself under siege on many fronts:
- Facebook and Twitter on privacy and media manipulation issues.
- Google on tax, copyright and antitrust issues
- Amazon on tax, antitrust and labor laws
- Uber and Lyft on labor, safety and local transportation laws
- Amazon tariffs for their Chinese products
These are the issues that will define how Big Tech fares in the future. Lobbyists on all sides will grow and prosper. So, far, this article might seems like an indictment of Big Tech, but my own opinion is that many of the measures being proposed to regulate Big Tech are as bad as the problems they are trying to fix.
- Why shouldn’t car owners be able to make some extra money without the government killing their business with regulations?
- Why shouldn’t people be able to buy free services by giving up their privacy?
- Do we really want the Government to replace Big Tech in regulating speech on the Internet?
- Why shouldn’t people be able to search for information they want?
- Why shouldn’t people be able to pay less for things they choose to buy on the Internet?
SO, WHAT’S THE SOLUTION?
How about trying this:
- Remove the special status we gave Big Tech to help it grow. They no longer need it. They are big enough. That means letting people sue Facebook for libel and slander on the same basis they can sue anyone else and enforcing privacy laws.
- Limit Big Tech’s ability to transfer technology to China.
- Keep exemptions for new smaller competitors to Big Tech. The worse thing that can happen is that the Government creates stringent laws that increase costs for new competitors that might one day break the Big Tech monopolies.
- Look into antitrust violations where appropriate, but don’t bring politics into it.
Contact us to find out how we can help you at:
|Jim Verdonik||Benji Jones|
© 2019 Innovate Capital Law (Verdonik & Jones, PLLC) For further information regarding the issues described above, please contact us.
This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.