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Scott Galloway on the break up of big tech – notes and video from DLD18

I’ve been mostly travelling since the DLD conference, so just catching up on my notes and reflections now.

Scott Galloway was one of the people I was really keen to see speak in Munich. His recent book The Four was one of my best reads of 2017 – I bought several copies for our office and recommend on Brilliant Noise reading lists for our digital mindset and leadership programmes.

What sets Galloway apart from most tech commentators is that he does his homework, brings fresh insights and lays out his thinking in an engaging but above all provocative style. This year’s theme of his annual DLD talk was close to the bone for many of the attendees – the break up of big tech.

Galloway repeated and build on the themes in his book about “the four” – Amazon, Google, Facebook and Apple – essentially that they are now so big that they are destroying more value than they are creating. Amazon and Facebook seemed to take the most flak in the talk.

Here are some themes and highlights, depending on your point of view:

  • Facebook is a media company and disingenuous in pretending it isn’t: “[Facebook says] We can’t be arbiters of the truth and you don’t want us to be.’ No, we’d like you to try.”

The four treat fines from breaking the law as costs of doing business. In proportion to the size of deals they are getting “$25 parking tickets”.

While Amazon dwarfs all other retailers it pays hardly any tax (see below).

What happens when the most successful companies in the world don’t pay taxes? Simple, the less successful companies pay more taxes. We have opted for a regressive corporate tax system.

The four will destroy almost 200,000 jobs in the advertising industry.

These have been fantastic vessels for the transfer of wealth from the rest of the world to the United States and from the middle of the United States to the coasts.

He also used “the shitshow” of Amazon’s HQ2 location selection process. US cities effectively bid against one other to be the one that waived its tax and other. Laws the most to attract the company to settle there.

At one point he suggested that the Chinese response to big tech had been effective from a national security point of view – ban the US company, support local versions of e-commerce, search and social and effectively lock them out. “There haven’t been any concerns about Russian hackers interfering with elections in China.” The fact it is a totalitarian regime probably helps too, though, right?

At times, then, you could think that Galloway was completely in tune with the protectionists of the hard left and right. In fact, he showed a clip of him being introduced on a Fox News show as a socialist – although one suspects that Fox’s owners would love to Google and Facebook hobbled or broken up by governments. But Galloway insists that his call for the four big tech giants to be broken up is driven by capitalist logic. Like Microsoft in the 90s, he says, the big tech companies are shutting down challenger companies – think Facebook’s assimilation of Snap’s features – and need to be constrained to allow the next generation of tech innovators to emerge. Without the anti-trust suits against Microsoft, Google and Facebook might never have emerged.

This claim was categorically denied by The Second Machine Age author, Andrew McAfee on a later panel that morning. Microsoft was beaten in some markets by the Four because it failed to execute fast enough or well enough in search or mobile, says McAfee, and the responsibility to deal with their excesses is down to citizens and consumers.

Will it happen? If it does it will be the EU leading the charge, since US regulators seem to have no interest in hampering companies that hoover up the world’s cash and data so efficiently. Also, Galloway’s says: “The break up of big tech will not be easy because Jeff Bezos is smarter than all of us.”

You can watch the whole session here:

Lastly here are Galloway’s predictions for 2018. He started the session by showing all of the things he called wrong last year – but he still has a pretty good hit rate.

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Cabbies at the gate – Uber’s CEO at DLD18

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Taking back the future – DLD18 notes from Day One

I’ve already posted about Paul Daugherty of Accenture’s session on AI – the following are some themes and notes I picked up through the rest of Sunday at DLD 18 Munich

Yesterday at DLD began with Facebook’s VP Communications and Public Policy, Elliot Schrage, defending the company’s critics. What is Facebook going to do about Facebook was his theme, where everyone else is asking what are we going to do about Facebook — and Amazon and Google and – maybe not so much – Apple.

There were two lines of attack from questions in the crowd – Facebook is to blame for fake news skewing elections and Facebook had the media industry help build it as a publishing channel and now is going to screw them.

The fake news question – Kara Swisher asked if underinvestment in prevention was a management issue – was responded to along the lines of hands up, sorry, but the government, the CIA and FBI missed it too. A US questioner, responder and company involved explains the US-centric response there, even if he was on stage in Munich. Similar questions hang over Facebook ads and algorithms and influence over Brexit, the Catalonian revolution. Still, when you’re being blamed for Trump getting elected in your own country, I can see why those other elections might seem peripheral.

Image: Kara Swisher in Sarah Connor mode at DLD18 – glasses doubtless to shield against the ferocious brightness of the enormous LED displays on stage.

On publishing, Schrage also acknowledged the criticism but stressed that the company was interested – in fact Zuckerberg himself was especiallly in doing right by users:

“Mark is committed… to helping promote strong communities and an informed public. Trusted publications will benefit.”

Later in the morning, documentary filmmaker and artist, Hito Steyerl offered a direct critique of Facebook’s new policy to weed out fake news sites by asking users which sources they trusted:

“As a trained documentary filmmaker, I can tell you a credible source is not defined by popularity.”

Andrew Keen, long time critic of Silicon Valley and the tech sector’s power, was on stage following Facebook in conversation with Paul-Bernhard Kallen, CEO of Germany’s Herbert Burda Media.

Immediately invoking the concept of surveillance capitalism, Keen asked why the big US tech companies won’t accept their responsibilities as media platforms, something Kallen attributed to legal liability loopholes during the Clinton administrations laying of the benign legislative landscape that made possible the growth of the GAFA (Google Amazon Facebook Apple) or the Stacks, as Bruce Sterling named them when he spotted their developing dominance about six years ago.

In Kallen’s analysis the next generation of online services would be far more responsible in how they understood and managed their influence on society. Whether that generation of services came from the incumbent tech giants or new players, he couldn’t predict. Disrupting models like the blockchain and decentralised web forces could make these future companies very different to the ones we see today – take a look at platform co-ops and ownerless blockchain powered corporations for hints of what might come to pass.

Image: Hito Steyerl

In the session that featured Hito Steyerl, whom I mentioned earlier in this post, there was some expansive and edge thinking from both her and Evgeny Morozov, well chaired by the Serpentine Gallery’s Hans Ulbrich Obrist. This session seemed to suffer from small migrations of executives leaving – bored, confused or just hungry (it was running into lunchtime at this point). It was one of the least crowded of the sessions int he main hall, which was a shame as the ideas were deeply relevant, if very challenging.

Here are some of the threads from Morozov and Steyerl that I want to pick up for more research and thinking later on:

  • The digital intermediation of everything: this is the title of an essay by Morozov looking at how the economics and power of big tech companies owning your data will play out.
  • Techno-religiosity: Something that Yuval Noah Harari explored in Homo Deus and a Google talk which Steyerl referred to. Steyerl says: “The more advanced the technology, the more likely people begin to discuss it in religious or spiritual terms” – think AI, especially.
  • Orbis theory: The theory that in the 1600s the mass colonisation of the Americas caused a lowering of CO2 levels globally, as 50 million indigenous people died and forests reclaimed their farmland and the trees processed more carbon.
  • Owning your own data: The importance of this is huge when looked at it in the economic and political context. I recall the vendor relationship management movement that began ten years ago and similar efforts, but now GDPR (General Data Protection Regulation) in Europe is creating a legal push for it. Morozov also alluded to the idea of states nationalising data to protect its citizens from corporations.
  • Access to people’s data was about better advertising, now it is also about fuelling AI:The big tech companies are using the data they get from people in return for free services (search, social networks, convenient ecommerce) to develop their machine learning abilities.
  • Benevolence can turn to indifference – and it would hurt us: Services from Google and Facebook feel like, and for now are, a social good – so many people wouldn’t be able to afford what the tech giants give us for free. But if they no longer need the data from users, that benevolence would likely turn to indifference. Effectively Morozov is saying, what if advertising wasn’t the main revenue stream for these companies and they got their money from B2B services? What would happen to the services they provide?
  • The coming machine learning monopoly: Morozov said that if he were in business he would be worried about the growing power of the four giants as the sole providers of machine learning. Once they are the best, they will dictate terms of access to others.

At the end of the first day of DLD 18 there was blood in the water and no one was sure whether it’s theirs or Facebook and Google’s… or both.

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