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TECH CEO SUMMER SUPERBOWLJuly 29, 2020 Hearings
10 Lines of Attack & 10 Lines of Defense… Why Hold These Hearings Now… What to Expect in the Future
Bruce MehlmanJuly 29, [email protected]
follow @bpmehlman
Photos licensed from AP
LAWMAKERS WILL RAISE MANY CONCERNSTen Lines of Attack Expected at 7/29 Hearing
1. Charging Unfair “Rents”. “Robber Baron” were German warlords who demanded payment from those seeking to pass their castles on the essential Rhine River. Apple demands an up-to-30% cut & use of its own payment service to be in its essential App Store.
2. Competing Unfairly. Amazon allegedly monitors real-time data of what’s selling on its marketplace, quickly offering its own competing products/ services at lower prices, more prominently & leveraging its insider insight.
3. Excessive Censorship. Republicans allege “woke” liberals at Google & Facebook are biased in limiting speech of conservatives online.
4. Inadequate Censorship. Democrats allege tech leaders at Facebook & Google put profit ahead of consumers, allowing bad actors & foreign nations to bully, inflame controversies & influence elections.
5. Ad Tech Dominance & Manipulation. Google’s secretive ad tech system allegedly discriminates against competitors (e.g. Yelp, HomeAdvisor, etc.)
6. Failure to Protect Consumers’ Privacy. Critics contend that consumers are not Facebook and Google’s customers… they are their products whose personal data are harnessed for high-profit advertising.
7. “Efficient Infringement” of Others’ IP. Google and others allegedly ignore others companies’ patents, threatening retaliation and/or litigating for years with judgements an easily-absorbed “cost of doing business.”
8. Enabling China. China hawks contend U.S. companies such as Apple strengthen China’s technology competitiveness (and reduce U.S. jobs) by researching & manufacturing in China.
9. Failure to Protect Consumers from Fake & Substandard Products. Amazon allegedly allows counterfeit and unsafe products from China to remain widely available on its store.
10. Insufficient Diversity. Big tech employees and leadership are faulted for remaining overwhelmingly white, Asian and/or male, while persistent digital divides widen racial & gender inequality.
2
TECH CEOS WILL OFFER MANY RESPONSESTen Lines of Defense Expected at 7/29 Hearing
1. Denial. We are not monopolies. Our services are *free* to consumers. Anyone can launch their own search engine / smart phone / e-commerce platform / social network.
2. Defiance. Our market shares are fairly-won and forever at-risk. Consumers opt-in to use our goods & services and are free to quit any time. Platforms don’t post bad content, users do.
3. Deflection. The real problem is China / Microsoft / cyber criminals / a few bad actors / inadequate infrastructure / insufficient STEM education / lack of consumer digital literacy / patent trolls.
4. Determination. We are committed to doing better on diversity / the environment / privacy / content moderation / consumer protection.
5. Nationalism. American global leadership is under pressure from Chinese technology and European taxation / regulation. We are the home team. USA, USA, USA!
6. Capitalism. Capitalism is the greatest system in the world for improving the human condition. Markets are competitive & success is fleeting… just ask AOL / Blackberry / Palm Pilot / Betamax / Apple (1980 version).
7. Innovation. If you don’t slow us down, we will soon launch amazing goods and services that will improve lives / increase jobs / save the planet / empower the weak / stop pandemics / help world peace.
8. Jobs. We employ more than one million workers, a majority of whom are American. We give entrepreneurs the tools (e.g. cloud) to start companies at far less cost and with much greater reach than ever before.
9. Empowerment. The broadband-connected smart phone is the Guttenberg printing press of the modern era. It allows everyone to bear witness (e.g. George Floyd killing), empowering new voices (BLM, Trump 2016) to be heard despite resistance from establishment gatekeepers.
10. Indispensability. The Internet is the hero of the pandemic. When everything else failed, the network held up, keeping us productive, connected, informed, working, learning, playing. This ain’t broke.
3
$21.44
$14.14
$5.15
$3.86
$2.94
$2.83
$2.71
$1.99
$1.85
$1.73
USA
CHINA
JAPAN
7/29 TECH
GERMANY
INDIA
UK
FRANCE
ITALY
BRAZIL
CANADA
$4.8
ARE THEY TOO BIG & WEALTHY?
The Four 7/29 Witnesses’ Combined Market Cap > 192 Nations
National GDPs (2020) & Company Market Caps
in Trillions of US $$
Source: Investopedia 4
DO THEY EMPLOY TOO FEW PEOPLE?Employees per $1 Billion Market Cap
(20 Most Valuable Global Companies)
FROM: http://bit.ly/Roaring2020s ; Source: PwC analysis of public data for MCR&T
1790
1374 13421297
1252
11311040
1121
625706
656
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
5
WHY ARE THE DIGITIZED THRIVING…
-5.1%
17.7% 19.0%34.1% 34.7%
54.4%71.9%
285.7% 295.2%
S&P (ex-IT) Google Facebook Apple Microsoft Netflix Amazon Zoom Tesla
FROM: https://bit.ly/Great-Acceleration-Q3-2020 Sources: S&P; Others
(ex-IT)
YTD Stock Performance (1/1/20 thru 7/20/20)
6
… WHILE THE UNDIGITIZED ARE FAILING?
U.S. Congress Schools
Health Care
New York law requires K-12 schools to conduct 12 fire drills per year but 0
distance learning practice runs.
19 years after 9/11 attacks shut down U.S. airspace, Congress still has no plan
to work remotely in emergencies.
Policy barriers to Telehealth services limited initial reach,
readiness & affordability.
Elections
Many states prohibit secure voting from home.
FROM: https://bit.ly/After-COVID-Mehlman2020 7
ARE THEY GOOD FOR SOCIETY?
Source: The Verge 8
ARE THEY ACQUIRING TOO MANY COMPANIES?
Source: Bloomberg, 7/28/2020 9
ARE WE IN A NEW GILDED AGE?
If Data is the New Oil, Is Bezos the New Rockefeller?
CarnegieSTEEL
RockefellerOIL
VanderbiltRAILROADS
Page / BrinONLINE ADS
BezosE-COMMERCE
ZuckerbergSOCIAL NETWORK
Vast fortunes amassed by Iconic Innovators
Electricity & Engines Transformative tech reshapes economy Internet & Mobile
Dominant firms build huge market share
The Gilded AGe TodAy
FROM: http://bit.ly/Mehlman_NewGildedAge 1
TECHNOLOGY & THE FUTURE
11
FASTER INNOVATION (AND DISRUPTION) IS COMING…
Digitizing Government, Education & Health Care
Reducing Risk, Cost & Carbon in Transportation
Enabling Earlier Warnings & Faster Cures
Manufacturing Faster With Shorter Supply Chains
Making Cities Safer, Cleaner & Smarter
Enabling New Jobs & New Work Opportunities
FROM: https://bit.ly/After-COVID-Mehlman2020 12
…AND GLOBAL CHALLENGES ARE RISING
RISING PROTECTIONISMLimiting Market Access & Taxing
Locally
RISING POPULISM
Questioning Size, Fairness & Consumer Welfare
RISING NATIONALISMChallenging Security & Local
Contributions
RISING NATIVISM
Limiting Access to Talent
13
A SPLINTERNET IS UNAVOIDABLE…
GOALProtect People
Empower People
Control People
APPROACH Heavy Regulation (eg GDPR)
Light Regulation State Dictates (eg Great Firewall)
ECONOMIC IMPACT
Older Industries Protected
(fewer startups)
Disruptors Dominate (consumers / competitors
less protected)
Nat’l Champions Dominate
(limited global reach)
POLITICAL IMPACT
Hits Nations > EC(populists empowered)
Permissionless Politics (government weakened)
Surveillance State (gov’t strengthened)
MEDIA IMPACT
Some Limits(copyright, truth, privacy)
Confirmation Bias (affirming > informing)
State-Dictated Reality
SOCIETAL IMPACT
Seeking Middle Ground
(free-ish speech)
New Voices Empowered
(both hope & hate)
“Social Credit Scores”
(less freedom)
FROM: http://bit.ly/Deglobal-Mehlman2019 14
Government is Coming
…NEW REGULATION IS CERTAIN
Antitrust / Competition
Privacy Enforcement
Platform Liability / Content Ctrls
New Digital Taxation
Emerging Tech Regulations (A.I., Facial Recog., Blockchain)
Encryption Access
Export / Import Controls
Anti-Gig Work Rules
Supply Chain Security
In progress Very Likely Possible Unlikely N/A
U.S. STATES
FROM https://bit.ly/Great-Acceleration-Q3-2020 15
ANTITRUST SUITS ARE LIKELY
U.S. vs. U.S. vs. U.S. vs.
88% Share of Search
76% Share of Smart
Phone OS
47%Share of E-Commerce
64%Share of Social
Media
Antitrust investigations by: GOOG AMZN FB
State attorneys general √ √
US Dept. of Justice √ √ √
Federal Trade Commission √ √ √
House Judiciary Committee √ √ √
European Union √ √ √
Platforms accused of abusing dominance, competing unfairly
FROM: http://bit.ly/HuntingBlackSwans2020 Sources: Search; Android; eCommerce; Social Media 16
U.S. vs.
TECH HAS ALREADY DISRUPTED POLITICS…The DIY Campaign Is Better, Smarter, Faster
ORGANIZING
FUNDRAISING
GET-OUT-THE-MESSAGE
GET-OUT-THE-VOTE
FROM: http://bit.ly/Permissonless 17
DISRUPTION WILL EXTEND TO EDS, MEDS & FEDS
Internet Cutting Out More Middlemen
EDUCATION• Hybrid online-offline degrees, more access
• Lower cost, higher enrollment, fewer schools• Employers are becoming the new schools
HEALTH CARE• More telemedicine, greater access
• A.I. transforms diagnostics & discovery• Real-time revolution: wearables + tracker
apps + cloud
PHYSICAL BUSINESS MODELS• “Retail-pocalypse” “Office-pocalypse”
• Cash & credit cards ePayments• Travel & Broadcast Zoom & Streaming
GOVERNMENT• More virtual hearings & voting
• A.I. Oversight (fraud, waste, abuse)• Smarter policing & national security
FROM https://bit ly/Great Acceleration Q3 202018
is one of the nation’s most innovative government relations firms, offering strategic solutions to
companies, trade associations, non-profits, and entrepreneurs that help them succeed in Washington.
http://www.mehlmancastagnetti.com/
To be added to future slide distribution: [email protected]
RECENT MCR&T ANALYSES:Q3 ‘20: The Great Acceleration: https://bit.ly/Great-Acceleration-Q3-2020
Q2 ’20: After COVID: https://bit.ly/After-COVID-Mehlman2020
Q1 ‘20: Hunting Black Swans: http://bit.ly/HuntingBlackSwans2020
Q4 ‘19: Deglobal: http://bit.ly/Deglobal-Mehlman2019
Q3 ‘19: Wokepocalypse: http://bit.ly/Wokepocalypse2020
Q2 ‘19: The Roaring 2020s: http://bit.ly/Roaring2020s
Q1 ’19: Permissionless: http://bit.ly/Permissonless
Q2 ‘18: Empowered America: http://bit.ly/EmpoweredAmerica
Q4 ‘17: Navigating the New Gilded Age: http://bit.ly/Mehlman_NewGildedAge
