Op-Ed: How Big Tech Got Lost, With Products and Business Models That Damage Democracy and Public Safety

For 65 years, the United States has relied on its digital technology industry to create amazing products and fuel economic growth. Most of the time, the industry has exceeded expectations. However, over the past decade, the tech industry has strayed with a culture, products, and business models that have subverted democracy, public health, and public safety.

Recent global events offer the industry an opportunity to reorient itself and it is vital that it does so. America needs its tech industry to solve problems, not make them worse. But we cannot expect the industry to change without proper incentives that must come from government and voters.

Today’s technology industry, many of which only emerged in the early 2000s, is allowed to operate without regulatory constraints. Entrepreneurs and investors have focused their energies on growing to massive scale and profit as quickly as possible, with no regard for community values ​​such as consumer safety, democracy, public health, and human autonomy.

After the financial crisis of 2008/09, the world economy was stable for more than a decade, with inflation and interest rates exceptionally low. Stability in international trade enabled supply chains optimized for short-term costs. As a country, we might have used this environment to address some of humanity’s greatest challenges, such as climate change and income inequality. Instead, we have allowed companies to set their own priorities. They strove for wealth and power, with strategies that aggravated every problem in society. No industry has done more damage than technology.

Some new technologies, like facial recognition, have been funded without a constructive use case. Other emerging industries, like ride-sharing, ignored existing laws and regulations, expended huge amounts of capital, and produced staggering losses, all in pursuit of a monopoly that could eventually lead to profits. In the field of artificial intelligence, entrepreneurs claimed that huge data sets — even those made up largely of junk — would improve our lives, despite overwhelming evidence of bias and poor outcomes.

Low interest rates and inflation encouraged investors to take ever greater risks, so they kept throwing money at tech startups. The bigger the promise, the higher the rating. Entrepreneurs responded with ever crazier ideas. Eventually, investors funded business plans that depended on overriding the laws of physics or finance. The self-driving vehicle sector claimed it doesn’t need the dedicated lanes or beacons on obstacles that are standard for autonomous planes and ships. They claimed that AI and sensors in the vehicle were good enough, despite plenty of evidence to the contrary. The crypto industry built a Ponzi scheme on bad computer science.

Each of these ideas had skeptics, but their warnings weren’t enough to overcome the enthusiasm of investors determined to own a piece of the next big thing. At its peak earlier this year, more than 1,000 startups were valued at $1 billion or more, many with little or no revenue.

The COVID pandemic and the Russian invasion of Ukraine have shaken global stability. Interest rates and inflation have skyrocketed, and geopolitical tensions are forcing changes in the international economy. Governments are no longer willing to subordinate other concerns to economic growth. Supply chains based on low labor costs are being restructured. This could be the beginning of a new economic era.

Although the tech sector thrived in the early days of the pandemic, it has hit a wall. The Nasdaq is down nearly a third in 2022, while 448 individual stocks are down 70% or more. Things could get worse as few of the new tech companies have generated material revenue. Of those that have gone public in the past decade, only one has made the Fortune 500, Coinbase, at No. 437. It remains to be seen what societal benefits will come from the tech industry’s past decade.

The transformation of the global economy creates great incentives for a tech reset. Consumers face shortages of many products. Businesses need to move production closer to demand. Climate change requires new energy solutions, a new power grid and new transport concepts. The exceptionally expensive US health care system does not meet the needs of the nation. The education system does not prepare children for adult life.

The lesson Americans should learn from the last decade is that failure to regulate technology leads to catastrophic damage. Politicians and voters sat back while it happened.

We clung to five myths: There’s only one way for the tech industry; new technology is always better; Markets are always the best way to allocate resources; industry will regulate itself in the public interest; and there is no meaningful role for government as arbiter of capitalism.

In fact, the current path relies on perverse incentives – change the incentives to change the direction of technology. New technology is not necessarily better. Markets aren’t always good at allocating resources, as the pandemic has shown. Companies cannot be expected to regulate themselves when they can make more money doing it. If capitalism is to work for the common good, the state must act as arbiter.

The way forward should require engineered products to meet safety standards equivalent to those of food and drugs, with a new agency like the Food and Drug Administration having to certify safety as a condition of market access. We should recognize that the use of personal data undermines human autonomy and should be banned. In order to create new products and business models, we should break the monopoly of today’s technology giants.

That path would be a change in culture, business models and industry structure. What seemed impossible a year ago when technology was in full swing has become more plausible. When the federal government fails to do its job, California has most of the necessary tools.

Of course, tech entrepreneurs and investors are fighting change. They are understandably reluctant to abandon the approaches that have made so many of them rich and powerful. But market forces set the process in motion. Now it’s up to politicians and voters to drive change.

Roger McNamee is co-founder of Elevation Partners and author of Zucked: Waking Up to the Facebook Catastrophe.

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