Category Archives: Big Tech

In his 2021 Reith lectures, the third episode of which airs tonight, the artificial intelligence researcher Stuart Russell takes up the idea of a near-future AI that is so ruthlessly intelligent that it might pose an existential threat to humanity. A machine we create that might destroy us all.

This has long been a popular topic with researchers and the press. But we believe an existential threat from AI is both unlikely and in any case far off, given the current state of the technology. However, the recent development of powerful, but far smaller-scale, AI systems has had a significant effect on the world already, and the use of existing AI poses serious economic and social challenges. These are not distant, but immediate, and must be addressed.

These include the prospect of large-scale unemployment due to automation, with attendant political and social dislocation, as well as the use of personal data for purposes of commercial and political manipulation. The incorporation of ethnic and gender bias in datasets used by AI programs that determine job candidate selection, creditworthiness, and other important decisions is a well-known problem.

But by far the most immediate danger is the role that AI data analysis and generation plays in spreading disinformation and extremism on social media. This technology powers bots and amplification algorithms. These have played a direct role in fomenting conflict in many countries. They are helping to intensify racism, conspiracy theories, political extremism and a plethora of violent, irrationalist movements.

Such movements are threatening the foundations of democracy throughout the world. AI-driven social media was instrumental in mobilising Januarys insurrection at the US Capitol, and it has propelled the anti-vax movement since before the pandemic.

Behind all of this is the power of big tech companies, which develop the relevant data processing technology and host the social media platforms on which it is deployed. With their vast reserves of personal data, they use sophisticated targeting procedures to identify audiences for extremist posts and sites. They promote this content to increase advertising revenue, and in so doing, actively assist the rise of these destructive trends.

They exercise near-monopoly control over the social media market, and a range of other digital services. Meta, through its ownership of Facebook, WhatsApp and Instagram, and Google, which controls YouTube, dominate much of the social media industry. This concentration of power gives a handful of companies far-reaching influence on political decision making.

Given the importance of digital services in public life, it is reasonable to expect that big tech would be subject to the same sort of regulation that applies to the corporations that control markets in other parts of the economy. In fact, this is not generally the case.

The social media agencies have not been restricted by the antitrust regulations, truth in advertising legislation, or laws against racist incitement that apply to traditional print and broadcast networks. Such regulation does not guarantee responsible behaviour (as rightwing cable networks and rabid tabloids illustrate), but it does provide an instrument of constraint.

Three main arguments have been advanced against increased government regulation of big tech. The first holds that it would inhibit free speech. The second argues that it would degrade innovation in science and engineering. The third maintains that socially responsible companies can best regulate themselves. These arguments are entirely specious.

Some restrictions on free speech are well motivated by the need to defend the public good. Truth in advertising is a prime example. Legal prohibitions against racist incitement and group defamation are another. These constraints are generally accepted in most liberal democracies (with the exception of the US) as integral to the legal approach to protecting people from hate crime.

Social media platforms often deny responsibility for the content of the material that they host, on the grounds that it is created by individual users. In fact, this content is published in the public domain, and so it cannot be construed as purely private communication.

When it comes to safety, government-imposed regulations have not prevented dramatic bioengineering advances, like the recent mRNA-based Covid vaccines. Nor did they stop car companies from building efficient electric vehicles. Why would they have the unique effect of reducing innovation in AI and information technology?

Finally, the view that private companies can be trusted to regulate themselves out of a sense of social responsibility is entirely without merit. Businesses exist for the purpose of making money. Business lobbies often ascribe to themselves the image of a socially responsible industry acting out of a sense of concern for public welfare. In most cases this is a public relations manoeuvre intended to head off regulation.

Any company that prioritises social benefit over profit will quickly cease to exist. This was showcased in Facebook whistleblower Frances Haugens recent congressional testimony, indicating that the companys executives chose to ignore the harm that some of their algorithms were causing, in order to sustain the profits they provided.

Consumer pressure can, on occasion, act as leverage for restraining corporate excess. But such cases are rare. In fact, legislation and regulatory agencies are the only effective means that democratic societies have at their disposal for protecting the public from the undesirable effects of corporate power.

Finding the best way to regulate a powerful and complex industry like big tech is a difficult problem. But progress has been made on constructive proposals. Lina Khan, the US federal trade commissioner advanced antitrust proposals for dealing with monopolistic practices in markets. The European commission has taken a leading role in instituting data protection and privacy laws.

Academics MacKenzie Common and Rasmus Kleis Nielsen offer a balanced discussion of ways in which government can restrict disinformation and hate speech in social media, while sustaining free expression. This is the most complex, and most pressing, of the problems involved in controlling technology companies.

The case for regulating big tech is clear. The damage it is doing across a variety of domains is throwing into question the benefits of its considerable achievements in science and engineering. The global nature of corporate power renders the ability of national governments in democratic countries to restrain big tech increasingly limited.

There is a pressing need for large trading blocs and international agencies to act in concert to impose effective regulation on digital technology companies. Without such constraints big tech will continue to host the instruments of extremism, bigotry, and unreason that are generating social chaos, undermining public health and threatening democracy.

Devdatt Dubhashi is professor of data science and AI at Chalmers University of Technology in Gothenburg, Sweden. Shalom Lappin is professor of natural language processing at Queen Mary University of London, director of the Centre for Linguistic Theory and Studies in Probability at the University of Gothenburg, and emeritus professor of computational linguistics at Kings College London.

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Scared about the threat of AI? Its the big tech giants that need reining in - The Guardian

After a 45-year career as the top corporate lawyer at IBM, Apple and Qualcomm, Don Rosenberg has plenty of stories to tell about the legal battles in big tech.

Like his behind-the-scenes role in an FBI sting that caught Hitachi plotting to steal IBMs software secrets; or his gambit to acquire the iPhone trademark ahead of its 2007 debut; or his stonewalling Chinas anti-monopoly regulators who sought access to Qualcomms U.S.-based computer servers during dawn raids at the companys offices in Beijing and Shanghai.

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But Rosenberg says his finest hour came three years ago late in his career when he spotted a loose thread in the netting around Broadcoms hostile takeover attempt of Qualcomm. He and his small team pulled it until the whole thing unraveled.

Rosenberg, 70, retired last month as Qualcomms general counsel and head of Government Affairs after 14 years at the San Diego mobile technology firm. He helped shepherd the company through grueling lawsuits with Apple, the Federal Trade Commission and competition regulators worldwide.

He also spent 30 years at IBM in jobs including head of litigation and general counsel. He was involved in the gigantic, nearly billion-dollar arbitrations with Fujitsu over alleged copying of IBMs mainframe operating system. He personally negotiated a $775 million settlement with Microsoft stemming from claims that the Seattle company engaged in anti-competitive conduct. And he persisted in getting a federal judge to sunset a 1956 antitrust consent decree that cast a shadow over IBM for four decades.

A Brooklyn native who grew up in public housing, Rosenberg took a roundabout path to law. After graduating college with a math degree, he worked as a pension analyst at an insurance company a job he disliked. His fiancee suggested that he consider law school. He sat for the Law School Admissions Test on their wedding day.

Antitrust has been a theme throughout Rosenbergs career. He won General Counsel of the Year in 2021 from The American Lawyer magazine, which cited Rosenberg and his team for being at the epicenter of some of the most significant cases that address the intersection of intellectual property and competition policy.

Rosenberg spoke with the Union-Tribune to unpack some of Qualcomms recent legal fights and look to the future as well as speak to what it was like to report to Steve Jobs.

On Nov. 2, 2017, Broadcom Chief Executive Hock Tan a wizard at wringing value out of acquisitions held a press conference with then-President Trump to announce the relocation of Broadcoms corporate headquarters from Singapore back to the U.S.

Four days later, Broadcom made an unsolicited offer to acquire Qualcomm for $105 billion in cash and stock.

Talks quickly turned hostile. The showdown was set for March 2018, when a slate of Broadcom-nominated alternative directors stood for election at Qualcomms annual shareholder meeting.

In the run-up to the vote, Rosenberg recalled that Broadcom had trouble with the Committee for Foreign Investment in the U.S. or CFIUS during a previous acquisition. The agency has broad authority to review foreign acquisitions of U.S. firms for national security concerns.

He and his team dug into the process of redomiciling. They found that Broadcom hadnt taken any of the procedural steps necessary to move its headquarters back to the U.S. including filing with a Singapore court and with U.S. securities regulators.

It had been a couple of months, he said. So, despite their statements that they were going to do it, they were still a foreign entity and therefore subject, in my opinion, to the CFIUS process.

That was the genesis of a government inquiry. Qualcomm argued that Broadcoms cost-cutting would cripple U.S. wireless leadership, opening the door for China to dominate important communications technologies.

Rosenberg and Qualcomms outside lawyers had almost daily conversations with Treasury people and the National Security people, trying to get their heads around what I was talking about which was yes, its a proxy fight and you usually dont get in the middle of proxy fights. But this is a different animal.

He contended that if Broadcoms slate of directors was elected, the acquisition essentially would be a done deal -- without a thorough CFIUS review.

During this back and forth, CFIUS required Broadcom to give it a five-day advanced notice before taking steps toward redomiciling. Rosenberg hired a Singapore law firm to watch the court where Broadcom would need to begin the process.

Broadcom indeed made a filing with the court, but without notifying CFIUS in advance.

That had a major impact, I think, on their credibility with the government, he said.

Things moved fast from there. Trump issued a presidential order immediately and permanently blocking the hostile takeover based on CFIUS findings that it threatened to impair the national security of the United States.

People throw the word around, but that was absolutely an existential moment, said Rosenberg. Qualcomm would not be what it is today if that hostile had taken place. And frankly, I dont think the (mobile) industry would be what it is today if that had succeeded.

In 2006, Apple recruited Rosenberg away from IBM to be its general counsel. He only lasted a year. He doesnt say much about the experience other than he never got comfortable at Apple.

During one of Rosenbergs first days in the office, Steve Jobs showed him a handheld device with a big screen, touch-based scrolling and all kinds of other tricks.

I was blown away, and I expressed that to him, said Rosenberg. I remember his big broad smile. That was to be the iPhone.

Donald J. Rosenberg

Age: 70

Title: Retired executive vice president, general counsel and corporate secretary of Qualcomm. Before that, served as senior vice president and general counsel of Apple, and held numerous roles including senior vice president and general counsel at IBM. Expertise in corporate governance, compliance, litigation, securities regulation, intellectual property and competition law.

Education: Bachelor of Science degree in mathematics from the State University of New York at Stony Brook and a law degree from St. Johns University School of Law.

Activities: Member of the Council on Foreign Relations, the International Advisory Board at UC San Diegos School of Global Policy and Strategy, and serves on the China Leadership Board for the 21st Century China Center at UC San Diego. He has served as an adjunct professor of law at New Yorks Pace University School of Law, where he taught courses in intellectual property and antitrust.

Rumors spread about the upcoming new handset, and the media was calling it the iPhone in coverage.

(Steve Jobs) hated rumors, and he absolutely hated the press. And he would say things like were not naming it that because nobody names my products except me, said Rosenberg. And I remember having conversations with him saying he could call this device mud. Its not going to matter. Its the product that matters.

In the end, Jobs opted for the iPhone name. But Cisco Systems owned the trademark, which it got through an acquisition of a company that developed a little-known IP phone that it called the iPhone.

It fell to Rosenberg to acquire the trademark. Apple was not on friendly terms with Cisco at the time, he said, and it was no secret that Apple wanted the name.

I had to negotiate, negotiate, negotiate, said Rosenberg. But I can say I had a great argument that they had abandoned the mark. I really felt I had a strong case. I said to them I think I may have a case for fraud on the patent office.

The companies came to terms.

We paid for it, but we paid, in my opinion, a lot less than we would have, said Rosenberg. So, I was able to acquire the iPhone mark, although Steve announced the iPhone before I had actually finished. I got a call in the auditorium from the general counsel at Cisco asking what the hell is going on.

While Qualcomm largely won its punishing legal bouts of the past couple of years, some investors worry that patent controversies havent been laid to rest, particularly with Apple.

They cite the similarities between this latest round of lawsuits with Apple and regulators and litigation brought by Nokia in 2007, which was settled on the eve of trial.

Whats to stop serial challenges to Qualcomms patent licensing business model every decade or so?

Rosenberg points to several things. The biggest is the U.S. Ninth Circuit Court of Appeals finding that Qualcomms patent licensing practices are legal. It was a major victory and establishes a precedent within the Ninth Circuits jurisdiction.

In addition, the company was able to secure court injunctions banning the sale of certain iPhone models in Germany and China. Rosenberg says the injunctions highlight the strength of Qualcomms intellectual property, which includes a portfolio of more than 100,000 patents.

Qualcomm failed to get injunctions in the United States. Patent attorneys say case law makes product bans for infringement very difficult, if not impossible, to get in the U.S., particularly for patents included in widely used technology standards.

I used to talk about how a (patent) portfolio was like a garden. You have to weed it and seed it and cultivate it, Rosenberg said. We have helped move the needle on things like patent rights, the value of patents, standard essential patents, the application of competition law to intellectual property rights through our cases, through our resolutions, through our advocacy and through some of the legislative initiatives that we helped move in the right direction.

That doesnt mean rivals wont take legal action in hopes of sidestepping patent royalties, he added. Patent cases are notoriously lengthy, expensive and unpredictable. Big, well-financed companies that license intellectual property have an incentive to file lawsuits and string out litigation to avoid paying.

But Rosenberg thinks licensees will be more cautious about pursuing these types of tactics after Qualcomm came out on top in these fights.

A lot of us who participated in this have put the business in a very strong position, stronger than it has been in quite some time, he said.

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In the room where it happens: Ex-Qualcomm attorney Don Rosenberg talks legal battles in big tech - The San Diego Union-Tribune

By Alex PetrosDecember 14, 2021

If competition against Big Tech were a card game, you probably wouldnt think it was a particularly fair one. The proverbial deck is stacked in the incumbents favor through both natural and artificial competitive barriers from network effects, to the increasing returns to scope and scale of data, to the unprecedented power over the user interface. Lax enforcement has allowed Big Tech to gobble up competitors and they can now wield their power to prevent any efforts to weaken their stranglehold on online markets. Combatting this power is not as simple as tweaking one or two minor things. We need an all-of-the-above approach to both change fundamental market dynamics and strip away the tools that Big Tech has used so effectively to gain and maintain their dominant position.

Thankfully, the House Judiciary Committee is well aware of competitive problems inherent in online markets, given their year-long investigation and over-400-page report issued late last year. Their response is a package of bills designed to strip away the structural advantages and anticompetitive tools Big Tech has used to gain and keep market power. Worried about the gravitational pull of network effects towards large, incumbent platforms? The ACCESS Act of 2021 is your answer. Platforms using their market overseer role to self-preference and protect their power? Try the American Innovation and Choice Online Act. Antitrust agencies dont have the funds to go toe-to-toe with ever-growing Big Tech legal teams and bring big, bold cases? The Merger Filing Fee Modernization Act should fix that. Troubled by Big Techs gargantuan size and the inherent conflicts of interest in their business models? The Ending Platform Monopolies Act is for you.

Thankfully the House Judiciary Committee is not alone in this fight as we also have Senate champions for Big Tech accountability. Senators Amy Klobuchar, Richard Blumenthal, Chuck Grassley, and Tom Cotton are leading the way in issuing modified versions of the House competition package. Highlights have included The Open App Markets Act from Senators Blumenthal and Blackburn to target market abuses in app stores and the American Innovation and Choice Online Act from Klobuchar, Grassley, and a bipartisan team of a dozen senators. Senator Klobuchar and Cottons most recent endeavor mirrors a pillar of the House package, the Platform Competition and Opportunity Act of 2021 (the mergers bill).

Public Knowledge has written extensively about the package. One post provides a broad overview of the entire package. Another tackles the thorny question of how the antitrust bills will affect content moderation (spoiler: not much, and if anything, positively). A third goes in depth on the ACCESS Act and interoperability. This post will offer an analysis of the House and Senate versions of the Platform Competition and Opportunity Act of 2021.

Big Tech earned their moniker through aggressive and unprecedented growth. The fuel for that growth and the key ingredient in maintaining their dominant market position? Mergers and acquisitions. The stagnant technology markets of today, with relatively unchallenged firms dominating personal fiefdoms in the online economy, are exacerbated by Big Techs past anticompetitive acquisitions. Googles dominance of online advertising finds its roots in the acquisition of Doubleclick and AdMob. Facebooks dominance of social networking might not have been possible without gobbling up Instagram and WhatsApp. Amazon ensured it would be the only Everything Store by buying up niche rivals like Zappos and Diapers.com. Apples walled garden has both expanded and grown more oppressive as a direct result of acquisitions like Beats Music and Siri.

In hindsight, its easy to criticize antitrust enforcers for waving these mergers through. After all, antitrust is supposed to protect competition, but it is clear today that many of the aforementioned acquisitions have harmed both competition and consumers. Under the Clayton Act, todays main merger law, acquisitions where the effect may be substantially to lessen competition, or to tend to create a monopoly are prohibited. Two generations of courts have favored strict interpretations of this provision, made especially difficult in the tech sector due to the necessity of predicting (and proving) what a market will look like in the future.

Enter the Platform Competition and Opportunity Act of 2021. If enacted into law, this bill would shift the burden of proving whether a merger harms competition onto the Big Tech titans themselves. Similar to the rest of the package, the bill only applies to a narrow category of covered platforms which today would mean Apple, Amazon, Facebook, Google, and (most likely) Microsoft. These five would have to prove, by clear and convincing evidence that their proposed acquisition does not fall into any one of five categories, else the acquisition is prohibited. They are:

1) Acquisitions not subject to the Clayton Act (Section 7A carveouts). These are the mergers that are extremely unlikely to affect competition in any meaningful way and are already explicitly permitted in antitrust law. This category includes de minimis acquisitions and those transactions that occur in the ordinary course of business (think a company buying office supplies).

2) Not competing with the platform itself. A covered platform cant acquire a company that competes with the platform for any product or service offered by that platform. This covers the bread-and-butter antitrust analysis of two companies directly competing in the same identified market. Think Google trying to buy DuckDuckGo.

3) Nascent or potential competition. A covered platform isnt just prohibited from buying companies that compete with it right now, but also those that are likely to compete in the future. Think of Facebooks successful acquisition of WhatsApp (a flourishing messaging service that could have become a social network competitor) as the kind of acquisition this provision is meant to block.

4) Increasing market power. Beyond competitive threats, a covered platforms acquisition cannot enhance or increasemarket position for a product or service that is offered on, or directly related to, the platform. Think Amazon buying FedEx. This would further entrench its online delivery market power and freeze out would-be rivals that currently use FedEx instead of Amazon. Logistics/package fulfillment is a service Amazon offers, and its certainly directly related to the online retail platform.

5) Maintaining market power. Finally, a covered platform cannot acquire a company that would bolster its ability to maintain its market position with a product or service offered on the platform or otherwise related to the platform. Anything that would make the covered platform harder to dislodge from its current dominant position, such as buying up a critical input or downstream buyer, would fall into this category. Think Facebooks acquisition of Instagram. Instagram was then just a small company, but it posed a serious threat to Facebook on mobile phones, which were quickly rising in prominence. The Instagram acquisition may also have violated other parts of this proposed legislation, but to the extent that the acquisition helped Facebook maintain its market position and weather the seismic shift to mobile, it could have been stopped by this legislation.

Both versions of the bill have a $50 million floor for acquisitions, so small deals which often lack a competitive concern (even given inflation, all of the deals we think of today as having been problematic were well north of the $50 million mark). Theres only one substantive difference between the House and Senate versions of the merger bill. While both bills cover online platforms with a $600 billion market capitalization (the five aforementioned companies), the House version allows for more companies to eventually fall under the bills restrictions, while the Senate version will only ever apply to companies initially designated under the bill. This stickiness in the Senate bill removes worries that the restrictions meant to rein in todays Big Tech titans could be applied more broadly. Crucially, as stated above, the bill would only affect five companies right now, so its not completely changing the merger landscape. But for those covered platforms, expect this bill to significantly curtail their ability to acquire would-be rivals.

If youre thinking that those categories cover most types of acquisitions Big Tech companies might make, youre not wrong. These bills would promote competition against Big Tech, so that fresh and diverse ideas, people, and companies set the direction of future innovation on the internet. No one vision will be imposed on the internet. Yet some critics are concerned about the bills effects on a pretty narrow category of people startup founders whose companies are built to be bought by Big Tech. Some startups today are created as an additional feature or synergy with a Big Tech platform where the most lucrative exit ramp is simply to be bought by a Big Tech titan. This bill would effectively end that practice. As of today, entrepreneurs that promise to competitively challenge Big Tech get laughed out of a potential investors office, while those that offer minor enhancements to todays same platforms get showered in investment cash. Ask yourself if this kind of innovation has really been beneficial for you and other consumers or just beneficial for some venture capital firms and Big Tech itself. Consumers benefit when companies duke it out and fiercely compete over their money and attention, not when those same companies can rest on their laurels because any competitive threats have already been neutralized. Real innovation that actually benefits consumers and disrupts the Big Tech status quo will be more likely as a result of this bill, not less.

This bill has the potential to change the innovation game for the better. Startups still have a buyout off-ramp if they so choose it just has to be any other company that buys them, not one of these five already dominant companies. The Big Tech companies themselves remain free to invest and innovatethe bill just prevents them from buying success instead of earning it. In a world with interoperability and nondiscrimination requirements creating open and fair markets, I think youll see a lot more funding of companies that directly challenge the Big Tech platforms. When these monopolies become competitive markets, consumers can expect more and better choices. Who knows what innovations you could be enjoying right now if we hadnt been mired in a Big Tech Dark Age completely different ways for communities to communicate or even new tools for information discovery. This bill could help restore innovation to the market by reinstating real competition.

Conclusion

In short, the Platform Competition Opportunity Act of 2021 can work in concert with the rest of the A Stronger Online Economy package to tackle the problem of Big Tech. The bill would remove perhaps their most potent tool of growth mergers and acquisitions, yet we need to fundamentally change the structure of Big Tech markets to really let competition flourish. The Senate taking action on nondiscrimination and mergers is huge progress, and we need to build on it. Next, we need Senate companions for interoperability and structural separations, and then to put the entire package on President Bidens desk to become law. Its time to unstack the deck and force Big Tech to play a fair game.

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Ending the Urge to Merge: The House and Senate Take on Big Tech M&A - Public Knowledge Tech News and Comment

Two teenagers watch a chat with friends on their smartphone

Ute Grabowsky | Photothek | Getty Images

LONDON A group of British lawmakers said Tuesday that "major changes" need to be made to the U.K.'s upcoming Online Safety Bill.

The draft bill is a proposed new piece of legislation that's designed to make the internet a safer place for people in the U.K.

However, some lawmakers are concerned that the current proposals don't go far enough.

In a report published Tuesday, the U.K. Parliament's joint committee on the draft bill said more offences should be brought within the scope of the proposed law.

"We're bringing in a lot more offences onto the face of the bill that deal with things like promoting self harm, racial abuse and other forms of abuse," Damian Collins, a lawmaker and chair of the committee, told CNBC, adding that it should be clear what the tech companies' responsibilities are.

The regulator should be able to say to the tech companies "these are the minimum standards you've got to hit" and explain what needs to be done in each category of harm, Collins added.

The committee also wants online fraud and scam advertising to be included in the bill's scope and an ombudsman to consider individual complaints.

Users should also be able to take tech companies to courts if they fail to meet their obligations under the act, Collins said, adding that named directors should be subject to criminal liability when they fail to disclose information that has been asked for or fail to comply with the act.

"These would be quite big changes to the way this [bill] works," Collins said. "The core thing is it's taking existing offences and law and applying them online and that the regulator has the legal power to do that.

The committee is calling for a plethora of online activities to be outlawed including the promotion of self-harm online, deepfake pornography (AI-generated porn) and targeting epilepsy sufferers with flashing images online.

TV and radio regulator Ofcom was put in charge of regulating the internet in the U.K. in February.

The committee said the government should give Ofcom more powers to investigate, audit and fine Big Tech, adding that the regulator should also be able to set the standards by which Big Tech will be held accountable.

"The era of self-regulation for big tech has come to an end," said Collins. "The companies are clearly responsible for services they have designed and profit from, and need to be held to account for the decisions they make."

Elsewhere in the U.K., the Competition and Markets Authority and the Information Commissioner's Office also have the ability to impose fines and penalties on technology companies.

Facebook, Instagram, YouTube, Twitter and TikTok have all been criticized by lawmakers in the U.K. and other parts of the world for allowing harmful content to be shared on their platforms. They say they're doing their best to remove it, but many lawmakers aren't satisfied.

During the U.K. inquiry, MPs and peers heard from victims of online harms including ex-Manchester United player Rio Ferdinand and TV presenter Martin Lewis. The inquiry also involved Facebook whistleblowers Frances Haugen and Sophie Zhang.

The bill is set to be put to Parliament for approval in 2022.

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'Land of the lawless': UK politicians urge government to enforce stricter rules on Big Tech - CNBC

If you are a fashionista using social media in 2021, theres a fat chance you would have come across advertisements or pictures displaying striped vests or spaghetti tops that remind you of the 2000s era, or like the internet likes to hashtag it, the Y2K trend. In fact, you might just see similar clothing items all over the internet and on fashion websites such as Shein, AliExpress or Urbanic. Big Tech has a ton to offer to the changing fashion industry with an array of products, social media platforms to market them and e-commerce platforms to sell them. It is changing the face of the fashion industry and giving birth to a new culture: fast fashion.

The fast-fashion culture is essentially really cheap clothing items, produced at a mass rate and in line with the trends changing faster than seasons. To add attractive features like short delivery times and 30-day return policies offered by these online portals are taking over the industry.

Trend Cycle

Microtrends have, as the name suggests, always been short-lived, but lately, this trend cycle has been accelerated a lot with the growing social media culture. Now these trends last up to a few weeks or months at most. The trend cycle conventionally included five stages introduction, rise, culmination, decline, and obsolescence. It has now been reduced to just three, with introduction/rise/culmination becoming one step.

A cultural aspect that is still unchanged is the human nature to jump on the bandwagon, so be it a year or a month, people will find ways to be in on the trends. And what better way than cheap clothing you can wear a few times and throw away?

Big Data: The Secret Sauce

The secret sauce behind the brands quick trendsetting is owed to optimising everything with big data. In an investigation of fast fashion website Sheins internal workings, restofworld revealed that Sheins internal software, from design to delivery to each supplier, is powered by big data. The suppliers are provided with personal accounts where the brand gives them current information about the styles in fashion, possible trends, hits, and misses so the brand can adapt and create clothing accordingly.

Big data has made it possible to conduct market research without having local knowledge. As a result, Shein has broken into vast geographies with success in Brazil, New Zealand, South Africa, France and more, owing to target specific demographic data it collects and leverages.

If a big celebrity like Kylie Jenner makes news for wearing a specific dress that most fans wouldnt be able to afford, Shein will easily find a dupe on such websites at a quarter of the price. The company leverages AI to study luxury clothing material and create the exact dupes, same as the colour, shape, and size at a speedy rate.

The reliance on big data is essential to catching on to trends better and quickly having suppliers get on to the clothes. The advantage that Shein has is that it need not create trends but catch on to the existing ones quick enough. To put this into perspective, while Zara expects the manufacturer to produce 2000 items in a month, Shein demands only 100 products in 10 days.

The amount of data collected may not be all ethical. The brand has been accused of surveillance capitalism by Tom Tugendhat, the Foreign Affairs Committee chairman. According to him, Sheins data collection network can rival many of the worlds intelligent agencies by using their mobile apps to spy on the users choices.

In fact, Sheins 5,800-word privacy policy lists tracking data points such as your searched items that directed you to Shein, the pages you view on the website, what you clicked on vs what you ordered or added to the cart, how much time you spend on each category and so on.

Additionally, an algorithm is present to showcase the latest designs on the home page and change them according to a change in the trend at an unparalleled speed. The recommendations are accompanied by discount pop-ups and sale countdowns that grab the users attention. That is not to say the algorithm is foolproof. Just last year, the algorithm pushed a necklace with a swastika charm, bringing Shein under heavy scrutiny.

Influencer culture, dupes and social media

Sheins interface presents thousands of new styles daily. This trend adds back to the influencer culture and the haul culture pushed by these platforms, especially TikTok and YouTube. The short form videos on the platforms lead to increased consumption. Hauls are the ticket to fame on such platforms, causing anyone who wants to get more views on their content, to jump on this bandwagon.

People get dressed up to post it online, contributing to the influencer culture. In fact, the fast fashion industry saw a boost in business during the lockdown, when people werent even leaving their houses and still buying tons of clothes. By 2020, Sheins sales had risen by 250 percent from the previous year, adding to $10 billion in revenue.

An effective marketing strategy by brands today is sending thousands of PR packages of the same product to influencers all around, so when they all share it online at the same time, it creates a trend. Additional frenzy is manufacturers selling the same products on various websites, from Shein to Urbanic and Romwe. Emerging technologies have given them the power to sell their products across platforms. This means you will see the same style on every other fashion platform, adding to the hype.

YouTube Video Thumbnail: Influencer Marketing

TikTok Clothing Haul

The culture of silicon valley isnt optimised on consumer choice, said Roger McNamee, partner, Elevation Partners, at BoF VOICES. Their profit comes from getting all of us to do what they want. Which is to say the same thing in their world everybody wears the same clothes in their world, everybody believes the same things because thats more efficient.

Shein leading the race

Shein, reflecting the growing e-commerce fast fashion industry, has become the most popular shopping app on both Android and iOS in the US. It was also the top iOS app in over 50 countries and the second most popular fashion website globally. In fact, the brands sales in the US in June accounted for 28 percent of the fast fashion market, close to the revenue of Zara and H&M combined. So surely, the app, and fast fashion, has a growing influence in the fashion industry.

Fast fashion thrives on speed. Shein leads the fast fashion industry as it can swifty identify trends, manufacture and ship the deliverables, all in a week. Shein has the added advantage of shipping across the globe. Ironically, the company doesnt sell in China. It rather takes advantage of Chinas trade relations with the US to import clothing to the USA. Chinese packages worth less than $800 can enter the US without added duties.

Given that Shein works directly with customers; unlike H&M or Zara, the company ships packages worth smaller amounts, not paying export taxes. The company ships to over 220 countries according to their claims. This is in comparison to H&Ms 75 countries and Zaras 100.

While Shein is leading, other companies are not far behind. Think Amazon, Alibaba and likes. After Shein was banned in India, the market was soon taken over by brands like Urbanic or Romwe.

Non-Sustainable Growth

Fast fashion is not conducive to a sustainable future or ethical growth for all its popularity. Apart from being sued by bigger brands, companies like Shein or Romwe have come under a series of controversies and scrutiny, with people wondering just how the brands are producing such cheap and quick clothing. Journalists digging into the nature of products have uncovered the work being outsourced through sweatshops that subject workers to brutal working conditions with meagerly pay and comprise of child labour.

A report by Public Eye, a Swiss advocacy group, found workers in six sites in Guangzhou to be working 75-hour weeks. Workers were clocking in three shifts a day with only one day of leave all month. The report also claimed that when Shein was informed of the non-compliance to labour laws, the company assured them they would run an investigation.

The largest consequence is the impact on the environment. Even though companies claim to use recyclable materials and quality raw materials when possible, it is impossible to make such cheap clothing without hazardous chemicals. One should also take note that the clothes are individually packed in plastic bags. Considering the tremendous amount of orders the company packs in just one day, a lot of plastic and toxins will end up in landfills.

Shein Packaging: Credits

The Other End Of The Spectrum

While big tech has encouraged and pushed fast fashion on one end, the other end of the spectrum is witnessing a revolution of fashion as we know it. The metaverse is birthing digital clothes and NFTs, making fashion as sustainable as it can be.

Granted, the digital wave of fashion is still in its infancy; it comes with a ray of hope to match up with the landfills of the fast-fashion wave.

Read more:

Big Tech's Threat To The Fashion Industry - Analytics India Magazine

Its open season on Americas digital media marketplace, withboththe left and right lining up to take regulatory shots at tech platforms, but for very different reasons. If both sides get their way, the result will be a more politicized media sector and unprecedented government interference with freedom of speech.

Facebook, Google, Twitter, Amazon and Apple have all become political pinatas for federal and state policymakers, with legislation and lawsuits launched seemingly on a weekly basis. But there is considerable confusion in the complaints both parties make about Big Tech.

Democrats want tech companies doing more to limit content they claim is hate speech, misinformation, or that incites violence. Republicans want online operators to do less, because many conservatives believe tech platforms already take down too much of their content.

The only thing unifying both sides is a desire for greater regulatory control of media. In todays hyper-partisan world, tech platforms have become just another plaything to be dominated by politics and regulation. When the ends justify the means, principles that transcend the battles of the day like property rights, free speech and editorial independence become disposable. These are things we take for granted until theyve been chipped away at and lost.

Is there any way to make both sides happy without undermining the digital economy, which has been dominated globally by American firms for over a quarter century?

Thats unlikely, but it hasnt stopped lawmakers from introducing a flurry of bills to weaken or eliminate protections afforded bySection 230, which limits liability for platforms that host user-generated content. Implemented in 1996, it has served asthe cornerstone of Americas ascendancyin the digital world andhelped spur an avalanche of innovation. Gutting it would put all that at risk.

Without admitting it, both sides are really at war against the First Amendment, which protects the editorial decisions made by private companies. To be sure, there is problematic content to be found on digital media platforms, and there aresome legitimate complaintsabout overzealous takedown policies and lack of transparent standards. That does not mean there is an easy policy fix to those problems, however. Butcourts have held repeatedlythat the First Amendment protects efforts by private media firms to devise their own approaches.Just last week, a Texas judge blocked a law that sought to limit social media platforms editorial freedoms. That followed a court in Floridaenjoining a similar lawthis summer.

Critics like to paint large tech companies as nefarious overlords out to destroy civilization. In reality, the problems we see and hear on modern platforms reflect deeper problems in our society. If these companies are to be blamed for anything, its making human communication so frictionless that every person now has a soapbox to speak to the world. Thats both a blessing and a curse. With unbounded speech comes many wonders but also many problems.

Now, large digital intermediaries are expected to make all those pathologies go away through some magical Goldilocks formula whereby they get content moderation just right. Its an impossible task with billions of voices speaking. Bureaucrats wont do a better job refereeing these disputes, and letting them do so will turn every content spat into an endless regulatory proceeding.

It is particularly surprising that someconservatives are joining the choruscalling for common carrier regulations orFairness Doctrine-like speech mandates, which would let government micromanage speech platforms. In this debate,they areinviting comprehensive political control of communications platforms, which is antithetical to a limited government philosophy.

Moreover, why would conservatives believe theyll benefit from more regulation? Even if one accepts the notion that social media platforms discriminate against conservative speakers or viewpoints, will freshly empowered bureaucrats really help them push private platform content moderation decisions in a more pro-conservative direction? The administrative state historicallyhas not been the friendof conservative viewpoints, and regulators are not suddenly going to become more sympathetic to them.

Theyd more likely be shooting themselves in the foot. There has never been more opportunity for conservative viewpoints than right now. Each day on Facebook, the top-10 most shared links aredominated by punditssuch as Ben Shapiro, Dan Bongino, Dinesh D'Souza and Sean HannitySean Patrick HannityLeft and right take aim at Big Tech and the First Amendment Rittenhouse says he's destroying gun used in fatal Kenosha shootings Dr. Oz expected to run for Senate in Pennsylvania as a Republican: reports MORE. Right-leaning content isshared widely on Twittereach day. Websites like Dailywire.com and Foxnews.comget far more trafficthan the New York Times or CNN.

Conservatives should push formore competition and choices,not more regulation and litigation. They should again embracethe vision President Reaganset forth in 1987, when he vetoed a bill to reestablish the Fairness Doctrine: History has shown that the dangers of an overly timid or biased press cannot be averted through bureaucratic regulation, but only through the freedom and competition that the First Amendment sought to guarantee.

It remains the principled path forward.

Adam Thiereris a senior research fellow at theMercatusCenter at George Mason University and author of Evasive Entrepreneurs and the Future of Governance.

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Left and right take aim at Big Tech and the First Amendment | TheHill - The Hill

Its impossible to know which stocks will dominate the stock market in a decades time, but we can fairly confidently say which companies will not be on that list: stocks that currently top todays market-cap ranking namely Apple AAPL, +2.80%, Microsoft MSFT, +2.83%, Amazon.com AMZN, -1.12%, Alphabet (Google) GOOG, +0.38% and Meta Platforms (Facebook) FB, -0.02%.

Thats because its rare for stocks at the top of the market-cap ranking to keep their status a decade later. Not only do they usually fall out of the top 10, they also underperform the market on average over the decade.

Thats according to an analysis conducted by Research Affiliates, the investment firm headed by Robert Arnott. To show the precarious position of the markets top dogs, he calculated what happened over the decade of the 1980s to the 10 largest publicly traded companies at the beginning of that 10-year period. Eight of the 10 were not on 1990s top-10 list, and all 10 on 1980s list underperformed the world stock market over the subsequent decade.

Arnott found that the 1980s were not unique. He reached a similar result for the top stocks of the 1990s, 2000s, and 2010s. On average, a stock on any of these lists underperformed the market over the subsequent decade. In addition, there was between a 70% and 80% chance that any given stock would not be on the comparable list one decade hence.

Arnott illustrated these top companies underperformance in another way as well: He constructed a hypothetical portfolio that each year owned the worlds 10-largest companies. The performance of this portfolio is plotted in the chart below. Over the 40 years from the end of 1980 through the end of 2020, this portfolio lagged a buy-and-hold by 1.8 annualized percentage points.

Numerous investment lessons can be drawn from Arnotts fascinating results. One is that cap-weighting is not the optimal weighting scheme for your portfolio. Equal-weighting is one obvious alternative, and it has beaten cap-weighting: since 1971, according to data from S&P Dow Jones Indices, the equal-weighted version of the S&P 500 SPX, +0.95% has outperformed the cap-weighted version by 1.5 annualized percentage points.

Arnott believes there are even better ways of weighting stocks in an index beyond equal weighting. His firm maintains a number of so-called fundamental indices that base a stocks weight on fundamental characteristics such as sales, cash flow, dividends and book equity value.

Just six stocks Apple, Microsoft, Alphabet, Amazon, Tesla and Meta Platforms account for 26% of the S&P 500s total market cap

But theres another investment implication of Arnotts data that I want to focus on: His results highlight the difficulties determining the valuation of a lopsided market.

Consider the S&P 500 currently, in which just six stocks Apple, Microsoft, Alphabet, Amazon, Tesla TSLA, +1.32% and Meta Platforms account for 26% of the indexs total market cap. Imagine a situation in which those six are overvalued while the other 494 stocks, on balance, are more fairly valued. In that case, the valuation ratios for the S&P 500 as a whole could paint a skewed picture.

This situation isnt just hypothetical. The largest six stocks currently have an average price/earnings ratio of 62.0, according to FactSet, more than double the average across all stocks in the S&P 500 of 29.1 and almost triple its median P/E ratio of 21.4.

Its possible, therefore, that the stock market isnt as overvalued as we would otherwise think by focusing on valuation ratios for the S&P 500 as a whole.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

Become a smarter investor. Sign up hereto get MarketWatchs best mutual funds and ETF stories emailed to you weekly!

More: When should I sell Amazon? These pro tips can help you dump your stock market darlings

Also read: If the S&P 500 cant hit new highs, brace for fresh selling

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These 6 overvalued stocks are making the S&P 500 look more pricey than it really is - MarketWatch

The seeds of surveillance capitalism are starting to sprout while Stuxnet attacks, 3D TV flops, and a 2D game of flinging furious fowl is a runaway success.

Tweets were sent in their billions in 2010, and at least some of them were about Irish showband sensations Crystal Swing. This internet-famous group was not among the stellar line-up for the second Dublin Web Summit, but founders from Twitter, YouTube, Skype and Bebo were all invited for the Irish event and its new sister conference, Founders.

As US tech was reaching across the Atlantic and landing in Dublin, an ill wind that blew in from that side of the world had left Europe shuddering. The debt crisis that followed the financial crash was taking hold across the EU, and Ireland was among the worst hit. In late November, the EU agreed to an 85m bailout package to rescue the countrys failing financial sector.

The unemployment rate continued to trend upwards, but jobs were still being created in tech as more Irish outposts were established and growing. US analytics firm Dun & Bradstreet was among them.

Dun & Bradstreet opened its software and data operations centre in Dublin in 2010 with the express intent to leverage the technical talent in the Irish market, said Donal Cavanagh, the companys present-day Dublin site lead. In the intervening decade, we have seen both the explosion of data and the critical role data now plays in the successful running of any business. Everyone is looking for growth, to manage risk, to navigate ever-growing compliance directives. Today, in a world that is digitalised, the way to connect and control these is through data.

There was still plenty of money to be made in the age of big data and, as a new decade dawned, analysis and monitoring were moving beyond the commercial and into the personal lives of individuals.

Facebook was reaching new heights in 2010, hitting 500m users just over halfway through the year. Among them was about a third of the Irish population.

Facebook had become so mainstream it was taken to the big screen. Directed by David Fincher and penned by Aaron Sorkin, The Social Network wowed critics and topped the US box office. Facebook CEO Mark Zuckerberg said the film completely misrepresented the motivation behind the social media platform, but conceded that the costuming was fastidious. Every single shirt and fleece they had in that movie is actually a shirt or fleece that I own, he said.

Meanwhile, the subject matter of future Facebook documentaries was coming to the fore. At the January Crunchies awards in San Francisco, Zuckerberg made comments downplaying users desire for privacy. He was forced to eat his words in May after a glitch was found that could make users chat messages and pending friend requests visible if exploited, and a Wall Street Journal report claimed advertisers on platforms such as Facebook were using a privacy loophole to retrieve personal information.

Zuckerberg responded with an op-ed in the Washington Post announcing new privacy controls. The biggest message we have heard recently is that people want easier control over their information, he wrote, changing his tune from earlier in the year.

This became the holding pattern for Facebook privacy concerns for years to come, as the vast trove of information offered up by the platform presented just too tempting an opportunity for data mining. Indeed, this was the year the US National Security Agency started its large-scale social mapping programme, though that wouldnt be revealed until later. In the meantime, the man who made half a billion friends closed out 2010 as Time magazines Person of the Year and with almost $2bn in revenue.

Of course, Facebook wasnt the only tech company building a lucrative business on an abundant data mine.

Google was stirring up its own privacy-centred controversy in 2010, as it was revealed that the companys Street View mapping vehicles had captured more than they should have. (And not just the odd or inappropriate moments caught on camera.)

Street View had mapped Irelands major cities in 2009 and its cars returned the next year to fill in some gaps. This was after it had emerged that unauthorised code deployed by Street View captured data broadcast over unencrypted Wi-Fi networks in more than 30 countries. This prompted investigations in the US, Spain and the UK, while the Irish Government demanded that Google simply delete the data it had intercepted.

Eventually the US investigation was closed after Google promised to improve its internal procedures. The company also promised to delete the data it collected in the UK.

In Germany, Google agreed to allow residents to opt out of the service and have images of their homes blurred out. This, however, made these homes a target for vandals.

Street View launched in Ireland at the end of September, after its cars and pedal-powered trikes finished their intensive mapping of Dublin, Cork, Limerick, Galway and Waterford. It had reached all seven continents in 2010, and even photographed several penguin colonies in Antarctica.

While controversial in its roll-out, Google was right in thinking that Street View was something that people wanted to see. What viewers didnt want, however, was 3D TV.

Spurred on by the phenomenal success of James Camerons Avatar in December 2009, TV-makers and broadcasters threw their weight behind 3D entertainment in a big way.

Sky was the first network to announce a 3D TV channel for Ireland and the UK (and SiliconRepublic.com got a pre-launch sneak peek in 2009).Sony built one of the worlds first 3D outside broadcast trucksand, by March, Samsung and LG promised at-home sets. Irelands first 3D TV broadcast, a Premier League match between Manchester United and Chelsea, was made on 3 April adding a whole new dimension to watching sports.

That same month, Samsung pointed out that 3D TV might cause motion sickness, altered vision, disorientation, eye strain and instability, among other things.

Add that to the high cost and low content on 3D TV, and the market just wasnt adding up. Even though 3D TVs were shipping faster than HD TVs in November 2010, it wouldnt be long before most 3D TV sets and services were no longer available.

But with touch-enabled smartphones becoming ubiquitous, the demand for mobile gaming was at an all-time high. And along came Finnish game developer Rovio to take a (sling)shot at this trend.

Angry Birds launched in late 2009 at the height of the swine flu epidemic, hence the antagonist pigs. It quickly rose ranks in projectile motion to become the number-one iPhone game. When it finally arrived on Android, it scored more than 1m downloads in one day as more and more users flung themselves into the action.

The Android roll-out was slightly scuppered by the fragmentation of the Google mobile ecosystem, and this would become a common issue for the rival to Apples tightly controlled iOS. But its popularity held strong and, by year end, Angry Birds was top of the app charts another feather in its cap.

Another viral success of 2010 was far less charming. The Stuxnet computer worm was first detected in the summer, described as one of the most refined pieces of malware ever discovered.

The threat it posed became clear in September when it attacked Irans first nuclear power plant. While initially described as cyberterrorism, some experts felt it had to have been a state-sponsored cyberattack due to the worms sophisticated design.

Some saw Stuxnet as a new form of cyberwarfare. Within days, a major cybersecurity exercise was set to assess the vulnerability of vital services in the US and, later, the US military created a Cyber Command to protect its networks. However, security technologist Bruce Schneier said that threats of cyber war and terrorism were grossly exaggerated and were really hindering our understanding of online risks.

By the end of the year, Stuxnet code had made its way to underground forums, while threat reports and a former CIA director predicted the rise of cyberattacks in the future.

27 January: Apple unveils the iPad, a nine-inch tablet computer with all the capabilities of an iPhone, minus the phone.

16 February: At Mobile World Congress in Barcelona, Google CEO Eric Schmidt announces that the company is now pursuing a mobile first strategy.

23 March: LinkedIn connects with Dublin, announcing that it will establish its international headquarters in the Irish capital.

5 April: WikiLeaks publishes footage of a 2007 airstrike on Baghdad, which shows a US helicopter killing civilians.

30 April: Journalist Mark Little bases his social media news service Storyful (which he founded in January) at the National College of Ireland Business Incubation Centre, alongside Barracuda FX and Ian Luceys Lucey Technology.

6 May: A trillion-dollar stock market crash is triggered by a series of automated trading programs entering a feedback loop.

20 May: Scientists create the first synthetic cells in a project that took 15 years to complete.

22 May: In a big moment for bitcoins use, computer programmer Laszlo Hanyecz trades 10,000 bitcoin for two pizzas from Papa Johns. (At todays rate, those pizzas cost more than 210m each.)

27 May: Whistleblower Chelsea Manning is arrested by the US Armys Criminal Investigation Command.

11 June: The FIFA World Cup kicks off in South Africa and the deafening sound of vuvuzelas in the crowd inspires Irish start-up Restored Hearing to pitch its tinnitus treatment to football fans.

15 June: One day after the slim iPhone 4 with its high-definition Retina display is made available for pre-order, Apple and AT&T have already sold out of their initial stock.

24 June: Ergos financial software spin-off Fenergo raises 2m in funding from Enterprise Ireland and the European Investment Bank to go global.

16 July: Instagram co-founder Mike Krieger posts the platforms first photo: an artistically angled harbour view through a window. (The app would arrive on the App Store in October.)

25 July: WikiLeaks publishes a trove of more than 90,000 classified documents on US military action in Afghanistan.

10 August: Physicist Stephen Hawking says he believes that the long-term future of the human race must be in space.

10 August: The World Health Organization declares that the H1N1 swine flu pandemic is over after just over a year.

10 September: A transatlantic flight is grounded at Shannon Airport after a charging mobile phone overheated to the point of melting and emitting smoke, unbeknown to its owner.

4 October: Twitter co-founder Ev Williams announces that he will step down as CEO, to be replaced by COO Dick Costolo.

5 October: Andre Geim and Konstantin Novoselov are jointly awarded the Nobel Prize in Physics for their groundbreaking graphene discovery from 2004.

9 October: Google announces that its self-driving cars have clocked more than 140,000 miles.

11 October: The Big Four record labels EMI, Sony, Warner and Universal fail in their bid to secure an injunction against UPC to implement a three-strike rule for illegal file-sharing.

22 October: The International Space Station outstrips Mir for the record of the longest continuous human occupation in space, passing its 3,641st day.

28 October: Chinas Tianhe-1A, packed with more than 14,000 Intel Xeon processors and more than 7,000 Nvidia Tesla GPUs, is dubbed the worlds top supercomputer with the capability to perform 2,507trn calculations each second.

10 November: Microsoft launches the Kinect for Xbox 360 in Ireland with some help from Sophie Ellis-Bextor.

17 November: Researchers at CERN trap antimatter for the first time (for a sixth of a second).

18 November: Camara recycles its 20,000th computer in Ireland.

28 November: WikiLeaks publishes a collection of more than 250,000 US diplomatic cables.

16 December: Following an international arrest warrant issued by Swedish police over allegations of sexual misconduct, WikiLeaks founder Julian Assange is released on bail from a second extradition hearing in the UK.

17 December: Reports emerge that Twitter is considering Dublin as the site of its European HQ.

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2010: Big Tech is watching you - Siliconrepublic.com

Alphabet, Inc (NASDAQ:GOOGL) is a worldwide digital advertising and cloud services company. The company operates in three segments; Google Services, Google Cloud, and Other Bets. The stock has gained 62% year-to-date and 276% over the past five years.

Source: Getty Images

We all know Google, right? Need a sports score? Google it. Migratory habits of penguins? Google it. Need to see Alphabet's financial statements? You got it -- just Google it. But some of us may not be clear just how and from where Google generates its revenues. The vast majority of their revenue comes from advertisements related to Google Search, as shown below in the disaggregation of the company's revenue for the first three quarters of 2020 and 2021.

When one searches on Google, the ads shown on top are often "pay-per-click" advertisements. This means that the advertisers bid for the top ad space, and then pay Alphabet whenever someone clicks on the ad. This is very effective advertising as consumers who perform a search are often ready to buy. As shown in the table above, Google makes 58% of its revenue from search advertising. This revenue was up more than 46% year-over-year for the first nine months of 2021. This is an impressive showing, however not as impressive as the 57% year-over-year gain made by YouTube ads. More and more consumers are cutting the cord each year and YouTube benefits from this trend in a major way.

The Google Cloud is an exciting element although it currently only makes up 7% of revenues. Google Cloud has a long growth runway and related revenue was up 48% year-over-year. The Cloud Services market is currently dominated by Amazon's (NASDAQ:AMZN) Amazon Web Services and Microsoft (NASDAQ:MSFT) Azure . However, the total addressable market for cloud infrastructure is expected to surpass $150 billion in 2021, a 37% increase over 2020. Amazon makes up 32% of the market and Microsoft 20%. After this, several companies jockey for position with Google leading at 9% market share. With the total market growing this year by more than 30%, this is a massive opportunity for growth for Google.

Revenues at Google continue to expand impressively and are expected to reach more than $254 billion for the 2021 fiscal year. This is an increase of 39% over the pandemic tempered 2020.

SOURCE: ALPHABET

As shown above, the pandemic led to tepid growth in 2020 which has roared back in 2021, effectively filling the gap. Over the past five years revenues have grown at a compound annual rate of 23%. Margins are also healthy with the company posting an EBITDA margin of 36% over the trailing twelve months and an operating margin of 30% over this time. Both are up from 2020 where the company posted 30% and 23%, respectively.

Of the Big Tech giants who are Google competitors, only Meta Platforms, formerly Facebook, (NASDAQ:FB) has more attractive valuation metrics. This is due to the recent whistleblower accusations against Meta Platforms which have caused the stock to swoon. Meta Platforms also makes the majority of its revenue from advertising, while Amazon and Microsoft compete with Google in the cloud and advertising markets.

SOURCE: YCHARTS

Google has a very reasonable forward PE of 26.5, shown above, which suggests there is still considerable upside in the stock, especially given the expected growth. The EV to EBITDA ratio is even more attractive at 16.8. This is due to the fortress balance sheet that Google maintains. The company had $142 billion in cash and short-term investments at last report with just $12.8 billion in long-term debt. The cash and short-term investments on hand represent a whopping 7.5% of the $1.88 trillion market cap.

Google has made tremendous gains in its core advertising business year-over-year and more is expected as we turn to 2022. Search and YouTube will continue to lead the way, however the company also has a tremendous opportunity in the cloud services segment. Margins are expanding and the company maintains an impressive balance sheet. Google is being overlooked by investors judging by its modest valuation ratios. All of this adds up to tremendous value and an exceptional opportunity for long-term investors to gain an edge.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Alphabet Is The Best Value In Big Tech - Motley Fool

With Parag Agrawal becoming Twitter CEO, now a number of Big Tech companies are headed by persons of Indian origin. Unsurprisingly, a wave of patriotism has swept across India. These people have done India proudthat is the common refrain. But that may not be true, for Big Tech today is the enemy of free speech; and Indians helping curb liberty can never be a matter of pride for their country.

To put things in perspective, lets consider the case of Jayaprakash Narayan. He can be lauded as a hero because he fought against authoritarianism during the Emergency (1975-77). But we can never and should never eulogize the otherwise admirable people for having colluded with tyranny at that time.

Big Tech is not without achievements; it has brought the gains of technology to billions of people. But it is also colluding with the enemies of freedom; this was the reason that Twitter de-platformed former US President Donald Trump, who is the greatest world leader of this century, for he is the biggest enemy of China, the most powerful and dangerous rogue state.

Social media giants censored and downplayed a lot of content that was anti-China. Concomitantly, they promoted a great deal that suited Beijing, the most important being their unflinching support to the theory that the novel coronavirus was of natural origin.

This helped a bunch of scientists to manipulate global opinionby way of a letter to the reputed medical journalLancetfor over a year into accepting the natural origin theory of the coronavirus. It was only on May 5 this year that the prominent science journalist Nicholar Wade challenged the natural origin orthodoxy (https://thebulletin.org/2021/05/the-origin-of-covid-did-people-or-nature-open-pandoras-box-at-wuhan/). The possibility of the virus birth in a lab got a leg up.

Wade also hinted at a concerted endeavor, if not a global conspiracy, aimed at proving that the origin of the novel coronavirus was natural. The recent developments not only underline the disingenuousness of some dishonest scientists but also the credulity of intellectuals all over the world who unquestioningly accepted the scientists lies as gospel.

In an article in the prestigious magazineThe Bulletin of Atomic Scientists, Wade talked about the thought leaders anti-Trump obsession supporting the natural origin theory which helped the Chinese. Another reason [for the acceptance of the natural origin theory], perhaps, is the migration of much of the media toward the left of the political spectrum. Because [former US] President [Donald] Trump said the virus had escaped from a Wuhan lab, editors gave the idea little credence. They joined the virologists in regarding lab escape as a dismissible conspiracy theory.

Wade said that at that time it was really far too soon for anyone to be sure what had happened. Yet, the scientists overwhelmingly conclude[d] that this coronavirus originated in wildlife.

The scientifically unsubstantiated assertion became an indubitable fact; and anyone, from conservative American politicians to dissenting scientists, questioning the novel coronavirus natural origin was accused of peddling a conspiracy theory. Trump and his political allies were of course hauled over the coals, but even credentialed experts were silenced. Like Chinese virologist Li-Meng Yan, who is now in the US. In September last year, Twitter suspended her account for the unpardonable sin of saying in public that China had manufactured the coronavirus in a Wuhan lab.

While the mainstream media and Big Tech acted like the Inquisition to support China, no one bothered to check the intentions of the scientists who had emphatically asserted the natural origin theory. According to Wade, It later turned out that the Lancet letter had been organized and drafted by Peter Daszak, president of the EcoHealth Alliance of New York. Daszaks organization funded coronavirus research at the Wuhan Institute of Virology. If the SARS2 virus had indeed escaped from research he funded, Daszak would be potentially culpable. This acute conflict of interest was not declared to the Lancets readers. To the contrary, the letter concluded, We declare no competing interests.

Daszak, a devious manipulator, took the world for a ride for more than a yearto help the Chinese Communist Party. Just as he and others did to send American taxpayers money to the Wuhan Institute of Virology. According to Wade, From June 2014 to May 2019, Daszaks EcoHealth Alliance had a grant from the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health [of the US], to do gain-of-function research with coronaviruses at the Wuhan Institute of Virology. Whether or not SARS2 is the product of that research, it seems a questionable policy to farm out high-risk research to foreign labs using minimal safety precautions. And if the SARS2 virus did indeed escape from the Wuhan institute, then the NIH will find itself in the terrible position of having funded a disastrous experiment that led to the death of more than 3 million worldwide, including more than half a million of its own citizens.

The propagation of a fake theory is just one consequence of the suppression of free speech by Big Tech and the mainstream media. Therefore, the fact that top executives in most Big Tech firms are Indians is not something we should be proud of.

Views expressed above are the author's own.

END OF ARTICLE

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We shouldnt be proud of Indians dominating Big Tech - The Times of India Blog