TECH vs. THE WORLD
Big Tech gets bigger during Covid-19
As the global economy collapses, tech giants emerge from the pandemic stronger than ever
Our growing relationship with technology reached a tipping point during the coronavirus pandemic. With people told to stay indoors, the lockdown accelerated the trends that had already been shifting our lives online. We soon found that Big Tech — Amazon, Apple, Google, Facebook and Microsoft — were able to fulfil many of our daily needs and prove their indispensability in the process.
Facebook allowed us to keep informed and connected with friends and family that we could no longer visit due to quarantine restrictions. Amazon boosted its workforce by 175,000 to meet the increased demand for online shopping as physical stores shuttered. Google and Microsoft rolled out services, from video-conferencing to education apps, to enable employees and students to work and learn remotely.
As the pandemic upends the global economy, smaller businesses already struggling with the dominance of these giants are being dealt a critical blow. Brick-and-mortar retailers suffering without foot traffic during lockdown were left with little choice but to sign up to Amazon Marketplace to keep afloat. With more sellers having to join the platform Amazon can further transition from being the dominant gatekeeper for e-commerce into being the dominant gatekeeper for much of retail.
Bulldozing competition is just one of several reasons that have led to demands for more stringent regulation of technology companies and even calls to ‘break up big tech’ from both sides of the political spectrum. Tech giants have so much power that fair business negotiations are impossible, and they are more than willing to use power in one market to crush competitors in another. Concerns over privacy and surveillance have been the cause of public outrage in recent years.
All of this scrutiny seemed to be coming to a head pre-pandemic. In 2019, the US Department of Justice, the Federal Trade Commission, Congress and dozens of state attorney-generals had opened probes into whether Big Tech firms have unfairly suppressed competition, and harmed consumers in the process. In Europe, the EU Competition Commission led by Margrethe Vestager was also seeking to enforce antitrust laws and break the tech monopolies. Vestager advocates that tech giants need to do more than just show that they aren’t harming consumers, but need to also demonstrate how they are helping them.
Covid-19 has given the tech industry the opportunity to showcase themselves as positive contributors to society. “As a software platform and tools company, we at Microsoft view ourselves as digital first responders when the true first responders call from the front lines. Microsoft works for the heroes who are putting their lives at risk and must bring them everything we have to offer” wrote Microsoft’s chief executive Satya Nadella in a Financial Times op-ed.
Eric Schmidt, former Google CEO argues that the coronavirus should make us more ‘grateful’ for Big Tech. “Think about what your life would be like in America without Amazon, for example. The benefit of these corporations — which we love to malign — in terms of the ability to communicate … the ability to get information, is profound — and I hope people will remember that when this thing is finally over,” said Schmidt to the Economic Club of New York. “So let’s be a little bit grateful that these companies got the capital, did the investment, built the tools that we’re using now and have really helped us out. Imagine having the same reality of this pandemic without these tools.”
The reality is that Big Tech has found itself in a unique position to help and also profit from the situation. The tech industry’s conception of a ‘touchless’ society of driverless vehicles and drone packaging had previously been marketed on convenience and creating a world without friction. Framing these services around their public health benefits is part of a rebranding exercise to win back public support and ultimately grow their businesses.
In an article in The Intercept, Naomi Klein notes that just two weeks before Covid-19 was declared a pandemic, Eric Schmidt’s lobbying campaign to the US government for “massive public expenditures on high-tech research and infrastructure, for a slew of ‘public-private partnerships’ in AI, and for the loosening of myriad privacy and safety protections” was justified as a necessity to avoid being outcompeted by China. There was no mention of public health.
The pandemic has exposed the technological shortcomings of governments in the US and Europe. Overwhelmed by the crisis, several governments are having to rely on Big Tech to compensate for the skills gap. Google and Apple — who collectively power 99% of the world’s smartphones — have been working together to develop a contact tracing app to help governments and health agencies reduce the spread of the virus. In the U.K., a month-and-a-half after announcing its own attempts at contact tracing app, the British government reluctantly admitted its app was flawed and that they would switch to the Apple-Google model.
“Neither the public nor the private sector alone can provide the answers. The challenges we face demand an unprecedented alliance between business and government” Nadella’s FT op-ed continues. “Too often we celebrate the ideal of a maverick working alone in a garage solving all our hard problems. We do need those mavericks, but we also need more co-ordinated combinations of government and industry that respond and innovate.”
The five tech giants have stepped in to support governments and the public sector in various ways. Microsoft has been helping international healthcare organisations screen coronavirus patients using an AI-powered healthcare bot. Facebook has been supplying health researchers with datasets and mobility visualisations such as co-location maps, movement range trends and indexes to help forecast the likelihood of disease spread. Amazon has collaborated with the UK and the Canadian government to deliver medical equipment and test kits to essential workers. It’s cloud computing product, Amazon Web Services, powers government agencies and resources throughout the world, and was given the data storage contract for Australia’s contact tracing app.
Franklin Foer warns us why the firms are all too eager to help the government manage the coronavirus crisis. “Rather than supplanting government, they have, in essence, sought to merge with it” writes Foer in The Atlantic. “As the pandemic accelerates Big Tech’s insinuation into government affairs, the industry’s most powerful companies will almost certainly exploit their relationships with agencies to damage less powerful rivals and extract lucrative contracts.”
There is widespread concern over the consequences of this alliance between Big Tech and government. After the announcement of the Apple-Google joint effort on contact tracing, more than 300 scientists and researchers from 25 countries published an open letter urging governments to avoid a system that ‘would allow unprecedented surveillance of society at large’.
There is a precedent of tech companies soaring after being given the scope to pillage personal data during a crisis. “The 9/11 attacks transformed the government's interest in Google, as practices that just hours earlier were careening towards legislative action were quickly recast as mission-critical necessities” writes Shoshana Zuboff in The Age of Surveillance Capitalism. A key aspect of US tech billionaires’ fixation on China is an admiration for its government and tech industry’s less restricted approach to mass surveillance.
“As tech and government grow more comfortable with each other, they’ll face the temptation to further indulge their shared worst instincts” says Foer. “Both wield intrusive powers with inconsistent regard for the prerogatives of privacy. Both possess a not-so-humble sense that they can change public behaviour.”
It’s too early to say exactly what the final outcome will be regarding the pressure for regulation that was mounting pre-pandemic. Politicians on both sides of the Atlantic have found themselves with more urgent things to worry about. However, since lockdown measures began to ease the European Commission has opened two antitrust probes on Apple regarding the App Store rules and Apple Pay system. The US Justice Department is gearing up for a similar investigation into the App Store and is ‘moving swiftly’ in preparing a lawsuit against Google.
In a closely watched case in Germany, Facebook lost an antitrust decision over data collection. The company will now have to alter how it processes user data in Germany as it was ruled that it had violated competition laws by abusing its dominant market position. Facebook has said that they will appeal the decision but this is undoubtedly a regulatory setback that could inspire similar cases elsewhere.
On the other hand, with the global economy reeling, many believe we should be focusing on building up rather than breaking up. Big Tech has led the global market recovery in the wake of Covid-19 and is emerging from the crisis flush with billions of dollars to spend. Our growing reliance on their products as expressed through the pandemic has given these companies the encouragement to seek how to deliver the services they do not yet offer.
Since the pandemic, Microsoft has acquired three cloud computing companies to bolster its technology offer to businesses. Amazon has added to its air cargo fleet and is looking to buy a multibillion-dollar autonomous vehicles start-up. Apple has made purchases in AI and VR whilst Google awaits acquisition approval on a deal for Fitbit that has met antitrust and privacy concerns worldwide.
Facebook has taken a $5.7 billion stake in the Indian telecom company Reliance Jio, paid an estimated $400 million on the GIF company Giphy, and invested in Indonesian ride-hailing and food delivery company Gojek.
“I’ve always believed that in times of economic downturn, the right thing to do is keep investing in building the future,” Mark Zuckerberg, Facebook’s chief executive, said during an investor call in May. “When the world changes quickly, people have new needs, and that means there are more new things to build.”
Tech giants have emerged as the clear winners of the Covid-19 crisis. The pandemic has demonstrated the potential power of tech companies as a force for good and they are as profitable as ever. It could result in the public and government alike looking at them in a new light, as technocrats and lobbyists have long wished.
However, rather than ceding control, we should be raising our expectations. By setting ambitious requirements on what a positive contribution to society looks like, citizens and regulators can and must hold the industry accountable. Breaking up big tech may never happen but that does not mean we should not insist on an even higher standard in which these companies can be a force for good without exploiting monopolistic practices.
