Stop disruptors on the internet

After a decade of boundless growth, when it seemed like a new billionaire was being minted every day, the tech industry has finally hit a rough patch. Elon Musk’s erratic behavior following his takeover of Twitter has left the financially indebted platform in a precarious state. The sudden implosion of cryptocurrency exchange FTX vaporized a business that was recently valued at $32 billion (1.1 trillion baht), taking many other crypto companies with it. Meta (Facebook) is laying off 11,000 people, 13% of its workforce, and Amazon is losing 10,000.

What should we make of these setbacks? Are these isolated incidents or signs of structural change?

Twitter was already struggling. After getting into debt and overpaying, Mr. Musk immediately began cutting costs, claiming the company was losing $4 million a day. His first layoffs wiped out 80 percent of the company’s contractors and half of his permanent staff.

He then lifted the bans on thousands of far-right provocateurs, as well as ending the enforcement of rules against “harmful disinformation” about Covid-19. Many advertisers have paused their campaigns to prevent their brands from being associated with toxic content. As I write, Twitter is in shambles.

As the second largest cryptocurrency exchange, FTX came out of nowhere, built a huge public profile, and then exploded, all within a few short years. The knock-on effects are being felt across the cryptocurrency industry.

Meta’s layoffs reflect the company’s stalled growth after a meteoric 17-year run. Young people have embraced TikTok, undermining the growth of Meta’s Instagram platform, and Apple introduced a tool that allows iPhone users to opt out of sharing data with platforms like Facebook and Instagram, costing Meta as much as $12.8 billion. dollars this year. Meanwhile, Meta CEO Mark Zuckerberg has taken a big gamble on virtual reality, attempting to create a general-purpose operating system for an industry that doesn’t yet exist. The company has already spent $36 billion on this vision, with little to show for it.

I believe the global economy is in the early stages of a structural shift that will leave the tech industry, the primary beneficiary of the previous economic regime, particularly vulnerable to disruption.

The Russian invasion of Ukraine changed everything, catching most businesses and even governments off guard. I believe it will be remembered as the trigger that ushered in a new economic era, with interest rates, inflation, geopolitical tensions and instability at significantly higher levels than in the last decade. There has been a loss of trust between the great powers.

For technology, a new economic environment presents both challenges and opportunities. Many tech companies will not recover. The best days of Crypto, Twitter and Meta seem to be behind us. Other tech companies, likely including Amazon and Apple, will recover, but perhaps slower than they would like.

Some new opportunities will emerge. Firms that are restructuring manufacturing and supply chains will need technology, and demand for technology-based automation will likely increase. And as consumers adapt to new economic realities, they will benefit from a range of applications and services that don’t exist today.

While that may be too much to ask, policy makers should seize this moment to steer the tech industry in more desirable directions. For years, the industry has undermined democracy, undermined public health and jeopardized public safety. To the extent that policymakers have gone to great lengths to rein in the industry, they have focused on privacy and competition, efforts that performed too little and came too late.

The focus of policy makers and regulators should shift from the symptoms to the root causes: in particular, the culture, business models and structure of the industry. The culture of the industry is hyper-focused on speed, scale and profits, with no regard for consumer safety.

Similarly, the business model of “surveillance capitalism” is an assault on human autonomy analogous to child labor. And it’s an onslaught that has spread from internet platforms to many other industries.

Finally, the concentration of economic power in the technology industry prevents new ideas and business models from reaching the market. With today’s macroeconomic disruption, policymakers have an opportunity to undo years of laissez-faire policies. Tech companies should be forced to demonstrate security as a condition for market entry. Surveillance capitalism should be outlawed. Monopolistic business practices must be banned and monopolies must be dismantled.

Protecting democracy, public health and public safety is good policy. It also happens to be the right thing to do. There will never be a better time.©2022 Syndicate Project