Opinion

When the Muttering Classes Turn on Silicon Valley

Big tech did betray certain ideals but the sudden demonization of Amazon, Google et al won't actually achieve much if consumers still love their products.

Building domes in Seattle, an expansion of the Amazon compound in Seattle.
AP, Elaine Thompson

Suddenly Google, Facebook, Amazon and Apple – and a host of smaller tech companies like Uber and Twitter -- became public enemies.

The new zeitgeist was captured in a New York Times essay last week called “Silicon Valley is Not Your Friend,” which argues that the ideals that inspired the founders of these tech giants succumbed to the ruthless pursuit of profits and growth.

Google, Facebook and Amazon are “world dominators.” Silicon Valley is a “wrecking ball” that threatens to “smash the foundations of our society,” warned Noam Cohen.

The assault on the tech giants isn’t confined to op-ed pages. Next month the Senate will be holding hearings on how the big internet companies ignored Russian interference in U.S. elections, that will be fodder for more embarrassing revelations.

In Europe, the backlash has been financially costly for Google, for instance, which was slapped with a $2.7 billion fine for favoring its products on search results. 

There’s talk in the air about regulating the biggest companies, which was anathema just a year or two ago, because their market dominance makes them akin to public utilities.

Needless to say, Cohen urges his readers to back new rules even if it comes at the cost of slowing the pace of innovation.

For its part, Amazon beefed up its lobbying staff in Washington to more than 80, making it one of the biggest corporate teams in the capital.

“Silicon Valley is going from being heroes to villain. It’s been brewing for quite a while, but there’s a big shift happening,” Vivek Wadhwa, a Carnegies Mellon professor told The Guardian last month.

You know it's terrible

It says a lot that Cohen could title his essay “Silicon Valley Is not Your Friend.” No one waste their time declaring that “Wall Street is Not Your Friend” or that “The Apparel Industry is Not Your Friend.” No one thinks otherwise. We know they’re in it for the money. Which is okay so long as they make it by satisfying the customers’ needs without cheating.

But no business markets itself that way. Imagine Coca Cola telling shoppers, “You’d be better off drinking water, but we’ve made a fizzy drink that’s irresistible and are earning a good profit doing that.”  

Tech companies portray themselves as doing things to make the world a better place. Drug companies want to make sure you stay healthy and McDonald's worries that its menu will please as many palates as possible. Even banks claim they're there to take care of your money and finances.

In fact, big companies do all these things. Their CEOs, like everyone else, probably imagine themselves as being more socially responsible than they are routinely given credit for. Mark Zuckerberg really wants to help create “better solutions to some of the biggest problems of our time,” as he said in a 2012 manifesto. Google really believes it doesn't do evil, or at least tries not to.

Tech companies have had it easier with the public than others because their products were so cool, they were often available for free, they worked and are more often than not associated with fun and pleasure. An insurance company or an HMO or a supermarket chain has to work a lot harder to your friend.

Silicon Valley seems to have betrayed the friendship. Its list of sins is long and growing -- although the tech industry can only fairly take the rap for some of them.

Big Apple, no taxes

The most serious of them is aimed at Amazon, which seems to be engaged in the old monopolist trick of predatory pricing and whose expansion drive into segment like supermarkets (buying Whole Foods) is a real threat to other retailers.

Likewise, gaming the tax system by artificially booking profits in low-tax countries is legal but indefensible, though in their defense, tech companies are by no means the only ones to do it.

Apple, for instance, has structured its European operations so most of its profits are attributed to an Irish subsidiary that only exists on paper and isn't required to pay corporate income taxes anywhere. The European Union estimates Apple's underpayment of taxes over the years is something like 13 billion euros ($15.3 billion).

The other category of sins is less serious. It’s true that Google, Facebook & Company initially dismissed the growing evidence of Russian interference in the elections and are now playing catch-up. But the fact is the issue only emerged a year or so ago and tech companies are trying to cope with it. In any case, the extent of the problem is being exaggerated – it’s become the left’s tool for coping with the trauma of the 2016 elections. 

Big tech has also been slow to deal with the problem of fake news and online hate speech. But it’s a tricky issue as they try to draw a line between free speech and improper speech. And it’s one that no matter where it comes down the critics will come down hard on them either for engaging in censorship or allowing outrageous content to appear online.

Eat or surf? Tough one

Then there is the category of high-tech sins for which the companies get blamed, but the finger should be pointed back at the accuser. Uber and other ride-sharing services are correctly blamed for killing off well-paying jobs and replacing them underpaid part-timers.

As self-driving cars make their way on to the roads in the next several years, the impact will be even greater. It won’t be just taxi drivers, but truck and bus drivers that will find themselves out of work. Indeed, the shared economy threatens to wreak havoc across whole industries, replacing salaried staff with people paid on a piece-work basis.

All this will come at a cost to the economy and exacerbate the problem of income inequality, but the shared economy is clearly what consumers clearly want.

Uber now provides more rides in New York than the city’s iconic yellow cabs and Airbnb is posing a real threat to hotels. The regulatory crackdown on the two companies’ services isn’t the result of grassroots opposition to their business but the result of lobbying by industries unhappy with the new competition.

In fact, the entire assault underway on Silicon Valley is being mounted by the chattering class. There’s no sign that masses of consumers are shunning Amazon or that people are shutting their Facebook pages.  Wall Street doesn’t worry about anti-tech sentiment, as evidenced by the fact that the share prices of most big tech companies are at or near record heights.

The fact is the masses of people still regard big tech as their best buddy, which is no surprise given how much time they spent with it, which is more than they do with any flesh-and-blood friends. The market research firm Mediakix calculated average time spent per day by North Americans was 40 minutes on YouTube , 35 on Facebook, 25 on Snapchat and 15 on Instagram. It came in well ahead of eating/drinking, grooming and socializing.

The chattering class is a force to be reckoned with (although, ironically with the rise of social media, less of one than in the past). But big tech can probably relax and fire a lot of those lobbyists: The public still sees Silicon Valley as its friend.