1 big thing: A storm
gathers around Big Tech
The backlash against Big Tech is on track to escalate around
the world in 2020 — and with more concrete consequences, write Axios managing editor Scott
Rosenberg and editor-in-chief Nicholas Johnston.
- Why
it matters: Smartphone growth is stalling, and innovators are vying to figure out
what will replace them. Platform transitions always make tech
incumbents quake.
In Washington, regulators and lawmakers are finally getting the
details they've wanted about the full power of tech companies — and how to
fight back.
- In
state capitals, attorneys general and legislators
are stepping in to investigate and counter anticompetitive practices.
- On
the campaign trail, liberals assail the power of Big Tech and call for
breaking up Facebook and Google, while conservatives decry their power and
accuse them of silencing their voices.
- In
newsrooms, investigative
reporters are following more threads and leads to expose the power of tech
giants and the false promises of new startups.
- On
Wall Street, investors
have lost patience with money-hemorrhaging startups and loose-cannon
founders.
- Around
the world, a
trade breakdown is severing supply chains and nationalist
forces are splintering the global internet, shaking the
foundations of the tech industry's decades-long march to dominance.
The big picture: Tech giants today control
vast hoardes of cash, armies of talent and troves of data, and they provide
billions of customers around the world with convenient, personalized, often
free services.
- Unlike
their predecessors, they might have the resources to outmaneuver and
outlast government assaults.
The bottom line: Partisan political battles
dominate the headlines, but this is the conflict that will shape our economy
and society.
2. The fall of unicorns
Illustration: Eniola
Odetunde/Axios
Public market investors are turning a more critical eye toward
"unicorn" startups, particularly those with lax governance and big
losses, writes Dan Primack.
Why it matters: This comes after years of laser
focus on top-line growth, and is challenging for older startups that had geared
their business models to the old normal.
- WeWork
is the most obvious example, with its new co-CEOs frantically seeking to
shed assets and slow expansion.
- Postmates
was supposed to have filed its IPO registration by now, but hasn't.
- There
are dozens, if not hundreds, of other mature startups caught with their
income statements down.
What comes next could be familiar for anyone
who's ever tried to find a plumber: More demand than supply.
- Unicorn
growth has been driven by an unprecedented number of large, later-stage
venture capitalists. This includes not only the $100 billion SoftBank
Vision Fund, but also hedge funds and mutual funds.
- These
"VC tourists" will thin out, putting companies in capital limbo.
- Some
startups will get ghosted by their "founder-friendly" VCs.
- The
result could be a wave of rescue rounds, in which share prices are crammed
down, or outright fire-sales.
The bottom line: For companies with
reasonable controls and paths to profitability, all systems remain go. We are,
after all, still in the longest-ever bull market for public equities.
- But
for unicorns that never looked beyond the trough, it could be slaughter
season.
Bonus: The biggest of Big Tech
Data: Yahoo. Chart: Naema Ahmed/Axios
3. States add to Big Tech's headaches
Illustration: Aïda
Amer/Axios
Already facing antitrust and privacy enforcement actions from
governments around the globe, major tech companies are now grappling with a
slew of new potential threats from individual states, writes Kim Hart.
Why it matters: Local governments are more nimble and have
higher levels of public trust than Congress, so they have more latitude to get
laws passed quickly.
- That's
a problem for tech companies that are trying to shore up public trust
while also fighting back an array of regulatory assaults.
The big picture: State attorneys general
have been particularly active under the
Trump administration, acting unilaterally to go their own way in some cases,
and uniting to fight Washington in
others.
- Aggressive
state AGs with an interest in tech often move into higher profile
political roles — such as former Missouri AG Josh Hawley, who's now a
Republican senator and a vocal critic of Big Tech.
- There's
also former California AG Kamala Harris, a presidential candidate who, as
a senator, has been tough on data privacy and election security.
At the state level, populist movements on the
right and the left may converge on some tech-related issues, such as perceived
partisan bias and business market dominance.
- Cities
and states are also showing an appetite for intervening in the gig economy,
which is expected to have ripple effects far beyond firms
like Uber, Lyft and Doordash.
4. Media goes all-in on tech coverage
Illustration: Aïda
Amer/Axios
Media investigations of Big Tech are ushering in a new era of
oversight into the industry, writes Sara Fischer.
News outlets around the globe are expanding their
tech coverage, adding new teams, reporters and areas of focus to the beat.
- More
hiring: CNN,
the Washington Post, the Financial Times and the New York Times continue to expand
their tech reporting teams to cover tech policy, not just gadgets and
games.
Between the lines: Media companies are increasing
their investments in tech coverage as a way to fill an expected void in
interest in politics after President Trump departs office, and as a way to make
up for years of rosy, consumer-focused coverage.
5. The consumer compromise
Illustration: Sarah
Grillo/Axios
A decade after consumers opened their lives to Big Tech, they're
beginning to realize that a phone in every pocket and a screen in every face
comes with consequences, writes Erica Pandey.
What's happening: With every breach of privacy and
misuse of data, consumers' optimistic view of Big Tech platforms as forces for
good is turning cynical. Users are becoming increasingly aware of the data and
privacy they give up in exchange for free services.
The big picture: Trust in tech giants is falling —
fast.
- Per a Harris Poll survey earlier this year,
Facebook's reputation rank among the world's 100 most visible companies
fell from 51 in 2018 to 94 in 2019.
- Google
fell from 28 to 41; Apple, from 29 to 32. Both Apple and Google were in
the top 5 most trusted companies as recently as 2012.
- Amazon
remains the exception. The behemoth has remained at 1 or 2 for several
years.
What to watch: California is leading the charge to
protect consumers' privacy with a new law that kicks in Jan. 1. The legislation
will give state residents the right to know what personal data is being
collected — and ask companies to delete it.
- Look
for this law to become a national blueprint for regulating Big Tech.
6. Yes, but ...
Illustration: Aïda
Amer/Axios
- Tech
giants like Google, Facebook and Amazon provide incredibly valuable
services at negligible or zero cost. No wonder consumers flock to them.
- Only
one major tech company — Uber — has ever been damaged by consumers turning
against it. There were no costs involved in switching to its almost
identical competitor, Lyft.
Social networks take years to build and are
almost impossible to replicate. Meanwhile, Google, Amazon, Apple and even
Microsoft are building out ecosystems that have no real rivals.
- Consumers
love these companies' products, and even if they didn't, they have nowhere
else to turn.
Our thought bubble: It's precisely because the tech
giants have such an iron grip on consumers that they need effective government
regulation.
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