Big Tech tottering: the cyber-Titans are in terminal decline

A predictable reaction by the authorities in Belarus to the growing unrest that culminated in the abduction of dissident Roman Protasevich was to step up the muzzling of international social media platforms, although the political unrest was organised via Telegram, an encrypted social media app capable of evading such bans. With Belarus hosting just 3.9m social media users, giants such as Facebook and Google are not going to worry about being denied access to so small a market.

But that is a microcosm of a much bigger issue. Just as the Covid pandemic dealt a fatal blow to globalism, already in retreat due to the rise of popular disillusionment across Europe and North America (“populism” in the lexicon of the legacy elites), by highlighting huge supply chain vulnerabilities, the actions of national governments were already setting limits to the ambitions of Big Tech.

Big Tech, until now, has represented the technological equivalent of the Big Bang, expanding universe theory. To the MIT graduate nerds in Silicon Valley, there seemed no limit to the expansion of ever more sophisticated social platforms and associated cyber outreach. Commercially, Silicon Valley shared the historical axiom of Prussian foreign policy: “We must grow greater, or we shall grow less.”

The first limitation on that ambition turned out to be geopolitical. Russia, for example, has developed its own online infrastructure, but without blocking Western platforms, preferring instead to tame them by threatening to throttle their speeds. Twitter, so cavalier in its treatment of an American president, meekly complied with 91 per cent of demands made of it by the Russian government to take down objectionable content. Russia is a more desirable market than Belarus; but geopolitics has deprived US-based Big Tech of the ultimate prize of expansion.

China, with a population of 939.8 million internet users, increasing exponentially (by 10 per cent last year alone), is completely closed to foreign Big Tech. All the Western household names – Facebook, Instagram, Whatsapp, YouTube, Google, Spotify and the rest – are unavailable to citizens of the People’s Republic, served instead by Wechat and Weibo. The masters of the universe in Silicon Valley can only look enviously over the fence at this forbidden fruit.

So, for the first time, Big Tech is beginning to realise the limits to its expansion. Although that still leaves it with a massive market and huge possibilities for developing further creative technology, as the Prussian maxim already quoted indicates, entities that have evolved an expansionary centrifugal force suffer an implosion of morale and motivation if that integral process is halted.

That, however, is probably the least of Big Tech’s proliferating problems. It now also has a leadership deficit. Across the business spectrum, it is a well-known phenomenon that the people who create and grow a business are often ill-suited to leading it in the changed environment that follows large-scale success. The android presentation of Facebook’s Mark Zuckerberg, under interrogation by Senator Ted Cruz in Congress, exposed the public-relations disaster that is Big Tech’s interface with the public. Almost symbolically, Bill Gates is embroiled in divorce proceedings that have raised questions about his private life. There is a fin-de-siècle feel about Big Tech, a sense that the first generation of leaders are yesterday’s men. Increasingly, their judgement is in question.

Big Tech has made a potentially fatal mistake in politicising its platforms. The golden rule in business, from which not even such massive corporations are exempt, is to maximise the customer base by cultivating as many people as possible, while taking care not to alienate anyone. In defiance of that key axiom, Big Tech has joined other corporations in going woke. It has done so at a time when its primary, domestic market is split politically down the middle.

In the climate generated by today’s culture wars, identifying aggressively with either woke or conservative forces does not imply a risk of alienating, say, 10 per cent of the market: it means provoking hostility from half of all potential consumers. Since, in normal circumstances, that is not a sane strategy, it can only be assumed that Big Tech has been emboldened to behave in this way on the assumption that its quasi-monopolist status makes it invulnerable to consumer retaliation.

That is a rash assumption. Such provocation as silencing the President of the United States during a presidential election alerts both public and politicians to the emergence of a new power – an unelected entity – with more clout than the US government and a complete absence of democratic accountability. To the public, that is deeply disturbing. To politicians of all shades of opinion it represents a threat. Democrats might have been pleased to see Donald Trump gagged, but the paranoia inseparable from their profession would also sound a warning: next time it could be us.

At the consumer level, it provides an incentive and, potentially, investment to develop independent social media platforms – conceivably even a second internet. Technological advances that would have occurred at an indeterminate time in the future could be accelerated by the desire of consumers to free themselves from the oppressive political policing of Facebook, Twitter, et al. No matter that near-genius pointy-heads will still congregate in Silicon Valley, attracted by both the mythology and the remuneration. To keep Big Tech ahead of the game, that may not be enough.

If governments resolve to cut Big Tech down to size, to slice and dice it, those same technocrats will not be slow to jump ship and join the rising-star enterprises. Sceptics credibly point out that the US government does not have the political will to curb Big Tech, that we have heard it all before, that it would be economic suicide to kill the geese that lay the golden eggs of American growth, and that these massive corporations have armies of lawyers skilful enough to postpone any resolution of litigation to an early date in 2143.

There is much truth in that argument. And yet… We live in times when radical upheaval is commonplace and seemingly unassailable assumptions, such as Britain’s continuing membership of the European Union, crumble unexpectedly. In the American context, there is already an unusual feature looming over the future of Big Tech: cutting it down to size is the sole policy, in an unprecedentedly polarised Congress, that is an across-the-aisle issue.

For, although the Democrats benefited significantly from the partisan policing of social media platforms at the last presidential election, they are no friends of Big Tech. Early in the campaign, Elizabeth Warren launched a broad-based and ferocious attack on Big Tech that would have gladdened the heart of any embittered MAGA-hatted Trump supporter, making it a primary target of the woke Left.

“Today’s big tech companies have too much power,” wrote Warren, “too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.”

Among her proposed remedies was legislation to prohibit companies with an annual global revenue of $25bn or more from owning both the platform utility and any participants on that platform. Lawyers and techies could both mount robust – and lengthy – arguments against such measures. There seems little prospect of anything radical being done in the immediate future. But that is not the point.

The point is that we are entering a new era in which, for the first time, Big Tech is in a defensive posture, trying to justify its enormous wealth and power, based on monopolist practices. There is a discernible parallel with the EU and its Remainer supporters meeting very inadequately the challenge of having to justify its existence. Once that negative impression of Big Tech is established in the public mind, it is only a question of time until it is brought to book.

Antitrust law is the most lethal weapon in the armoury of American justice. Lawsuits against Facebook and Google may be regarded as just the opening passes in a bullfight that will last for years. The picadors may not even draw blood. But the climate has changed from an assumption of settled ascendancy to permanently challenged hegemony. Late last year, prosecutors from the Federal Trade Commission (FTC) and more than 40 US states, asked the courts to break up Facebook. Even the EU is stepping up regulatory legislation to control Big Tech.

All of this is the merest preliminary offensive, but it indicates how the wind blows. Big Tech has behaved with reckless arrogance, allowing the prejudices of Silicon Valley liberals to antagonise that half of American society that is its natural constituency. Conservatives originally took to the internet like ducks to water, recognising it then as a haven of free expression, unlike the mainstream media, in thrall to the liberal consensus. Today, they find themselves gagged and cut off from the politicians they follow, trapped in a tunnel of woke censorship.

Although the pandemic drove more consumers onto social media and provided record revenues to Big Tech, more lastingly it delivered a death blow to globalism, which is Big Tech’s natural environment. Supply chain vulnerabilities are now the chief concern of world business: the realisation, following the Covid-induced production slowdown, that if China were to absorb Taiwan a world shortage of semiconductors would paralyse electronic activity, has concentrated minds and discredited globalisation.

Above all, after a binge of state expenditure calibrated in trillions of dollars, the US government is hungry for tax revenue. When it looks at Big Tech, what does it see? A bunch of fat-cat corporations with combined revenues of £1.1 trillion and market capitalisation of $8 trillion, contributing derisory rates of taxation to Uncle Sam. Facebook, for example, over the decade 2009-2019, paid just 10.2 per cent of its profits in US taxes.

Big Tech has created a perfect storm that must eventually sweep it away. Alienation of consumers, business practices that invite a crusade of antitrust litigation, refusing to plough back a reasonable proportion of profit in taxation to benefit Americans, finding itself on the wrong side of the exploded globalist delusion, and facing a crisis of leadership (does Mark Zuckerberg look like the kind of charismatic leader who could put a human face on the beleaguered Silicon Valley oligarchy?), the cyber-Titans are in terminal decline. Their attorneys will be able to postpone the reckoning for a long time, but during the war of attrition Big Tech will lose its market credibility, as it begins its long journey into night.