The Blog

  • April 3, 2018
  • The last straw

    The multiple issues/scandals/problems facing companies in Silicon Valley could drive you to ask if the wheels falling off the collective tech wagon. A recent article in the DealBook section of the New York Times asks the question,

    Are we witnessing the end of a mania?

    Investors, always willing to believe in technology companies, spent the last three years piling into the shares of companies like Facebook, Amazon and Netflix with special abandon. Now the intellectual underpinnings of the tech rally are being seriously tested.

    But maybe this is just the way disruptive innovations evolve. To be sure, if it takes 50 to 60 years for a disruption to work its way through society and the economy, as I have documented in discussions of long economic waves called K-waves, then it’s quite likely that we’ve seen this kind of thing before, say in the 1960’s. You remember the 60’s, right? That’s the point.

    Because there’s little living memory of the last time, today’s happenings look unfamiliar. A disruption grows and grows consuming everything in its path until there’s nothing left to consume and at its peak the disruptors become the disrupted and accommodations must be made. Often the they are initiated by standards and even regulation—admittedly a dirty word in Silicon Valley and environs but one that must be said.

    In the more genteel days of the 19th century the disruption of the day, electricity, had its own peaking moment pitting uber genius Thomas Edison, a proponent of direct current (DC) standards against the lesser known geniuses Nicolai Tesla and George Westinghouse, who favored alternating current (AC).

    Edison was not above making a slur to defend his viewpoint. When a condemned man was electrocuted using alternating current, Edison got his publicists to influence a headline saying the man had been “Westinghoused.” Those were the days. Nonetheless, facts are stubborn things and AC won the day because it was just a plain better standard for long distance transmission, something the emerging electricity industry simply had to have.

    Through standards setting and regulation, the electric industry became a ubiquitous and standardized service that is accessible to all and this set the stage for further growth of the industry and the economy. Ironically, the standards and regulations were nothing that individual business people would have readily agreed to.

    The Times article asks in a roundabout way if the tech sector is in a similar moment. While the sector comprises businesses as different as Facebook, Apple, and Google, to name a few, Facebook and social networks are reaping a healthy share of skepticism, and for good reason, so let’s concentrate there. Another Times article may have pinpointed the peak moment when social media went from the disruptor to the disrupted,

    Shortly before the election, a senior official with the Trump campaign bragged to the Bloomberg reporters Joshua Green and Sasha Issenberg, “We have three major voter suppression operations underway,” which the article described as targeting “idealistic white liberals, young women, and African-Americans.” Brad Parscale, who ran the Trump campaign’s digital advertising, is quoted in the same piece discussing his plan to use dark ad posts of an animation of Hillary Clinton referring in 1996 to some African-Americans as “super predators.” Parscale suggested that the campaign would use this image to discourage a demographic category described by the reporters as infrequent black voters in Florida. “Only the people we want to see it, see it,” he explained. “It will dramatically affect her ability to turn these people out.”

    Dark ads display once to a specific audience and then disappear though they’re still in the vault. But guess what, the article goes on to say that,

    the dark ads have disappeared and Facebook won’t release them, citing the privacy of its advertisers.

    Zuckerberg might say that trust is important and he might spend a few bucks on grandiose full-page newspaper mea culpas but he and his company are still remarkably tone deaf. Did the suppression effort work? You be the judge,

    The election of 2016, the first after Barack Obama’s presidency, was notable for a seven-percentage-point decrease in African-American turnout, from 66.6 percent in 2012 to 59.6 percent, according to the Pew Research Center.

    The first decline in 20 years and the largest decline on record.

    This isn’t an American phenomenon. The news shows that the effort in 2016 was international with companies like Cambridge Analytica employing many non-Americans to sort data, create psychographic profiles, and generally influence the US election and possibly other efforts like the Brexit vote.

    My take

    We’re at the moment when attention turns to regulation in social networking and elsewhere. Facebook’s focus on the individual’s rights (privacy of its advertisers!) rather than the potential harm it can cause to a whole society represents a blind spot that will interfere with any solo attempt to rectify the situation. That’s why self-regulation rarely works without a mandate from government.

    It’s possible to regulate social networks through a system of encryption, certification, and a modicum of tracking. Doctors, lawyers, plumbers, beauticians and many other professionals all submit to systems of practitioner licensing and professional standards and utilities are regulated. That’s a workable model for social networks.

    It’s currently easier to attempt to influence millions of people about consequential issues than it is to pull the permits to make an addition to one’s home. It shouldn’t be that way.

    The momentum in the halls of legislatures around the world right now is toward regulation. The social networks should welcome it and work with governments to reach a workable compromise which includes a standard set of regulations that apply over broad swaths of the planet. Regulation will do for the industry what it can’t do for itself and that’s exactly what the society needs.

    Published: 6 months ago


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