COSM A Technology Summit

Wall Street Journal columnist to Big Tech: You are doomed

Published at Mind Matters

Andy Kessler—author of Wall Street Meat and Eat People—offered some candid assessments of Big Tech’s future at the COSM Technology Summit from his perch at the Wall Street Journal.

We may not realize it, he told his audience, but much of Big Tech’s power in the world today stems from a few words in the Telecommunications Decency Act (1996):

No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider

(47 U.S.C. § 230)

As the Electronic Frontier Foundation explains, “In other words, online intermediaries that host or republish speech are protected against a range of laws that might otherwise be used to hold them legally responsible for what others say and do.” And that is why most big Western social media and other online services are based in the United States. No such protections apply in other Western countries.

Kessler joked, pointing to his host, “If I defame George Gilder on Facebook, he can’t sue Facebook, though he can sue me. And without Section 230, there would be no Facebook.”

In other words, these giant companies’ very existence depends on seeming incidentals of legislation. But each of the giants also has a central weakness that will doom it.

The fall of tech giants is by no means a new development, Kessler noted. IBM, a colossus of the early tech revolution, continues to decline in revenue and significance, with occasional upticks that really don’t change the picture. And remember General Electric? “GE used to be 1% of the US economy, now it is 1% of its former self.” Last year, Dow Jones kicked the once-mighty GE off the Industrial Average index for loss of significance.

If, as Kessler puts it, “The titans of yesteryear are no longer the titans of tomorrow,” what ills does he see brewing within the titans of today?

Apple’s iPad sales are way down and the iPhone sales are “dead flat.” The weakness, he suggests, is that things don’t wear out the way they used to. “Smartphones are radial tires. So Apple is backing into services. They’re making TV shows!

And mighty Facebook has peaked. “They’re not allowed in China. Their user numbers in the US and UK are dead flat and starting to go down. So they’re going to sell more ad space? They’re going to fill the balloon they created.”

Amazon remains profitable in part due to a decision to open up their cloud service to other users (Amazon Web Services or AWS). 

And Google? “A free service model cannot deliver sustainable growth.” Kessler thinks that blockchain, harnessing billions of servers, may “dwarf anything Google can do.” Apart from that, he concurs with George Gilder that Google can’t imagine life after Google and thus cannot easily prepare for inevitable decline. 

“These companies are all going to blow up,” he summarized, “Buried inside each is an NCR, a Control Data, or a Honeywell” awaiting its time. 

Perhaps because he doesn’t see Big Tech firms as invulnerable, Kessler is a strong opponent of proposals by political figures such as Sen. Elizabeth Warren and Sen. Josh Hawley to break them up. He reasons that the targeted companies will either fade into comparative insignificance for unrelated reasons as the bureaucratic machinery grinds away (think IBM). Or they will slowly put themselves back together again as a virtual monopoly if conditions permit (think AT&T and Verizon). “You can break up Facebook today and it’ll be a decade before anything happens,” he said.  

The discussion was “Regulation and the Future of Technology: A conversation between George Gilder and Andy Kessler,” COSM, A National Technology Summit: AI, Blockchain, Crypto, and Life After Google October 23–25, 2019, sponsored by the Walter Bradley Center for Natural and Artificial Intelligence, hosted by technology futurist George Gilder.

Denyse O’Leary reporting live from the COSM Technology Summit.

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