On this WWiW EXTRA episode, we speak with three experts on whether the D.C. region, and the world in general, is hitting a ceiling when it comes to potential su...
Trust in tech companies is at an all-time low after a long series of privacy mishaps and worries about job automation. Which begs the question: have we reached peak tech? Is the bubble going to burst, and finally lead to a reasonable amount of regulation? To understand what’s on the horizon, and what could change, we spoke with James Moore, founder and CEO of the Washington Institute for Business, Government, and Society; Kandi Parsons, shareholder at ZwillGen; and Richard Levick, founder and CEO of LEVICK.
ABERMAN: What’s your first impression? Are you seeing the same things I’m seeing? As in, is big tech sort of hitting a peak right now?
PARSONS: Well certainly, big tech is under increasing pressure. And when I looked at the topic of this show, is the party over, I looked back to see, well, how many times have we asked this question? And it turns out, there are articles and press releases going back to the mid 2010s asking, is the honeymoon over? So, it’s long been predicted it’s over. There is an increasing interest from international and federal regulators, and on the Hill, and on a broader array of topics, that I think we’ve seen in the past.
So, tech is not over. But big tech may feel increasing pressure, and Congress may actually do some things that they haven’t had the leverage to do before, because there weren’t so many controversies surrounding Big Tech, and there was so much. There was a love affair with big tech, and I think that that has tempered a decent amount. But I don’t think we’re going to see the end of big technology companies as we know them.
ABERMAN: How disappointing, I hate those scooters. Anyway, that’s another story. Jim, what do you think?
MOORE: I think we’re in the process of seeing the beginning of a high tech train wreck. We’ve been watching for such a long period of time seeing tech grow and grow and grow with little being said from Washington D.C., that we’re coming to a point where Washington is going to have to do something. Government and business is having a tremendous impact on how society is going to be dealing with technology into the future. It’s regrettable, from the standpoint of Silicon Valley, that one of its leading figures, namely Mark Zuckerberg, used as his tagline “move quickly and break things.” And so, I think Washington now is sitting back, and trying to figure out exactly what’s been broken, trying to do something to be able to address that.
But when you have worldwide companies that are trying to invest in our companies, to be able to see that governments are engaged in trying to tap into the elections of democratic countries, it is clear that we’re entering into a brand new age in which the question is whether our government leaders or policy makers are up to the task of being, first of all, able to identify and define exactly what the situation is, let alone being able to address it in some substantive way.
ABERMAN: Richard, on other shows at other times, we’ve talked about fake news, we talked about manipulation of elections. I know that you’re really concerned about technology from that standpoint. Is that what’s shaping the current environment?
LEVICK: You know, I don’t think it’s a final backlash. But you know, I think a couple of things. One, big tech clearly sees this as different. Big tech, for the first time as of two years ago, hires more lobbyists than all of Wall Street, and that is that’s a remarkable change. I think they see it as different. There’s nearly 300 lobbyists being hired, just for the FAANG: the Facebook, Apple, Amazon, etc.. And that’s a change too. There is a bipartisan approach, and in this environment, to have bipartisan opposition, is also extraordinary. And we’re just moving into an election.
Three, we had big tech on Mount Rushmore. They were the gods of Mount Olympus just a couple of years ago. Google, do no evil, Facebook, just break things. All of those things were taken tongue in cheek and in the best possible light. No more. We are much more concerned. I think it’s not so much elections, so few people in this country vote, that I think that the invasion of democracy in India, in Myanmar, obviously here, in a number of other countries, is not nearly as concerning, even though it should be, as the surveillance economy, which we’ve entered into. Are we the customer? No. Are we even the product? Probably not. I think we’re being reduced down to the information. It’s the ability to predict what we’re going to do next. And that scares all of us.
ABERMAN: I think what’s fascinating for me, having cut my teeth in the venture industry here and in Silicon Valley, is that a lot of things, you know, move fast break things, Don’t Be Evil, really comes out of the hacker culture. You know, the people, Jobs, Wozniak and others, who were sitting in their garages and basically invented technology in the 70s and 80s. And that was very much an open source collective collaborative structure, very anti-establishment, anti rules. And it seems like somewhere along the way, it went from an idealistic positive thing, perhaps, to an excuse for not complying with regulation and rules. Is that a fair assumption?
PARSONS: I think that’s somewhat fair. I agree with Richard that I don’t think the election question is going to be the thing that moves Congress, because that is a partisan issue, but where the bipartisan component is, the anti-trust issues, the inability for smaller businesses to innovate where four or five large businesses are controlling issues, and not necessarily complying with regulations in the framework that currently exists. And right now, we see tech companies go on the Hill, and they do their dog and pony show, but then nothing really changes. And creating consumers as the product, or making us the information, has created a great deal of concern. I think Cambridge Analytica was more of a turning point than actually the election interference, and in that way, we saw Facebook do very little in response to that, give a lot of lip service to it.
And I think that has a number of regulators concerned. And there was a recent report that the FTC has settled a case against Facebook for five billion dollars. And while that sounds like a huge number, a number of people on the Hill are saying that’s nothing for Facebook. That’s a drop in the bucket. And they want to see Mark Zuckerberg on the order, they want to see these CEOs held to task. And I think that that is not necessarily going to satisfy a number of lawmakers and policymakers as enough, given the amount of power that these technology companies have. The question is, in the current political environment, will these bipartisan forces actually come together to do anything about these concerns that we have, these antitrust concerns, these privacy concerns?
ABERMAN: You know we talk about bipartisanship, but my understanding is the Republicans have a very different view of why we should regulate the tech companies than the Democrats. Do you want to comment on that?
MOORE: Well I think first of all, everybody is in agreement, which is a rare thing in Washington these days, that there needs to be some kind of a resolution of how best to deal with high tech companies, and what’s been transpiring. I, at one point, was very much involved in the U.S. government, during the Reagan years, of being able to oversee all of U.S. industry at home, and abroad. And in those days, tech was just beginning to come into its own. What’s amazing in those days is that high tech companies were coming into play. Companies like Amazon and Google, etc. If they had any presence in Washington, it essentially was a law firm, and with a single out saying, hey, we represent that particular company.
There simply were no full time employees that were coming in from the Silicon Valley to be able to deal with Washington. Now today, for example, Uber has 300 people just based here in Washington D.C. to be able to understand what is happening. But as much as the high tech companies have come to the conclusion that they need to be able to deal with Washington, Washington hasn’t quite figured out how to be able to deal with the high tech industry. It was extraordinary to see Mark Zuckerberg not too terribly long ago address a committee in the United States Senate, some of whom I don’t think ever turned on a computer, trying to figure out how the model worked for a company like Facebook in being able to generate revenues. And so, trying to figure out how to be prudent, as I don’t think Congress is in a position at the moment to even understand the problem, let alone address it. One of the things that we’re doing at the Washington Institute, for example, is to be able to provide a safe haven in which we’re going to be trying to bring together policy leaders, both in the executive branch and the legislative branch, together in the offices of companies like Facebook and Uber, and the rest, to be able just to talk about the current situation, so that it’s not just congressional hearings.
It’s not just in the courtroom, that under that, there can be an understanding between government leaders, as well as the high tech industry, to be able to understand exactly what it is that we’re all going through. Because at the end of the day, the decisions that are made, both by the tech companies and government, is going to have a tremendous impact on society.
ABERMAN: So here’s my hypothesis, and why I think that this may be different from other times. Because Kandi, I agree with your earlier comment. We’ve been talking about the end of tech since the beginning of time. What I think is different now is, there’s certain aspects of it that people who don’t understand technology can understand the outcomes. For example, I think that people have an inherent understanding of market power, and when they’re paying too much, or when they don’t have choices, the consumers feel that.
And I also think that people also get a sense of when their businesses can’t grow, because they’ve been preyed upon. I think back to railroads for example, which eventually got regulated back in the 19th century. And then, I also think that people now are physically almost offended by the idea that their privacy is being invaded. So Kandi, you have clients who have to explain their businesses to regulators, and you’re in Congress. And Richard, you’re doing this as well. Am I right that this is becoming a populist issue? You know, you don’t have to be a technologist to be angry anymore?
PARSONS: It is somewhat on the market power issue. It’s interesting because some of the big technology companies are actually providing right now consumers better prices and more options than the way we historically think of monopolistic power. And so, there is an interesting theory in antitrust right now, called Hipster antitrust, which is that a company can be providing lower prices to consumers and still be doing damage to the economy, and to the market, and to other small businesses. And that’s where you hear on candidates like Elizabeth Warren talking about whether or not companies that operate a platform should also be able to offer products on that platform. And that’s a question we should consider. So here, you don’t have a lot of outrage from consumers. For example at Amazon, because they can get whatever they want as fast as they want at really low prices, but where you have some outrage is that smaller businesses that are struggling to deal with them. So, there’s some conflicting balance there. But certainly on the privacy front, for a long time consumers didn’t care that they were the product, or that their information was the price of using the “free” product.
Now, given the increasing surveillance state, the understanding that governments may be getting into that information, the creepiness factor, and frankly the fact that other countries or continents in this instance like Europe have said, wait a minute, privacy is a bit of a human right. There is more of a common language around this, and you are starting to see people say, wait a minute, Facebook or Google shouldn’t be able to do anything and everything with my information. But younger consumers still want these products, they are integrated into every day and moment of their lives. And I think that’s where you’re not seeing, you know, quite the populist uprising. You have leaders who don’t understand or use these products. And so, there’s a disconnect right now. I think probably tech leaders aren’t super concerned, because I think they know that these are integrated into everyone’s lives, and the solutions will be small. And they’ll be able to deal with them.
And I will say, a number of tech companies, big and small, would like to see regulators do something. They would like a more level playing field. And there are some businesses that compete on privacy that say hey, we don’t need this, our product isn’t data, our product is this product. And we’re happy to protect your data. So, there are a number of competing issues there. I do think it’s more populist, but it’s a conflicted populous position, because it’s so integrated into our lives.
ABERMAN: It also sounds to me, I mean, just what the small example we gave of antitrust, where if you do an analysis based upon pricing, that may not be the right regulatory tool to use these days. Richard, you’re an old recovering lawyer like me, and you deal with business people all the time. Do you think that it’s a failure of the regulatory environment? We’re trying to regulate railroads or the buggy whips, or is it a lack of sophistication? What do you see when you’re trying to help people manage this?
LEVICK: Or all of those things. I don’t think it’s about big tech’s ability to self regulate. We don’t see them coming forward, in most cases, with more than empty promises, and I think Mark Zuckerberg leads that. If you look at last spring, when he testified before Congress, although he got high marks for not wearing a black T-shirt, and you know, appearing to answer questions, lack of confidence spiked to 83 percent of Americans right after that. And I think it says that people no longer trust them, their trust bank is out too.
Although there seems to be some bipartisan approach, for partisan reasons, but that’s not going to be enough to have a good policy. If we look at the robber barons of a century ago, no one confused kerosene, fireproof kerosene, railroads or steel with us, that is, with the human being. We now don’t know, and increasingly don’t know, where does technology end, and humanity begin? Or vice versa? The fact that the next product or the Alexa in our kitchen can tell us what we’re thinking, or what we’re going to purchase next, is only the beginning of a level of artificial intelligence. And in terms of anger, the A.I. Revolution is at its nascency. we’re about to lose 77,000 truck drivers, about 3 million other drivers, taxi drivers, bus drivers. What will that do, in terms of a level of anger?
And I think all of us, even those of us who I think feel “safe” in a white collar position, we’re going to look at dramatic changes in our lifetimes. And quite frankly, when was the last time we had an unemployment rate of 3.5, 3.7 percent and people were unhappy? They were concerned, they were fearful? And I believe it’s because of what we see coming next, which none of us know how to control, and don’t have faith that we can regulate our way out of.
ABERMAN: Jim, we want to turn to you. What do you think is going to happen in 2020? Is this all going to come to a head? Is the election going to make a difference, in terms of high technology?
MOORE: No. I think it’s great for people like Elizabeth Warren to come out with a whole lot of policy papers, and to be able to distribute them. But the notion that the American people are somehow going to absorb themselves into the pros and cons of where we are right now, and high technology, I think is terribly misplaced. At the end of the day, you know, if you were to ask, and I’m very much a part right now of the organization, the CEO COUNCIL, The Wall Street Journal.
If you were to survey those individuals, and that includes folks like Rupert Murdoch and and Henry Kravis of KKR, and the founder of Federal Express, what their greatest single concern is, they would by far tell you it was worker displacement. They’re genuinely concerned about the fact that high technology is playing a critical part as a critical player in what the future economy is going to look like. The notion that somehow if an auto worker in Detroit loses his or her job is somehow a job to be picked up in Mexico or China is absolutely wrong. It is really artificial intelligence, it’s innovation, creativity in the tech industry that is allowing for those people to lose their jobs. The number one area within the economy that is going to be displaced first are going to be truck drivers. That has been conclusive. And so, but the truck drivers right now are beginning to understand that. But they’re not going to understand that until they get their pink slips.
ABERMAN: And let’s put a point on that. Truck driving is the number one place that middle class people go to make a good living. It is not just, I mean, there are millions of people involved in the trucking industry. Years ago, I had a national radio show, a lot of people who called in were truck drivers and I got to know them. This is a big problem.
MOORE: But the point is that we’re not there yet. We’re looking into the future, and we can see what our fortunes will be in the future, that is going to be a very serious problem. But until it hits, we’re really at the beginning of this journey.
ABERMAN: So here we go. Kandi, we talked about this in the last segment a little bit. Now we’ve got a situation where Jim just said the biggest problem we’re facing is not privacy. It’s not antitrust, it’s job displacement. I don’t remember seeing the regulation of that.
PARSONS: Well, right. I mean, we all know how good Congress is at looking forward into the future and solving a problem in advance and preparing for it, right? I mean, there are solutions. They may not be a one size fits all solution, but we have had major technology revolutions in the history of our country. And we may not have seen the likes of these, but the Industrial Revolution, the invention of the car, there were things that changed the manufacturing line. There were things that changed and affected jobs. And we hear candidates talk about these issues all the time. But the idea that we could give the truck drivers or other types of employees skills to move them into new segments of the economy is a way to address this coming revolution.
But we actually have to do it. And tech companies could play a role in that. There are a number of things that tech companies are doing that are innovating, and they need people to do that. Every child should be learning coding. Well, that’s great for children. But what about the people who have jobs right now? Well, that can be learned too. So you know, I’m an optimist by nature. I think there are ways to solve these problems, but it needs to be a collaboration. Not only between our government, but between the companies that are going to rely on other people to build their technologies. It’s not all going to be A.I., someone has to code the A.I., Someone has to develop these tools.
ABERMAN: So with that in mind, before I turn it to Richard. Does that mean that you don’t think that any trust or privacy legislation is going to really consume enough mindshare to happen after this election?
PARSONS: I tend to think there will be some sort of federal privacy legislation within the next couple years. A number of people think it won’t happen, because the states have gotten into play, and that Congress will ultimately just let the states play it out, and there will be 50 different laws that tech companies, who quite frankly many of them provide good services, will have to grapple with. But I think the feds will step in, in a Band-Aid type way.
ABERMAN: Richard, what do you think? Is the party over?
LEVICK: Well you know, I’m an optimist too. I think I’m down to three Xanax a day. You know, Stephen Hawking asked the question, which was: we are going to see in our lifetimes, we already are, machines building machines, tech building tech. But he also said the next phase is when machines can build technology better than we can. And that raises the question of, what is our purpose? So yes, we’re talking about truck drivers. But to Kandi’s point about Congress being unable to look forward, are we able to look forward far enough? Not only are truck drivers threatened, but the next range of jobs that are threatened are high tech mid-level jobs, and all those kids being taught coding are gonna be replaced by technology which is doing the coding for them.
So you know, I am afraid. I’m very afraid. I think we’ll find the answers, but I don’t know what they are, and I don’t think, to Jim’s point, we’re hearing them for the 2020 election cycle. I do think that litigation is going to be a big place we’re going to see change. I’ve talked about it on this program before. I think the Myanmar election, and the litigation that has followed in terms of Facebook being responsible for its content, I think that may very well shake the industry, because these empty promises of, trust us, we’ll fix it, it doesn’t work anymore. No one does trust them, but they don’t haven’t yet faced the wrath of responsibility. And that may force some changes as well.
MOORE: You know if you go back in time for a moment, imagine what it must have been like for those candlestick makers realizing that light bulb manufacturers were coming into existence. The notion that somehow they could stand and say, don’t you dare let one of our jobs go by the wayside, these guys are a threat to us. It simply wasn’t going to happen. Light bulbs are going to come in to existence, period. And as a result, we should have been thinking about it, and we should be thinking today using that same example of trade adjustment assistance, being able to anticipate what the job market is going to look like in the future, and address it that way.
ABERMAN: This is really wonderful. I really appreciate you taking the time to inform me and our listeners. Jim Moore, thanks for joining us today. Kandi Parsons, thank you as well. And Richard Levick, as always, thanks for coming in and organizing another great panel for us.
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