Tag Archives: disruptive technology

It’s not just about privacy — and Silicon Valley doesn’t get it

Key Takeaways:

1 – Silicon Valley and Washington, DC, are vying for which capitol – the tech capitol or the political capitol — sets the public policy agenda.

2 – Americans are not so much worried about privacy as they are about Silicon Valley’s threat to their free will.The SV-DC balance of power

I recently attended the Bloomberg Next Summit in Washington, DC, and during a panel discussion on the divide between Silicon Valley and Capitol Hill, Fred Humphries, Microsoft’s Corporate VP for US Government Affairs, made the statement that the technology industry has lost trust on Capitol Hill.  The panel, which also included Niki Christoff, Salesforce’s SVP for Strategy and Government Relations, and Michael Beckerman, President and CEO of the Internet Association, then went on to discuss the prospects of a U.S. privacy law.  Christoff boldly predicted that the next Congress will pass a national privacy law, and Beckerman agreed.  Beckerman added that it is not going to be another GCPR, but will be U.S.-specific.  Humphries offered a dissent, noting that there are many different business models in the technology industry, and these different sectors of the industry would each seek provisions that would impede other sectors, making it difficult to have a privacy regime that would apply across all of them.

Frankly, this panel’s immediate deflection to privacy as the issue that must be addressed to improve trust in the technology industry illustrates that Big Tech just doesn’t get it.  What’s dividing Big Tech and Capitol Hill is power – it’s a fight over who is going to set the direction of public policy for the country.  It’s not a fight that is peculiar to the U.S., but with the global capital of Big Tech being Silicon Valley, the balance of power between Big Tech and Big Gov in the U.S. has a huge impact on that balance in other countries, particularly in other democracies.

Free will, not just privacy is at stake

Certainly, Americans are concerned over their privacy.  According to Pew, 91% believe that people have lost control of personal information and how it is used, and 49% are not confident of the federal government’s ability to do anything about it.

But so what – despite data breaches, identify theft, and all kinds of scams that emerge from these, most Americans still freely share all kinds of personal information online and through their mobile devices.  Increased surveillance seems to be tolerated too – not just government surveillance, of which 82% of Americans are tolerant according to Pew – but almost everyone carries around a smartphone which collects massive amounts of personal data through the dozens of apps that are on each device.

Americans may be worried about the collection and misuse of personal information – but heck, they trust technology more than government.  According to the Edelman Trust Barometer, after a battering year of tech scandals, including sexual harassment at many firms, concerns over how social media may have been used to manipulate the 2016 presidential election, and the Equifax data breach, trust in the technology sector dropped just one point to 75% as opposed to government which dropped 14 points to 33%.

Judging by their continued heavy engagement with mobile devices and online, privacy concerns are not the driving factor dividing Silicon Valley and Washington – it’s really, who is going to be the biggest influence on setting the public policy agenda — how Americans think about the issues and how we organize to achieve societal objectives.

It’s the perception that we are losing our individual and collective free will that is troubling Americans. In 2010, Google CEO Eric Schmidt said: “We don’t need you to type at all. We know where you are. We know where you’ve been. We can more or less know what you’re thinking about.”  And knowing what we are thinking about allows Google and other search and social platforms to help their advertisers and partners to influence our actions — not just what to buy, but what issues matter most, and perhaps even how to vote.  Are the FAANGs just one step short of mind control?  That’s what Schmidt implied, and he’s made the same statement many times in many forums.

Capitol Hill’s issues with Big Tech aren’t the same as Americans’

Capitol Hill also has issues with Silicon Valley, particularly with social platforms like Facebook and Twitter.  These platforms are enabling citizens to self-organize around public policy issues – loosely aligned groups like Black Lives Matter and the Tea Party are challenging establishment political parties for primacy in shaping the public policy agenda.  Individual citizens are bypassing Congress, state legislatures, and regulators as they directly challenge businesses to change their behavior and policies.

There is also a concern on Capitol Hill and within traditional policy-making institutions over concentration of power within a small number of Big Tech firms – particularly the FAANGs – Facebook, Apple, Amazon, Netflix, and Google.  Their dominance over control of information flows and news distribution, and the centralization of economic power enabled by their platforms, plus the dominance of these corporations by strong public personalities is concerning.  Both the disintermediation of traditional political and governmental institutions and the concentration of power, enabled by social and e-commerce platforms, diminishes the role of politicians, regulators and other public policy-making institutions.

The possibility that the FAANGs could become more powerful than governments is not lost on politicians globally.  European Union regulators are already taking steps under competition law and privacy law to de-fang the FAANGs, and China has shown that it is possible to have a rapidly growing internet sector with heavy governmental oversight.

While the model of governmental control in China is not transferable to western democracies, there is certainly more regulation to come for Big Tech in the U.S.  A national privacy law will be a start, but that alone will not be enough to calm the unease of Americans and their politicians.


Disruptive technologies are those that overturn the existing social order

Cool Robot

What makes a disruptive technology disruptive?

This is a question that came up in a discussion with my cohort in the doctor in law and policy program at Northeastern, and I’ve been puzzling on it for a few months.  One characteristic is that technologies that emerge with new value propositions come from the convergence of two or more existing technologies.  For instance, cell phones existed for years before they became truly disruptive.  It was when the smartphone converged the cell phone converged with the internet we began to see real disruption from mobile technologies.

With the smartphone, information becomes accessible and sharable anytime and anywhere, and it enables alternatives to existing services.  Smartphones have taken market shares from cameras, music CDs, taxi companies, and even cellular service itself.  They accelerated the disintermediation of the recording industry that had already begun with Web-based music sharing.  Most recently, apps on smartphones have begun the disintermediation of the personal transportation and the hospitality industries.

Convergence and displacement still don’t quite get at the disruptive effect of a new technology-enabled business model.  One more thing is needed — a threat to social order.  Consider the case of farming drones such as those offered by HoneyComb and PrescisionHawk.  These drones and the associated analytic software can enable crop tracking, and better decisions by farmers on where and when to irrigate or apply pesticides and herbicides.  They can provide a level of detail above what a farmer can get by walking the fields, and do so quicker and less expensively than services from agricultural airplane operators.  Many drones are financially within the reach of family farmers, thus disintermediating the farming aircraft operators and services.

However, crop-dusters and aerial surveyors who provide agricultural services have investments in expensive general aviation aircraft and equipment, and drones will destroy business value of these assets.  Hence, most general aviation services incumbents are opponents of drones, and they have cited safety concerns as a reason to ban their use.  For now, FAA rules effectively ban most commercial use of drones.

This government ban is only a short term win for agriculture aircraft business.  Imagine trying to get investment in such a business now?  Investors could be reticent to fund the acquisition of assets that could shortly be obsolete.  On the other hand, with the FAA restrictions they may also feel inhibited from investing in drone-based business services.  This stalemate effectively freezes time for agricultural aviation technology; it’s like in Cuba where 1950s era automobiles are still plentiful.  Even if a crop-duster wishes to shift his business to drone technology, it just isn’t reasonable to do so right now.  But the demand from farmers is there.

Government regulations though are not always able to intercept and freeze the disruptive effects of technology.  New business models that can capture a market rapidly enable the creation of a counter lobby to threatened incumbents.

Uber is a case in point.  This simple app connects the owner of a smartphone to the owner of a sedan or automobile, thus disintermediating limousine services and taxi companies.  Personal transportation services, unlike agricultural aviation services, are used by large numbers of people who can become a social lobby to counter the incumbent lobby.  Usage of emerging consumer apps can spread virally through word-of-mouth and social media, rather than being dependent on trade press and industry conferences.  This wide and rapid adoption enables entrepreneurs to run faster than the regulators.

Furthermore, regulation of personal services typically operates at a state and local level rather than at the national level.  The chance of finding friendly or just plain slow jurisdictions is pretty high, and by the time the incumbent lobby organizes itself, the new technology’s entrepreneurs and investors have the support of a large and growing number of consumers who can mobilize through social media — i.e., a social lobby.  By the time the backlash mobilizes, the entrepreneurs have generated enough revenue, social capital, and momentum to compete effectively in the lobbying game.

To summarize, the most disruptive technologies will include the following characteristics:

1 — Convergence of two or more existing technologies that enables the emergence of a new business model

2 — Displacement of incumbents that have significant investments in legacy assets, and thus a political stake in maintaining the status quo

3 — Disintermediation of the regulators through a vector that enables rapid development of a social lobby in favor of the new business model

Bottomline – Disruptive technologies are those that overturn the existing social order.