Climbing technology’s wall of worry in 2020 and beyond: Part I
After a decades-long halo effect in which Silicon Valley could do no wrong, the past several years brought a reversal of this narrative. According to Washington and the mainstream media, Amazon wiped out Main Street while Alexa recorded your dinner conversations. Google vacuumed all your health data while Facebook helped Vlad steal the election.
Meanwhile, the Federal Communications Commission’s (FCC) 2017 repeal of its own 2015 Open Internet Order (“net neutrality”) spelled certain doom. As one confident critic put it, “What we need to absorb and respect is the incredible reality that [FCC Chairman] Ajit Pai — a single man — is largely responsible for crippling the internet as we know it.”
Whether entrepreneurs and consumers outside the Acela bubble bought into all this techlash drama is much less certain. And for good reason. Despite numerous Big Tech bumbles and many valid charges from critics, information technology continues to power the US economy.
The repeal of the 2015 net neutrality regulations did not end the internet. Instead, network investment rose. The diversity and volume of internet content continued to explode. The Wall Street Journal even worries that, far from the “crippling” internet slow-down predicted by net neutrality fans, US broadband speeds may now be too fast!
Further evidence of the successful network policy can be found in the roaring advance of the content, device, and software firms that depend on robust and extensive networks to power their products and services. Amazon now employs 100,000 robots and 650,000 humans while advertising 30,000 job openings. Apple’s AirPods are on a similar trajectory as the iPhone, having sold 61 million pairs in the first three years and 10 million in the most recent quarter.
Several of the big Silicon Valley firms insisted the FCC’s intrusive 2015 regulations were needed to “protect innovation at the edge.” It wasn’t so. The six largest edge innovators — Apple, Amazon, Facebook, Google, Microsoft, and Netflix — now sport a total market value of $5.175 trillion.
In 2019, the top seven US capital expenditure leaders were all mobile, broadband, and Big Tech firms. Their capital investments totaled $92 billion. If, over the next five years, we continue unleashing new wireless spectrum and allow mobile firms to invest the planned $300 billion, 5G networks will only expand the opportunities for edge innovators, large and small, to deliver exciting new products and services.
On the policy front, there’s bad news and good news. The complicated and aggressive California Consumer Privacy Act (CCPA), enacted in 2018, went into effect on January 1. The initial cost of CCPA compliance has been estimated at $55 billion, or nearly 2 percent of California’s gross domestic product. Eric Goldman of the Santa Clara University School of Law thinks that figure is low. This insanely expensive over-reaction to legitimate privacy concerns cries out for a more thoughtful federal approach, not least to avoid the unworkable fragmentation of digital privacy law among 50 states.
On the other hand, the White House last week issued helpful new regulatory guidelines for artificial intelligence, which emphasize innovation instead of heavy-handed preemption. Adam Thierer offers a good summary here. We should not impose sweeping moratoria on new technologies, as some congressmen have proposed for facial recognition, merely because they seem scary. We should study the costs of misuse and develop targeted curbs, but we should also be open to the massive benefits these technologies offer. If we want more upstarts (and we do) to challenge the dominance of Big Tech, we’ve got to be willing to let entrepreneurs conduct what might initially seem like radical experiments.
Venture markets are awash with capital. We need lots more true tech startups to take advantage of this funding abundance. It would boost the economy and might help diffuse some of Washington’s worst “big is bad” policy ideas.