Big tech succeeded in getting bigger in 2017 — but its failures to society became much more apparent (FB, GOOGL, AMZN, TWTR, AAPL)
Steve Kovach
Updated
Marck Zuckerberg VR
Facebook
Big tech — Facebook, Google, Apple, and Amazon — were all financially successful in 2017, but they faced a huge backlash.
The industry stumbled through fake-news scandals, abuse of its services, and more.
Even as the largest tech companies are becoming more powerful, cracks in their armor are starting to show.
Financially, 2017 was a great year for big tech. But in just about every other way, it was a terrible year for the industry's titans.
Even as the giant technology companies — a group that includes Apple, Google, Facebook, and Amazon — posted record profits and saw their stock prices soar, they had to contend with backlash to a slew of image-damaging controversies. The negative sentiment against big tech's members has gotten to the point where some serious observers including Scott Galloway, a marketing professor at New York University, have started making the case that the government needs to them break up the way it did AT&T in the 1980s.
The controversies that plagued big tech this year and the potential for government intervention are guaranteed to bleed into 2018, and they could well accelerate. Public officials in the US and abroad are already taking a closer look at the technology giants, both at their dominant positions in the market and how billions of people rely on them every day for their news, information, and more. They're already exploring what actions their governments can take to level the playing field for other competitors and curb the abuse of the tech companies' systems.
As the year comes to a close, it's worth taking a look back at how big tech bungled its way through 2017.
Big tech failed to proactively police its services
Repeatedly throughout 2017, consumers were alerted to how bad actors — propagandists, racists, child abusers, extremists, and more — had hijacked tech companies' services to spread their messages and make money off them. And each time, it became more apparent how little the technology giants were doing proactively to prevent such abuse.
Most notably, it became clear the extent to which YouTube in particular had become the platform of choice for abusers. Many were able to make money off videos that advertisers would normally avoid by gaming the Google-owned company's systems. But YouTube experienced a succession of black eyes.
In February, The Wall Street Journal reported that Felix Kjellberg, a popular YouTube personality known to fans as PewDiePie with whom the company was developing an original video series, had posted anti-Semitic jokes in some of his videos. YouTube quickly severed ties with Kjellberg, canceling the series and kicking him out of its preferred-advertiser program.
But the controversy was emblematic of those that followed. YouTube would work with — or at least wouldn't do anything to hinder — the abusers on its site until they were identified in public reports or advertisers raised a fuss. YouTube's move came only after The Journal started asking questions about the jokes and Disney canceled its relationship with Kjellberg.
The following month, The Times of London published an investigation that reported that extremist videos were being funded in part by YouTube advertisers. But it wasn't until more than 200 advertisers — many of whom most likely had no idea that their ad dollars were going to extremists — threatened to pull out of YouTube that the company fixed the problem.
More recently, reporters discovered a community that was posting disturbing videos targeted at children, some of them depicting abuse of kids. Many of the videos had ads served up by YouTube, which was also helping market the videos to site visitors. Many of the videos were eventually removed — but, again, only after people outside YouTube raised the issue.
But it wasn't just YouTube that seemed to have lost control of its service and left it open for abuse. A ProPublica investigation discovered Facebook's automated advertising service let advertisers target "Jew-haters" and exclude people from ads based on race or ethnicity. Just this week, ProPublica and The New York Times discovered that Facebook made it possible for employers to exclude people of certain ages from seeing the recruitment ads they placed on the social network, a potentially illegal practice.
After the reports, Facebook moved to address some of the concerns — but not all.
The unfortunate, underlying narrative to all these cases? The largest tech companies seem all too happy to let anything go on their services — until they got caught.
Big tech failed in its fight against fake news
After getting duped by Russian propagandists into disseminating fictional news stories during the 2016 US presidential election, Facebook, Google, and Twitter all promised to stop spreading so-called fake news this year. But their efforts largely failed. Intentionally false information continued to spread across their services, most notably following the mass shooting in Las Vegas in October.
Facebook and Google were the biggest offenders, promising over and over to weed out the hoaxes and promote the facts, in part by using artificial intelligence and machine learning. So far, they've done little to show those efforts have paid off.
To the contrary, Facebook this week acknowledged that one of the steps it took to attack fake news — flagging some stories as potential hoaxes — did little to convince users the articles were actually misleading. One might wonder why Facebook hasn't responded by taking the next step — blocking such potential hoaxes from polluting the News Feed in the first place.
Facebook and Google have promised to hire thousands of human monitors to police fake news across their services. But they've provided little detail on who these content monitors are, where they're based, or how they'll be trained. They've also declined to say whether these workers will be full-time employees.
It almost doesn't matter. There's no way a few thousand people can monitor the vast oceans of content uploaded to their services every day.
The problem is 2017 showed fake news could not only widen political divisions and undermine faith in democracy but could also lead to mass suffering. The ethnic cleansing of the Rohingya in Myanmar has been justified in part by hoaxes that went viral on Facebook, as The New York Times documented.
Big tech failed to accept the responsibilities of being in the media business
The spread of fake news can be attributed in part to the fact that Facebook, Google, and Twitter continue to deny they're in the media business.
In pretty much all the most important ways, these firms act like media companies. And their resemblance to media companies only gets more pronounced over time.
Facebook, Google, and Twitter distribute news to billions of people every month. They place ads next to the news stories they distribute. They even produce online TV shows.
Despite all that, they continue to stick to the tired line that they're just service providers and distributors with little control over what's posted on their sites. Until these companies acknowledge that they have the same responsibility traditional media companies have to vet the stories and videos they distribute, it's hard to see how the fake-news problem will go away.
Big tech's CEOs failed to show up when it mattered most
When Congress called on Facebook, Google, and Twitter to testify about their role in allowing Russian-linked actors to influence last year's presidential election, the results were embarrassing.
The companies' representatives couldn't explain why their firms had allowed people to pay for US election-related ads related in Russian rubles. They declined to support legislation that would require the same transparency regarding funding with online political ads as with those placed in newspapers or on television. And they acknowledged that they didn't know how widespread the Russia-linked propaganda efforts were before the election.
Worst of all, the American public had to hear all this nonsense not from the companies' CEOs but from their lawyers. The distinct impression the companies left was that they were not taking the problem seriously.
But big tech succeeded in becoming ever more powerful
There's another big reason to worry about big tech. This year, its members became even more dominant — and looked poised to amass even more power. Many appear to be trying to introduce themselves into nearly every aspect of our lives.
Take Amazon. It purchased the organic-grocery giant Whole Foods, gaining a big foothold into brick-and-mortar retailing. It also dabbled in pharmaceuticals. And it increased its lead in voice-based computing by expanding its line of Echo smart speakers and licensing out its Alexa assistant far and wide.
All the tech giants, particularly Apple, stand to benefit disproportionately from the new tax law President Donald Trump signed Friday. The law greatly reduces corporate tax rates and offers big incentives for companies to repatriate the billions of dollars in cash they've parked in overseas accounts — all of which will put even more money in the pockets of some of the most profitable companies on earth.
That might be OK if big tech were likely to share that windfall widely, say by building new factories, hiring lots of workers, or giving substantial pay raises to existing employees. But there's little evidence the tech giants will do much, if any, of that. Instead, it looks as if their shareholders are destined to be the big winners of the tax cuts.
And while the largest tech companies continue to get larger, there doesn't seem to be much room for innovative young companies to replace them. This year saw the death of numerous startups that couldn't compete with the behemoths. There's little hope in today's environment we'll see another company burst into the ranks of big tech anytime soon. (Keep your eye on Snap's David-and-Goliath battle with Facebook in 2018; it will get nasty.)
If there's one bright side to big tech's growing dominance, it's that many people this year became much more aware of the titans' failures. The tech giants may be super-powerful, but the cracks in their collective armor are starting to show.
