WP017 - Fear of FANG
Software Defined Talk Members Only White Paper Exegesis Podcast, episode #16
Coté & Brandon Whichard,  January 2018.

This week, regular Software Defined Talk listeners get a free episode of our members only podcast. If you like this, sign-up to get access to these extra episodes, about every week. We do a deep reading and analysis of various types of tech content, marketing, and other ephemera from press releases, books, presentations, and white papers. Plus, as with this episode, we just talk about tech ideas and news in general, in the course of being a critic.

Everyone’s freaking out about tech companies. What they mean by “tech companies,” of course is the combination of Facebook, Google, Twitter, Amazon, and maybe Netflix. They (mostly) mean companies who are using tech to disrupt their industries (media, retail, entertainment) and using the business models of tech companies. The line is, to be sure, fuzzy, but these are not companies that make their money from selling hardware, software, or even IT services (like Microsoft, Oracle, Red Hat, SAP, Pivotal, etc.).


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Macro

  • Brandon: “It’s really about Facebook.”
  • So, here we are, talking about the kind of “tech news” that SDT has built it’s thing in opposition to. What’s the meta-meta on this being important or not?
  • First, this is well written, nothing really to argue about there. If Four was this well put together, that book would have been much better.
  • We should separate the argument being made into moral and business arguments: 
  1. What are the moral obligations these companies have, which begs the question, what do we want the outcomes to be? Nevermind who “we” is, that pushes too much on the stack.
  1. This is the Yglesiasian type of thinking that needs to happen a lot more on this topic: what is the type of life-style and civic mores we want to build, and how would we use the law and (God help us) Wall Street pressures to build that system? (Also, the primary type of Yglesiasian thinking that’s good in this context is: can I prove that these people are full of shit and liars who are just trying to rip you off?)
  1. There’s a good rant on music being too free in a recent Road Work episode that illustrates the more abstract point here: we never really discussed the idea that music should be free (or, basically, worth nothing). The technology just enabled it, and now it’s free. The music industry got fucked. Meanwhile, the movie and TV industries was all like “fuck that!” and no one things movies and TV should be free, we pay a lot for them, they’re hard to get, there’s DRM, etc. 
  1. So, for each company, we should ask, first, what types of moral-sphere the companies are operating in (indexing information [libraries?], retail, and media/social, and data brokerage/consumer spying), and, second, what kind of world we want to exist.
  1. “Addiction” - this is a compelling argument. Then again, I’m not old enough to remember that everything was addicting and going to ruin our life. Socrates didn’t like writing, it was going to ruin everything (he did a good enough job of getting himself killed anyway). Figuring out a new medium/technology is scary, for sure, but we survived the written word, translating the Bible into common languages, radio, moving pictures, TV, video games…and I’m pretty sure we’ll survive iOS and activity feeds. (See this out-of-left-field view on this topic.)
  1. “My information”/privacy - there’s equally something to duping people into giving up all their privacy. In the same way that we make credit card and mortgage companies spell out very clearly the risk and obligations you’re taking on and the amount of interest you’ll pay, it’s likely clear that these companies could do a better job telling you the creepy things they do - and then we need to somehow discuss as a group if these things are creepy. In the US, the answer would likely be yes, for example, as I understand it, we don’t let the IRS give over all the information it has to other government agencies, and vice-versa. We can’t even get a universal ID standard put in place or fix up voting for fear of tin-foil hat people. In the US, we don’t trust people with our information, like, ever. Clearly, most people don’t think about that in relation to FANG and friends (or, really, since the direct mail and marketing era in the 80s).
  1. What business laws and practices are being broken, what regulations are being broken? This also begs the question: what kind of business environment (“playing field”) do we want?
  1. For example: are there anti-competitive moves the companies are making to shut down competition we want? Do we want more competition in digital advertising? Do we care that Instagram is trying to take out Snap? What about poor flickr - can Verizon now sue Facebook because they’ve taken so much marketshare of photo sharing? Does Amazon strong arm suppliers into not selling to competitors (like Bestbuy, Walmart, HEB, etc.)?
  1. Let’s look at Snap in particular: I mean, should Snap even be a company? Like, is it enough of a good to humanity or something we’ll depend on for prosperity that we should care? No one gave a fuck about Kodak, Blockbuster, Circuit City, or, now, Sears.
  1. We can compare this to The USPS, Fedex, and UPS. I mean, that all seems pretty crazy right? Two private companies basically dominate private shipping? If Fedex tries to be competitive with UPS is that like Facebook trying to take out Snap? (I’m sure both Fedex and UPS are very careful to never kill each other so that they don’t trip up anti-trust problems, and would point to, I don’t know, DHL and regional shippers…but, still, we have all that in the “app to share a photo and some text with your friends” space as well.)
  1. For Amazon, you could replay the arguments against Wal-mart, that it’s destroying mom-and-pop shops; but that quickly gets to the moral bucket of arguments: do we want a world with mom and pop shops, or a world where we can reliably get 5 tube socks for $2?
  1. Media: for Facebook and Google, Ben Thompson has made some good arguments that the news paper industry was structurally unsound and (by today’s standards) artificially enabled by geographic barriers. How much do we want to regulate Facebook as a “platform”? How much should we regulate Fox News, CNN, Comcast, and Verizon? At some point, I think what people who want more regulation are trying to argue is that Facebook is now a commons “owned” by the people, like the airwaves or infrastructure access (which we regulate in the US) - do we want that?
  • Then, of course: does the article do any of that?
  • All that said, the argument when it comes to perception driven things like stock price and Congressional panels is that this all about subjective feels people are having. And if the feels the hammer-holders are having are negative, they’ll try to smash you with the hammer as we saw in that weird Congressional hearing with lawyers from these firms. This is reporting on this ongoing trend of people worrying about tech companies, of course: right below that meta-level. So perhaps we should read the purpose of this writing as: does it report well on the discussion around this topic (rather than the merits of that topic)?
  • Also, how much of this is just a hangover from Trump winning? When Obama used social stuff to win, was that alarming? This is the “guns don’t kill people…” argument, which is an interesting analogy. If Twitter can be used to support someone like Trump, is Twitter bad?
  • There’s also something to be said for “did you knowingly let Russian spies screw with America through your system? And, now that you know that happened, are you doing anything about it?” We have some - likely - good laws around export restrictions for tech which might apply here. But is anyone talking about that?
  • Towards the end, it gets to a stronger, more interesting point: these companies should take on more responsibility. The lack of libel laws have been a boon, it says. What it doesn’t do is make the case that these platforms are any different than a phone network, or a cable company. Are they libel like newspapers would be? If a TV show yells “fire,” is the cable company at fault? To invoke him again, Yglesias has a good rant on this: “the algorithm” has lots of editorial decisions built in, and can be changed. And if you wanted to make things better, you could: they’re just afraid of being called “biased,” and maybe being punished by Republicans for it. 
  • See some validation of the tech companies fears reflected in the discussion of Fox News and Breitbart as “propaganda machines” by the Favreau guy - you can imagine whoever the tech co’s pissing off talking like this. 
  • The point is: it’s understandable that the tech co’s would want to stay out of it. The sophomoric reply is to say that there’s already lots of editorial, etc. - that humans are always biased.

Micro

  • This format is fun. Tragically, they didn’t register the domain name invisiblehandstratergies.com, but someone does own the correct spelling.
  • I mean, once again, I’d like to do a small workshop on how to use links on the world wide web. Hypermedia! There’s so much they could link to for all of this that would be helpful.
  • “The fact that four of the five most valuable publicly traded firms in the world are technology companies”
  • This is the type of thing that galls me. First, the top five are Apple, Google (I’m not going to use that goofy actual name of theirs), Microsoft, Exxon, and Facebook (though are they still after loosing $25bn in valuation?). Apple, Google, and Microsoft I can concede as tech companies for sure, but Facebook? Amazon is #9, by the way.
  • “There is one ray of light. Almost all your services remain wildly popular with consumers; they use your products to communicate, to navigate, to search for stuff, to buy things and to socialise. They cannot imagine life without you. This is one reason investors have dismissed anti-tech rhetoric as political grandstanding.”
  • “Facebook and Google are responsible for nearly 80% of news publishers’ referral traffic. In 2017 they claimed around 80% of every new online-ad dollar in America. Google dominates as much as 85% of online-search-ad revenue worldwide. When you combine the stuff Amazon sells itself with the stuff others sell using it as a marketplace, the company controls some 40% of America’s online commerce.”
  • Explaining referral traffic could be done better.
  • This is an instance where a chart would do well, showing “traditional” spend/marketshare versus all of these. They have one for digital advertising, but seeing it in the context of all types of advertising would be good, esp. a Horace-like 100% area chart that let you easily see the mix shift.
  • “Google could be split from YouTube (which, kind of remarkably, is itself the world’s second-largest search engine) or be forced to spin off DoubleClick, the technology it bought in 2007 that places ads across the web” - the idea that you’d pull out DoubleClick is weird. If you forced Google to stop selling ads, the company would go bankrupt tomorrow: maybe G Suite and Google Cloud would be left as companies that could stand on their own?
  • ”Price regulation is hard for services that are basically free to the user.” - here’s where an interesting missed opportunity is: the user isn’t the business question, the customer is advertisers. Are the customers wanting change, suffering? The Leaders summary tackles this point a little more, but instead of saying that advertisers are the real customers, it tries to say that users “pay” for the service with their data. Man, I don’t know what to do with that kind of thinking; I don’t like the implications of this, but I can’t wrap my head around “owning my data.” Maybe the copyright to my content…but why should I own a recording of my “movements” and gestures? It’s creepy as hell, and I could see an invasion of privacy (and regulations needed - like loans and credit cards - to make sure you understand what’s happening), but “owning” it? Like, if I sit in Times Square, and watch people move around, who they talk to, what brand they carry…can those people claim to “own” my observations? If the point is that the tech co’s are tricking their way into this data and that normal people would say “hello no!” If they knew what as happening, then we need to regulate telling people what happens with their data.