Daily Archives: August 2, 2022

The idea of mixing work and politics has always been a fraught topic, andunderstandably so. Most companies have customers and employees on bothends of the political spectrum, and remaining neutral is often the only way to make sureall parties feel respected and comfortable. They say never to discuss religion or politicsat a dinner party; well, the same rule could be applied to the marketplace or workplace.

The problem is, "politics" is a word that covers a vast expanse of topics, and at somepoint everyone even company leaders need to draw a line. Neutrality isn't alwaysan option.

Consider, for example, a hypothetical infrastructure bill making its way throughCongress. This is politics we likely wouldn't discuss at work for a number of reasons. Itmight be a sensitive topic; there will likely be extreme positions on both sides of theaisle about whether the bill should be passed, adjusted, or blocked completely. Is itessential for a business to take a public stance on this? Except for a few nichebusinesses, probably not. Companies can (and often should) remain neutral.

But what about when it's an issue of human rights? Of war? Genocide? These topics,on a global stage, are often considered politics, but they likely affect a huge percentageof customers in much more profound ways than other issues we consider politics. Thedecision of whether to remain neutral, therefore, is much more complicated. Somecompanies choose to take a political stance; others insist on "staying in their lane" andfocusing only on their products or services.

But there, of course, is the rub: the products and services. What if a company's productor service directly affects, benefits, or connects to the issue at hand? Is a neutral stancereally possible at that point? Or does neutral mean complicit?

Tech companies, in particular, must reckon with this question. We can't pretendthe products we create aren't used on a global stage, for all kinds of uses somepositive and some downright nefarious. But if our tools are used by, say, governments tocommit war crimes, can we really say we're neutral?

We must do more. Some of the behemoths of the tech industry have obscene amountsof power over culture, communications, laws, and policies worldwide. With that kind ofpower, neutrality is impossible. But what exactly does this mean? It means techcompanies need to take more ownership of how their tools are being used.

That could start with something as simple as withdrawing business. If a company isselling products or services to an entity that is knowingly committing harm and,worse, using those products or services to do so that company has chosen a side.They are not neutral. Tech companies need to recognize this and make the harddecisions to pull out of these kinds of business relationships.

My own company recently did just this. We believe we have a responsibility to standwith the people of Ukraine, against Russia, and we have taken steps accordingly. We nolonger do business with companies in support of Russia, and we offer our services forfree for those actively supporting, or on the ground in, Ukraine. To do otherwise would betantamount to supporting the Russian invasion; there simply is no neutral option.

Why do business leaders seem to think that if profit is involved, morality ceases toexist? That mentality belies the real reasoning behind so-called neutrality: If profit isinvolved, many leaders simply don't care about anything else. It also reveals a certainshort-sightedness because, let's be honest, losing profit in the short term for a reasonlike this will often actually help your business in the long term. Customers care aboutthese things, and they don't take kindly to businesses supporting egregious acts ofviolence.

But the imperative goes further than this. So many tech companies today play a vitalrole in global communication, which has profound effects on how politics, policies, andreal human rights issues play out. And yet these companies social media companies,content platforms, and the like all still seem to want to remain as neutral as possible.We can't have it both ways. Neutrality inevitably will favor one side or another. As thewriter, Nobel laureate, and Holocaust survivor Elie Wiesel summed up so succinctly:"Neutrality helps the oppressor, never the victim."

We are living in the age of all things digital, in the transformation of every aspect ofglobal society at the hands of technical innovation. This is powerful thrilling, even and can truly make this world a better place. That's why so many of us got into tech inthe first place, isnt it? For that hope. That thrill. But it will matter little, or not at all, if thetechnological advances we make just add fuel to a fire of hate, authoritarianism, or war.We must take responsibility for the technology we're creating; companies must do more.We must use the incredible tools at our disposal to help the oppressed and give up thisfruitless quest to be forever "neutral."Neutrality is cowardice.

Continued here:

For Big Tech, Neutrality Is Not an Option and Never Really Was - DARKReading

By Clare Duffy, CNN Business

Much of contemporary Silicon Valley was built on advertising dollars. That dependence made even the most powerful companies look at least somewhat vulnerable last week after reporting their latest earnings results.

We seem to have entered an economic downturn that will have a broad impact on the digital advertising business, Meta CEO Mark Zuckerberg told analysts at the start of the companysearnings call on Wednesday.Its always hard to predict how deep or how long these cycles will be, but Id say that the situation seems worse than it did a quarter ago.

Meta, Twitter, Snap, Google, Apple and Microsoft all reported that shrinking advertising budgets a result of the recent market downturn and economic uncertainty took some toll on their previous quarter earnings and would likely continue to be a challenge in the coming quarters. Spotify also said it saw softening in its ad business starting in the last two weeks of June.

Revenue drops but Zuckerberg is defiant: Number of people using Facebook daily continues to grow

Even those with dominant market positions werent immune. Googles coreadvertising business grewjust 11.6% year-over-year, compared to the nearly 69% increase it posted during the same period last year. Meta, Facebook and Instagrams parent company, posted its first year-over-year quarterly revenue decline in its history as a public company. (Advertising accounts for the vast majority of Metas revenue.)

Those much less dependent on advertising felt the pinch as well. Microsoftsaid it tooka revenue hit of $100 million during the second quarter from a reduction in advertising spend. Apple CEO Tim Cook told analysts Thursday that digital advertising was clearly impacted by the macroeconomic environment during the June quarter, weighing on its services revenue.

Shares of Meta were down around 7%. Snap shares fell more than 25% after it reported earnings last week.

Googles Wall Street miss: End of pandemic spending boom means revenue slowdown

Todays results are very much reflecting the impact of a challenging economic environment which is hurting almost every mega tech company, Haris Anwar, a senior analyst at Investing.com, said in a statement.

Its a stark reversal for the online advertising industry. After a brief dip at the start of the pandemic, advertisers began funneling money into online ads to reach consumers who were spending more time plugged into screens. This time last year, Meta and Snap both reported that quarterly sales had doubled from the prior year, and Googles grew by 62%.

But the world is a very different place now. Russias monthslong war in Ukraine caused some uncertainty among advertisers, and many tech companiesresponded to the attackby cutting off the ability for Russian-based companies to advertise on their platforms.

More recently, a surge inflation, a market downturn and fears of a recession have prompted companies to pull back on their ad budgets, tech giants said during their earnings reports this week. Many companies, including in the tech industry, have recently slowed hiring and investments amid the economic uncertainty.

Microsoft misses Street expectations, blames Chinas lockdowns, Russias war

The very nature of how some online ad campaigns are run has made the pain immediate. Snap CFO Derek Anderson noted in the companys earnings call last week that advertising spending in particular auction-driven direct response advertising is among the very few line items in a companys cost structure that they can reduce immediately in response to pressure on other parts of their business.

Those macroeconomic challenges are expected to drag into the rest of this year. Meta said Wednesday it expects revenue for the current quarter to be between $26 billion and $28.5 billion, which would mark a second year-over-year quarterly revenue decline. Although Snap declined to provide financial guidance because of the uncertain environment, it said third quarter revenue was so far flat compared to the previous year.

The downturn also comes after Applesapp tracking changes, which went into effect in the second half of last year, had already been taking a toll on some tech giants businesses. Apple introduced a feature that lets users opt out of some tracking by apps, taking away some crucial data that social media platforms use to target ads. The change hurt ad businesses at Meta, Twitter and Snap, as well as smaller players such as Pinterest. Metas ad revenue alone took a $10 billion hit from the privacy update last year, and Snaps Anderson said last week that the changes upended a decade of advertising industry standards.

Amazon stock surges 11% after beating Street expectations

And while Google has the benefit of its own third-party data, YouTubes ad business hasnt been entirely spared.

Right now is essentially a perfect storm for digital advertising, D.A. Davidson analyst Tom Forte said. For companies reliant on advertising, theres a high risk to your revenue.

CNNs Rishi Iyengar contributed to this report.

The-CNN-Wire & 2022 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

Not even Apple can escape economic woes: Profits decline 11%

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What's behind the shrinking Big Tech: Online ad market is in decline - WRAL TechWire

Airtable is clearly not your average productivity company. In fact, it may not be a productivity company at all. Years ago, when Airtable was referenced as a spreadsheet on steroids in the press, CEO Howie Liu wasnt exactly enthusiastic, because he felt the company offered much more than that.

To this day, Liu eschews the comparisons to productivity apps like Asana, Trello, Notion or Monday.com. Instead, he wants people to draw comparisons between Airtable and enterprise software giants like his former employer Salesforce, or even ServiceNow.

We are trying to position ourselves more against ServiceNow or Salesforce, not from a CRM standpoint, but from a platform standpoint, said Liu. We always intended to become an app builder, he said.

These days, Liu wants Airtable to shift from collaboration and productivity tools to an application development platform that enterprises select as the backbone of their business workflows. But to do that, Airtable will have to prove to enterprises, investors and analysts that it's much more than a productivity company.

Howie Liu has always been interested in the power of software. By the age of 13 Liu taught himself to code with his fathers old textbook, and shortly after college he built his first company, a CRM system called Etacts. By the age of 22, he had sold that company to Salesforce.

That was the unlock for me it's like the software that can make any other software.

While working at Salesforce, Liu realized its underlying data model wasnt as rigid as other CRM systems, which gave customers a lot of flexibility around how they customized the software. It was a metadata-driven platform, meaning instead of hardcoding their business objects to be one shape, every customer could define their own relational data structure and all of their functionality worked regardless of how the customer defined their business objects, said Liu.

In other words, because everything in Salesforce could be changed, companies and individuals could build their own applications, which is why Liu saw Salesforce as more of an application platform than a CRM giant. That was the unlock for me it's like the software that can make any other software, he said.

But Liu also recognized that Salesforces user interface wasnt the best, and he felt he could do better. Building a platform to make apps, or software to make other software, is a really pretty interesting problem, and I think I can put my own spin on it, he said.

That spin came in the form of startup Airtable, which Liu left Salesforce to build in 2013, just two years after joining the company. Alongside a few friends from college, Liu set out to build Airtable as a super-powered spreadsheet on top of a relational database, much like Salesforce.

The company quickly found rapid adoption among designers and developers, building an almost cult following amongst productivity enthusiasts for its 21st century take on the spreadsheet. As of late last year, Airtable reached more than 300,000 customers and $100 million in annual recurring revenue.

Despite notable success in the consumer world, Liu always had dreams of serving large enterprises. From the beginning, Liu said he and his co-founders designed the product with scalability and complexity in mind. Today, Airtable has landed a number of large enterprise customers, from Netflix and Shopify to Intuit and Autodesk.

But Liu isnt satisfied with just being viewed as a productivity software company. Instead, Liu wants to turn Airtable into an application development platform that can serve large-scale enterprises, and compete with the likes of Salesforce and ServiceNow.

Airtables ability to land enterprise clients, where other productivity software has struggled, is due to the company's database, said Liu.

Because we have a relational database foundation, were more scalable. For instance, we can just scale up not only in terms of sheer record capacity but also the complexity of implementation, said Liu.

Not only can Airtables database hold more rows than its competitors, but the company also has the ability to script more robust APIs and native connections to systems of records like Salesforce, said Liu.

Although Liu thinks competitors like Monday.com, Asana and Smartsheet will continue to grow in a market with room for multiple billion-dollar-revenue businesses, he still doesnt see them as direct competitors.

In fact, Liu doesnt think any of those productivity companies can ever truly become application platforms, precisely because they dont sit on top of a robust relational database. In order to be a true app platform, you need to have an underlying database, he said.

But to build an application development platform that can compete for, and even win, deals against established enterprise tech vendors, Airtable will not only have to deliver from a product standpoint, but also shift the industrys perspective that it just has good productivity or project management software.

In some ways, Airtable is en route to doing that. Already, Airtable is in some of the same conversations as ServiceNow when buyers are evaluating application development platforms, and the company has already beaten Salesforce in at least one deal, Liu said.

The company is also landing in large enterprises like Netflix, which chose Airtable over other vendors because the implementation process was less lengthy. In fact, a member of the Netflix team discovered Airtable by happenstance, built a prototype of what they needed virtually overnight and launched the partnership between the two companies, according to Airtable.

Despite the prowess and financial muscle of Salesforce and increasingly ServiceNow, Liu is confident Airtable can best them in at least some deals. Airtables cloud-native background, ability to sit on top of a CRM or ERP and user-friendly interfaces are all key competitive advantages, from his perspective.

The fact that Airtable doesn't need to own a CRM or ERP system and has never been on-premises means the company can deploy much faster and more simply than other enterprise software sometimes in hours or days, rather than months.

Airtables roots as a consumer-focused company also translate into a major competitive advantage. Airtable arguably has a better user interface than Salesforce, and perhaps even ServiceNow, and is well-versed in organic bottom-up adoption. As more apps are built by line-of-business users, rather than IT, easy-to-use interfaces will become increasingly important.

Although IT always needs to be involved with application platforms to handle due diligence, security and data management, its critical that business users adopt them. You don't want to have [IT] come in to help you build the stuff. Youre trying to create an end-user environment where they can extend it themselves, said Gartner VP analyst Mike Gotta.

But despite Lius desire for Airtable to be compared with Salesforce and ServiceNow, hes not out to replace them. Instead, Liu wants Airtable to become its own source of truth (as the enterprise software buzzword goes) for business objects, data and processes that dont currently sit in a CRM or ERP system, such as production processes or content management.

To have durable value we need to, and we are becoming, the source of truth, the source of record, for new business objects that are not the customer record, that are not the developer issues in Jira, that are not the employee record, said Liu.

But to become a source of truth, Airtable will need to be used more broadly across enterprises.

The challenge is, CEOs arent saying, I want to have Smartsheet everywhere, I want to have Airtable everywhere, thats not what we see, said Gotta. Instead, a bottom-up approach leads individual departments to use different productivity tools, creating siloes. If Airtable can manage to find adoption across business departments, connecting cross-functional processes and stitching the data together, they could seize an opportunity, said Gotta.

The true test for Airtable, however, will be convincing enterprises to take a chance on an outsider.

Airtables true value proposition still doesnt seem widely understood, and the application development platform market itself is fairly nascent. I do think were not understood for everything that we really are and aspire to be, but were working on it, said Liu.

Thats why the company is planning to beef up its marketing. Instead of app development being viewed as a nice add-on, the company plans to lead with that in its messaging. Airtable is also shifting from the more organic discovery process it has relied on in the past to directly going after large enterprises.

Analysts agree that Airtable needs to work on its market presence amongst enterprises, as well as investors. Figuring out why customers should opt for Airtable over the many other options out there, then doubling down on that messaging, is, in my opinion, the best path to success, said Futurums Kramer.

In many ways, the markets misunderstanding has provided a bit of air cover as Liu plots Airtables next stage. For now, Liu is content flying under the radar. But that may shift as he thinks about taking Airtable public in the future.

An IPO isnt on the horizon anytime soon given the macroeconomic environment, but Liu is still preparing. Airtable is in an enviable position: With millions on hand after raising a huge round last December, the company has less pressure to cut costs or ramp down investment. Still, the company is being conservative, keeping cash on reserve to weather the uncertainty.

Liu isnt worried about demand for Airtables products and services, however. In his eyes, Airtable allows companies to do more with less, and deliver value faster coincidentally the same phrasing competitor Bill McDermott uses to describe ServiceNows effect on customers.

To beat Salesforce and ServiceNow in the long run, Liu knows that Airtable will need to leverage its consumer-like interface, relational database foundations and relationships with business users to convince enterprises it can service their more complex needs. If Airtable can achieve all that, it might just give Salesforce and ServiceNow a run for their money.

See the article here:

The Inflation Reduction Act is testing Big Techs climate resolve - Protocol

It wasnt all that long ago, certainly within most of our lifetimes, that digital technology seemed to be the answer to all our problems. Pick up virtually any book about the promise of tech published in the 1990s, and even into the early 2000s, and it was presented as almost inarguable that the democratizing effects of the digital revolution would bring a slew of benefits to civilization as we know it.

Today, that premise seems on far shakier ground. While there are plenty of reasons to still get excited about tech, theres no shortage of reasons to worry. In his brilliant new book The Digital Republic: On Freedom and Democracy in the 21st Century, barrister and author Jamie Susskind questions how freedom and democracy can survive in a world full of all-powerful digital technologies.

Digital Trends: Whats the central argument that youre making in The Digital Republic?

Jamie Susskind: The central argument is that we have a problem with the tech industry. That problem is not with individual bad apples at the top or particular corporations. Its the problem of unaccountable power, through a lack of proper governance.

My book tries to diagnose where that power comes from, why its a problem, and how we can make it more accountable in a way that preserves freedom and democracy.

DT: Explain what you mean by the republicanism referred to in the book title.

JS: Its drawing on the ancient republican philosophy that stretches back to the Romans. This isnt the republicanism of the modern Republican Party, nor of those who want to get rid of the monarchy in, for instance, the United Kingdom. Republicanism is a philosophy which holds that the purpose of law and politics is to reduce unaccountable power in society. For example, a republican would argue against the idea of kings, not just against a particular bad king. They wouldnt hope for better bosses; theyd argue for employment rights. They wouldnt complain about unpleasant slave owners; theyd fight for the abolition of slavery.

Applied to the digital context, digital republicanism says that its inherently problematic for an enormous amount of power to be concentrated in the hands of those who own and control digital technologies. Thats the case even if we happen to agree with how they exercise that power from time to time.

DT: Tech companies frequently face critiques, at times from both sides of the political aisle, about becoming political in some sense. But is there any way that they could have avoided this? It seems inevitable. Even the broad idea of a computer interface is, in a sense, ideological because it structures how we perceive the world. Add in the mission statement and scale of search engines and it appears that this problem was always going to arise.

JS: I think so. The central argument of my book is that digital technologies exert power whether or not its conscious or desired on the part of their creators. All technologies contain rules that we have to follow when we interact with them. The rules of Twitter state that you cannot post a tweet if its more than a certain length. The rules of a self-driving car may state that they wont drive over a particular speed limit, even in the case of an emergency.

As more and more of our actions and interactions and transactions are mediated through technology, those who write the rules are increasingly writing the rules of society. You may consider yourself to be an entrepreneur or an engineer or a tech executive or whatever, but youre still performing a political function in society that should, in my view, be held accountable accordingly.

DT: Whats the answer to that? Engineers and executives most likely arent elected politicians. Should they try their best to aim for a stance of impartiality or neutrality?

JS: Theres no such thing as a neutral posture that can be adopted. Thats because neutrality itself is a choice between alternatives. For instance, if youre neutral about the content that is posted on your social media platform that might mean being neutral about hate speech, or rape threats, or child pornography. Another example involves Googles autofill suggestions. Google used to have a problem with its autofill responses coming back with unpleasant suggestions so if you typed in, Why do Jews, it would come back with have big noses or own the media. Googles defense for that was that it was neutral because it reflected the queries that had been made by people in the past.

To me, thats a good example of when neutrality is the same as injustice. Instead of changing or helping reduce the amount of discrimination in the world, Google amplified and enlarged it. As the Holocaust survivor Elie Wiesel used to say, neutrality favors the oppressor. There is no neutral posture that digital technology owners and controllers can take. I think we just have to accept that there are always going to be decisions that involve priorities and trade-offs and principles and, sometimes, prejudices.

The real question is how do we manage and govern those? We should govern them in the same way that we govern other unelected people in society who hold positions of social responsibility, be they doctors, lawyers, bankers, teachers, broadcasters. These are all industries in which people have unique positions of social responsibility, and the law imposes certain duties on them as a result.

DT: The question of neutrality has recently been raised with a lot of the discourse surrounding Twitter and the seemingly now-aborted Elon Musk takeover. Some have suggested that platforms such as Twitter have a bias and that some of the problems of social media could be solved if they acted less.

JS: One of the long-standing themes of republican political thought is that if you adopt a position of neutrality or of abstention in the social and political fray, what youre actually doing is creating space for the strong to dominate the weak. A social media platform in which there are no rules doesnt give everyone equal rights to participate. It means that certain voices are going to be drowned out, certain people are going to be hounded off the platform. In the real world, the state sometimes intervenes in the lives of the people within a polity in order to rebalance power imbalances. Tech should be no different.

DT: There seems to be a real wave of tech skepticism at present, certainly when you compare it to, for instance, the cyber utopianism of the 1990s when there was the sense of a Californian ideology that could solve all our problems. Can you pinpoint when things changed?

JS: I think its quite clear that it happened in 2016. That year, the Remain side lost the Brexit referendum, and the Hillary Clinton campaign lost the electoral college in the United States. In both of those campaigns, claims were made by the losing side and on behalf of the losing side that the winning side had illicitly weaponized digital technologies.

Whether it was through micro-targeting or the harvesting of peoples data, some of those claims have withstood scrutiny in the subsequent years, while others have not. But regardless of their merit, I do regard that as a turning point. That year, the question of the power of digital technology shot right to the top of the political agenda. It has also exploded as an academic concern.

DT: What steps can we, as individuals, take to address some of the problems you outline in the book?

JS: Very few, Im afraid. And its important to be honest about that. We need to get out of the mindset that if only we were a bit more tech-savvy, we may be able to better protect ourselves and our children. I believe thats nonsense. I think that the challenges posed by digital technology can only in the main be fixed at the collective level. That means through the mechanism of law. It shouldnt be left to individuals.

DT: So what would this kind of collective action or regulatory action look like?

JS: It differs from industry to industry; technology to technology. But in the book, I lay out a number of possibilities. Firstly, I think that powerful individuals in the tech sector should have their conduct regulated in a way analogous to the way that doctors and lawyers and pharmacists have theirs regulated.

Secondly, I think we need a broader conception of antitrust than the one we currently have, which is currently focused narrowly on economic concerns. I think when we are assessing whether a particular merger or acquisition is good for society, we shouldnt just be taking price into account; we should be taking things like media diversity and the concentration of political and social power into account.

Thirdly, I would like to see ways that individuals and regulators can contest important exercises of digital power, whether thats ways of contesting algorithms that are distributing mortgages or jobs or housing or loans. Its a reasonably comprehensive legal regime that I outline in the book. Underpinning all of it is a new mechanism for involving the people in decisions about digital technology. Its not just a matter of shifting power from tech companies to parliament, but also from parliament back to the people.

This interview has been edited for length and clarity.

Originally posted here:

The world needs a better way to regulate Big Techs unchecked power - Digital Trends

Meta was all set to acquire Within, the company behind Supernatural, the VR fitness app until the Federal Trade Commission (FTC) stepped in and filed a lawsuit to block Metas planned acquisition.

Considering Metas stronghold on the VR Market, the FTC alleges that the social media giant wants to monopolise the Metaverse.

But, setting aside the legal and regulatory aspects, these recent developments have led many to questionShould the government really block startups sales to big tech?

Should the government intervene?

Firstly, any government intervention in a business deal is seldom not seen as a good thing. A free market, in theory, works well when government interventions are limited to the minimum.

But, when it comes to big techs and the space in which they operate, there is little to no competition. Thats because companies like Google and Meta have acquired a dozen companies each since their inception. Some of these acquired companies were offering products and services similar to these big techs.

FTC blocked Metas acquisition of Within because they believe it serves a larger purpose for Meta. Meta is betting on the Metaverse and VR technology, and according to the FTC, acquiring Within would help Meta build and ultimately control a VR Metaverse.

Meta already owns a best-selling virtual reality fitness app, and it has the capabilities to compete even more closely with Withins popular Supernatural app. But Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief, FTC Bureau of Competition Deputy Director John Newman said.

In response, Meta said that the FTCs case is based on ideology and speculation, not evidence.

However, the FTC does have a point. Meta currently controls almost every aspect of the VR industry. The Oculus Quest 2 by Meta is already the top-selling VR headset. In Q1 2021, headsets accounted for 75 per cent of all VR headset shipments. Its VR app, Beat Saber, is also one of the most popular VR apps of all time. Meta has also acquired five VR Game studios in the last couple of years.

According to the FTC, Facebooks quest to dominate the VR market began when it acquired Oculus VR in 2014.

Although the Metaverse is still considered relatively new and unsophisticated in its current form, Gartner predicts that around 25 per cent of people would spend at least an hour a day in the Metaverse by 2026. It is likely that with such predictions for the future of the Metaverse, itd be a major cause for concern if Meta somehow manages to control the whole VR market.

In 2013, Google acquired Waze for almost a billion dollars even though it owns the most popular mapping app. What made Waze stand out was the way it integrated data from other drivers. Google Maps did not have these features. However, following its acquisition, most of Wazes features were integrated into Google Maps.

At present, Google Maps holds nearly 80 per cent of global market share in the web mapping industry. The question then ariseswhat if Googles acquisition of Waze was blocked in 2013? Would we have witnessed Google compete with Waze in the mobile app web mapping industry?

Competition is a good thing

Regulating big tech is not an easy task. Even though governments across multiple jurisdictions are working on policies and regulations in this regard, another way to tackle their growing dominance could be to encourage competition. And protecting startups from being acquired could be the first step in harnessing a competitive ecosystem.

For instance, in India, the Competition Commission of India (CCI) is keeping a close watch on big tech companies. Ashok Kumar Gupta, chairman of CCI, on multiple occasions has referred to the big tech as centres for entrenched and unchecked dominance. They are currently investigating Apple and Google for their app store policies, specifically their payment methods, which could harm local app developers.

As challenging as it may be to compete with big techs, current trends suggest that TikTok might emerge as a competitor against big tech. It was recently revealed that nearly 40 per cent of young users preferred to use TikTok over Google for search purposes.

TikToks growing influence has also forced YouTube (owned by Alphabet) to introduce Shorts- a short video feature similar to TikTok.

In 2020, TikTok overtook Meta to become the most downloaded app. Reportedly, Facebook is also building its feed to look much like TikToks. Meta had already incorporated Reels, a short video feature similar to TikTok, both on Instagram and Facebook. Further, Instagram had already transformed its interface to appear as close to TikTok as possible.

Even though TikTok is not seen as a direct competitor to big tech yet, its growing popularity is certainly making big tech jittery.

A market perspective

While competition in a market is healthy, not everyone agrees that blocking big tech to acquire startups is a good thing.

Aaron Levie, CEO at Box, believes that from a market perspective, If the government blocks big tech companies from buying small startups in nascent markets, all that will happen is there will be fewer startups over time because investors cant underwrite the risk. This is bad for innovation, and ironically good for the big tech companies.

But should venture capitalists (VCs) only invest in startups that have the potential to be acquired by big tech tag? Ideally, investment in a company should be driven by the quality of its product or service and the potential growth it may witness in the future. When it comes to cashing in on their stakes in the company, VCs should help the company turn a profit. That would automatically lead to more private investments or even an IPO. This would ensure continuity of the business they once placed their faith and money in.

Sridhar Vembu, CEO at Zoho, also disagrees with Levies thesis and believes asking the regulators to go easy on big tech acquisitions helps increase the dominance that big techs enjoy and does nothing to reduce their monopolistic hold. This concentration of power and wealth in big tech mirrors the rise in inequality in the broader society, Vembu added.

Read more:

Why the Government is Right to Block the Startup Sales to Big Tech - Analytics India Magazine

Big Techs most ardent critics have gained momentum in pursuit of an antitrust overhaul to curb the power of companies such as Amazon and Google that have become integral to the everyday lives of millions of Americans.

The view that the tech giants are monopolies has united Big Techs bipartisan detractors, who say Congress has an uncommon moment to deal a lasting blow. The most viable in the pipeline is the American Innovation and Choice Online Act.

The bills supporters say it would make measured and necessary changes to antitrust laws to combat Big Tech. The tech companies and their allies in Congress say Americans rely on and love the products and warn that the legislation would destroy them.

The legislation takes direct aim at Amazon, Apple, Google and Facebook, which now operates as Meta, by seeking to prevent the companies from giving preference to their products on their platforms to the detriment of competitors.

Under the legislation, online platforms with more than 50 million monthly active users or 100,000 U.S.-based monthly active users would be blocked from putting their products and services ahead of different businesses if it materially harms competition. Antitrust enforcers from the Federal Trade Commission, the Justice Department and the states would have authority to enforce the law.

Sen. Amy Klobuchar, Minnesota Democrat, has shepherded the bill alongside Sen. Chuck Grassley, Iowa Republican. They revised the legislation in June in hopes of getting it passed this summer.

Rep. David Cicilline, Rhode Island Democrat, and Rep. Ken Buck, Colorado Republican, have stewarded companion legislation in the House.

Ms. Klobuchar said the bill is not designed to break up the companies or ban mergers.

All they have to do is treat people fairly, Ms. Klobuchar said last week on the Senate floor. The way our bill works, [if] they do that, they stay out of trouble. They dont do it, Justice Department, FTC, state AGs can look at doing something about it.

Ms. Klobuchar said Amazon is unfair to showcase its products over competitors products on its website.

Amazon Vice President Brian Huseman wrote that the bill would jeopardize his companys ability to keep down prices and offer a wide selection of products.

Sen. Klobuchars vaguely worded bill would mandate that Amazon allow other logistics providers to fulfill Prime orders, he wrote on Amazons website. Such a mandate would make it difficult, and potentially impossible in practice, for Amazon and our selling partners to offer products with Primes free two-day shipping (let alone one-day).

Ms. Klobuchar has accused Amazon of making misleading claims and urged swift action to pass the bill over Big Tech objections.

The chance of congressional votes on major antitrust legislation against Big Tech before the August recess was jeopardized when Democratic leadership prioritized other business and questions about Senate support lingered.

Mr. Buck pushed for votes on the bill in June. Ms. Klobuchar called for votes before August. In comments to the New York Post, Mr. Grassley signaled last month that he was open to waiting until this fall, if necessary. Ms. Klobuchars office did not answer whether her anticipated timeline for the legislation had shifted toward autumn and pointed to her push for an immediate vote.

Senate Majority Leader Charles E. Schumer, New York Democrat, told Punchbowl News in July that he supported the legislation but intended to wait and see whether it had the 60 votes necessary to survive in the upper chamber. The legislation did not appear to have that many votes.

Four Democratic senators raised concerns in June. Sens. Tammy Baldwin of Wisconsin, Ben Ray Lujan of New Mexico, Brian Schatz of Hawaii and Ron Wyden of Oregon expressed fear that the bill would supercharge harmful content online by hindering content moderation practices that censor peoples speech.

Some Republicans also cast doubt on the legislation. Sen. Mike Lee of Utah questioned the wisdom of the bill as it advanced through the Judiciary Committee in January.

A coalition of conservative advocacy groups led by the Internet Accountability Project urged the Senate in July to pass the bill immediately.

Big tech companies have effectively amassed enough power to transcend marketplace consequences, the coalition said in a letter to senators. Never before in our countrys modern history have so few people wielded such immense power over the dissemination of information, or had the ability to silence their political or ideological opponents.

The bill also has been caught up in power plays by the internet giants rival tech companies.

Yelp general counsel Aaron Schur wrote in support of the bill in a University of Chicago publication in July. Yelp, the crowdsourced business review site, is a competitor of Google and a witness in the Justice Departments antitrust case against Google.

The American Enterprise Institutes Mark Jamison told Mr. Schur that the bill hamstrings tech titans to benefit companies like Yelp. Mr. Jamison previously consulted for Google.

If the U.S. government does not break up Big Tech, its Chinese competition may deliver a deadly blow, particularly via the popular video-based platform TikTok.

Facebook posted its first-ever year-over-year revenue decline in 2022s second quarter, marking an unprecedented three straight quarters of shrinking profits, according to MarketWatch.

Meta, Facebooks parent, fell out of the top 10 capitalized companies in the S&P 500 before Julys end, according to CNBC.

TikTok surpassed Facebook and Instagram in users time spent scrolling on their platforms in 2020, according to market research company Insider Intelligence. Facebook has made plans to shutter or reevaluate several products, including its newsletter service Bulletin and how it pays news publishers via Facebook News.

Facebook is shifting resources toward products catering to TikToks creative audience and facing the prospect of a congressional crackdown. Still, its shift from social media toward a virtual reality metaverse business may not escape government regulation.

The FTC said in July that it wants to block Meta from acquiring a popular virtual-reality-dedicated fitness app because Meta has a virtual reality empire.

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Big Tech antitrust bill slowly gains steam in Congress, still likely short of needed votes - Washington Times

The logo for Amazon Web Services (AWS) is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren

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WASHINGTON, Aug 1 (Reuters Breakingviews) - Technology companies have stormed the heights of consumer finance, but they dont face the regulation that vexes their old-world rivals. While no single financial watchdog has oversight of Apple (AAPL.O), Amazon.com (AMZN.O) or Facebook owner Meta Platforms (META.O), that could change. It all hangs on the views of a panel of watchdogs known as the Financial Stability Oversight Council.

When a company like Apple decides to offer financial services, the potential impact is huge. Take the iPhone makers new buy-now-pay-later service. Its starting small, with six-week duration loans and a borrowing limit of $1,000. But unlike the Apple-branded credit card thats effectively run by Goldman Sachs (GS.N), the lending decisions and funding for buy-now-pay-later loans are Apples own. Tim Cooks firm is doing some of what a Citigroup (C.N) or Bank of America (BAC.N) does, but without the onerous regulation.

It's a question of potential rather than actual risk. Imagine half the number of iPhone users in the United States, or about 59 million based on estimates by Counterpoint research, end up using the pay-installment service. That would give Apple about as many consumer customers as General Electrics (GE.N) financing arm, GE Capital, had in 2013. GE Capital required a bailout to back nearly $140 billion of its debt after it unraveled during the 2008 financial crisis.

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The cloud divisions of Silicon Valley giants also play a systemic role. The largest banks like JPMorgan (JPM.N) rely on Amazon and others for various tasks, including housing data, processing transactions and running applications. About 45% of banks use Amazon while a similar proportion depends on Microsoft (MSFT.O), with many using both, according to S&P Globals 451 Research. A disruption or failure through a hack or natural disaster could upend operations and cause a panic.

In GEs case, it was FSOC that stepped in when it became clear that the regulatory framework had holes in it. The 15-member panel was created after the 2008 financial crisis, and now includes Treasury Secretary Janet Yellen, Federal Reserve Chair Jay Powell, Securities and Exchange Commission chief Gary Gensler and Consumer Financial Protection Bureau head Rohit Chopra. The council designated GE Capital a systemic risk in 2013, and put it under the supervision of the Fed, where it stayed until 2016.

Tech companies would be a timely fit for FSOC. The group doesnt perform day-to-day watchdog functions but can farm such duties out to an appropriate panel member. The Fed also took supervision of insurer AIG (AIG.N) after the 2008 financial crisis. Other FSOC members have their own expertise: the SECs is over capital markets, for example.

And as with GE, it wouldnt need to throw a regulatory net around the whole of a company. Apple, say, could be asked to carve out its Apple Financing subsidiary into a separate holding company, which could then be subject to rules on underwriting, credit quality and stress testing. Cloud businesses like Amazon Web Service or Microsoft Azure could be deemed systemically important financial utilities, a label already applied to other forms of market plumbing like the Chicago Mercantile Exchange.

None of this would stop tech firms financial march, but it would slow them down. Regulated entities would need to have their own chief executive, board and come up with rules on cybersecurity and other areas. British authorities recently floated a range of options to make sure the financial system could withstand a cloud-computing snafu, including regular cyber resilience tests. And financial regulators often parachute examiners into the offices of the companies they supervise, who regularly check operations for risk management. That would be an unfamiliar intrusion for Silicon Valley.

Even if FSOC drags its feet, more red tape for tech firms is inevitable. In October, the CFPB asked Apple, Alphabets (GOOGL.O) Google, and Facebook about their payment systems. The agency can issue enforcement actions for violations of user privacy, among other concerns, and leader Chopra is no stranger to assertively using his position on other regulatory bodies as he showed when he helped speed the exit of then-head of the Federal Deposit Insurance Corporation, Donald Trump appointee Jelena McWilliams.

Still, a more coordinated approach would be better. With billions of users and lax regulation, the risks to consumers and the broader system from big tech firms are growing. Watchdogs, meanwhile, are often reacting to past threats. Putting Silicon Valley on FSOCs agenda would help keep the financial cops ahead of the game.

Follow @GinaChon on Twitter

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

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Editing by John Foley and Amanda Gomez

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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Breakingviews - Big Tech in finance? There's a regulator for that - Reuters

For Republicans running for the Senate this year, Big Tech has become a catchall target, a phrase used to condemn the censorship of conservative voices on social media, invasions of privacy and the corruption of Americas youth or all of the above.

But for three candidates in some of the hottest races of 2022 Blake Masters, J.D. Vance and Mehmet Oz the denunciations come with a complication: They have deep ties to the industry, either as investors, promoters or employees. Whats more, their work involved some of the questionable uses of consumer data that they now criticize.

Mr. Masters and Mr. Vance have embraced the contradictions with the zeal of the converted.

Fundamentally, it is my expertise from having worked in Silicon Valley and worked with these companies that has given me this perspective, Mr. Masters, who enters the Republican primary election for Senate in Arizona on Tuesday with the wind at his back, said on Wednesday. As they have grown, they have become too pervasive and too powerful.

Mr. Vance, on the website of his campaign for Ohios open Senate seat, calls for the breakup of large technology firms, declaring: I know the technology industry well. Ive worked in it and invested in it, and Im sick of politicians who talk big about Big Tech but do nothing about it. The tech industry promised all of us better lives and faster communication; instead, it steals our private information, sells it to the Chinese, and then censors conservatives and others.

But some technology activists simply arent buying it, especially not from two political newcomers whose Senate runs have been bankrolled by Peter Thiel, the first outside investor in Facebook and a longtime board member of the tech giant. Mr. Thiels own company, Palantir, works closely with federal military, intelligence and law enforcement agencies eager for access to its secretive data analysis technology.

Theres a massive, hugely profitable industry in tracking what you do online, said Sacha Haworth, the executive director of the Tech Oversight Project, a new liberal interest group pressing for stricter regulations of technology companies. Regardless of these candidates prospects in the Senate, I would imagine if Peter Thiel is investing in them, he is investing in his future.

Mr. Masters, a protg of Mr. Thiels and the former chief operating officer of Mr. Thiels venture capital firm, oversaw investments in Palantir and pressed to spread its technology, which analyzes mountains of raw data to detect patterns that can be used by customers.

Dr. Oz, the Republican nominee for an open Senate seat in Pennsylvania, was part of a consortium of investors that founded Sharecare, a website that offered users the chance to ask questions about health and wellness and allowed marketers from the health care industry the chance to answer them.

A feature of Sharecare, RealAge Test, quizzed tens of millions of users on their health attributes, ostensibly to help shave years off their age, then released the test results to paying customers in the pharmaceutical industry.

Mr. Vance, the Republican nominee in Ohio and another Thiel pupil, used Mr. Thiels money to form his venture capital firm, Narya Capital, which helped fund Hallow, a Catholic prayer and meditation app whose privacy policies allow it to share some user data for targeted advertising.

The Vance campaign said the candidates stake in Hallow did not give him or his firm decision-making powers, and Alex Jones, Hallows chief executive, said private, sensitive data like journal entries or reflections were encrypted and not sold, rented or otherwise shared with data brokers. He said that private sensitive personal data was not shared with any advertising partners.

All three Senate candidates have targeted the technology industry in their campaigns, railing against the harvesting of data from unsuspecting users and invasions of privacy by greedy firms.

In a gauzy video posted in July 2021, Mr. Masters says, The internet, which was supposed to give us an awesome future, is instead being used to shut us up.

Mr. Vance, in a campaign Facebook video, suggested that Congress make data collection illegal or at least mandate disclosure before technology companies harvest our data and then sell it back to us in the form of targeted advertising.

In a December video appearance soon after he announced his campaign, Dr. Oz proclaimed, Ive taken on Big Pharma, Ive gone to battle with Big Tech, Ive gone up against agrochem companies, big ones, and Ive got scars to prove it.

It is not surprising that more candidates for high office have deep connections to the technology industry, said Michael Rosen, an adjunct fellow at the conservative American Enterprise Institute who has written extensively about the industry. Thats where the money is these days, he said, and technologys reach extends through industries including health care, social media, hardware and software and consumer electronics.

What is novel in this cycle is to have candidates ostensibly on the right who are arguing for the government to step in and regulate these companies because, in their view, they cannot be trusted to regulate themselves, Mr. Rosen said.

He expressed surprise that a free-market, conservative-type candidate thinks that the government will do a fairer and more reliable job of regulating and moderating speech than the private sector would.

Technology experts on the left say candidates like Mr. Masters and Mr. Vance are Trojan horses, taking popular stances to win federal office with no intention of pursuing those positions in the Senate.

Ms. Haworth, whose group has taken aim at platforms like Facebook and Amazon, said states like California were already moving forward with regulations to prevent online marketers from steering consumers to certain products or unduly influencing behavior.

She said she believed that Republicans, if they took control of Congress, would impose weak federal rules that superseded state regulations.

Democrats should be calling out the hypocrisy here, she said.

Mr. Masters said he was sympathetic to concerns that empowering government to regulate technology would only lead to another kind of abuse, but, he added, The answer in this age of networked monopolies is not to throw your hands up and shout laissez-faire.

Multinational technology firms like Google and Facebook, Mr. Masters said, have exceeded national governments in power.

As for the Trojan horse assertion, he said, When I am in the U.S. Senate, I am going to deliver on everything Im saying.

It is not clear that such complex matters will have an impact in the fall campaigns. Jim Lamon, a Republican Senate rival of Mr. Masterss in Arizona, has aired advertisements tarring him as a fake stalking horse for the California technology industry but with limited effectiveness. At a debate this month, Mr. Lamon said Mr. Masters was owned by his paymasters in Big Tech.

But Mr. Masters, who has the endorsement of former President Donald J. Trump, appears to be the clear favorite for the nomination.

Representative Tim Ryan, Mr. Vances Democratic opponent in Ohio, has made glancing references to the Big Tech billionaires who sip wine in Silicon Valley and bankroll the Republicans campaign.

John Fetterman, the Democratic opponent of Dr. Oz in Pennsylvania, has not raised the issue.

Taylor Van Kirk, a spokeswoman for Mr. Vance, said he was very serious about his promises to limit the influence of technology companies.

J.D. has long been outspoken about his desire to break up Big Tech and hold them accountable for their overreach, she said. He strongly believes that their power over our politics and economy needs to be reduced, to protect the constitutional rights of Americans.

Representatives of the Oz campaign did not respond to requests for comment.

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3 Senate Hopefuls Denounce Big Tech. They Also Have Deep Ties to It. - The New York Times

When the Big 3 cloud infrastructure vendors Amazon, Microsoft and Google reported their earnings this week, it was clear that the cloud is helping keep their overall numbers up. But perhaps what was most surprising was that after years of sitting at 33% market share, AWS was up a tick to 34% in the second quarter, according to numbers from Synergy Research.

Even more surprising is that after years of steady market share growth, Microsoft was down a notch from 22% last quarter to 21% this quarter. Google came in third, holding steady around 10%.

Synergy chief analyst John Dinsdale said the slight drop in Microsofts market share is probably due to the law of large numbers Microsoft couldnt sustain its recent growth.

The days of Azure growing by 50% to 80% year on year are over. Once you get to a certain scale, it is virtually impossible to organically grow at such high rates. So its growth rates have trended down, as they had to. AWS experienced the same phenomenon a long time before Azure got there. Despite the Q2 changes in market share that you saw in our article, Azures rolling annualized growth rate does remain quite a bit higher than AWS, Dinsdale told TechCrunch.

But he said that AWS ability to continue to grow at the rate it has is nothing short of remarkable.

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The biggest story from Big Tech earnings is the sheer growth power of public cloud - TechCrunch