Legal Troubles Don’t Mean Diminished Ambitions for Big Tech

Big Tech took some unprecedented hits in 2018. For the first time in memory, previously unassailable companies found themselves squarely in government and public crosshairs alike, answering for a series of (often data-centric) misdeeds.

But even as questions loom and skepticism increases, these issues – and the ensuing public backlash – remain unlikely to diminish Big Tech’s considerable ambitions. In fact, there have been few, if any, signs of retreat.

For most internet users, Google, Facebook, and their counterparts are ubiquitous to the point of being taken for granted. Engaging with their products is almost reflexive when browsing or when using a phone or computer; it’s difficult to imagine a world without them. But years of accumulated goodwill have been threatened by intensifying scrutiny from around the world.

Last March’s Cambridge Analytica scandal was the first major cloud over Facebook in 2018. Revelations that the company had allowed the collection and sale of data for 87 million users without their consent brought initial pressure from lawmakers and the public; pressure that was then compounded when American intelligence agencies concluded that Russian operatives used fake accounts to spread propaganda on the platform during the 2016 presidential election. That scrutiny extended across borders: a British parliamentary committee investigating Russian election influencing campaigns recommended sweeping regulations on tech companies, while accusing the social media giant of being disingenuous – or outright obstructing – lines of questioning related to the inquiry.

Facebook took their lumps domestically for data misuse but were hardly alone in the harsh glare of the spotlight. Twitter received similar criticism and issued an apology; Google was called to testify in Washington for a perceived anti-conservative bias (an order they may or may not have invited by neglecting to attend a hearing on Russian meddling in social media) and was also the subject of bipartisan concern over the company’s “size and influence,” exposing issues of privacy and potential antitrust action.

Against this backdrop, the European Union passed the world’s most stringent set of data-protection rules. Long in the works, the General Data Protection Regulation may only apply to EU nations, but its effects reverberated far beyond Europe. Similar in spirit to past legislation, the comprehensive and enforceable set of regulations requires businesses to clearly detail how an individual’s data is being used and makes it more difficult to target advertising via personal information. Users have significantly more control over their data and can even call for it to be deleted. Non-compliance can result in fines upwards of $1 billion.

Technology Companies Respond by Expanding

The onslaught of bad press and legislative pressure would seem to encourage changes from Big Tech – or at least efforts to reassure the public of their benevolence. That has not been the case. “The tech companies are not flinching,” Bob Staedler, a Silicon Valley consultant, told the New York Times. “Nothing has hit them on the nose hard enough to tell them to cut back. Instead, they are expanding. They’re going around the country acquiring the best human capital so they can create the next whiz-bang thing.”

That expansion is both digital and physical. Tech’s giants want ownership over the digital real estate of the cloud; they are also redesigning physical spaces in cities like Toronto and building extensive new campuses around the country to house their rapidly growing workforces. Google saw a 21 percent increase in employment in 2018; the company is planning a “campus [in San Jose, California] of eight million square feet with offices for 20,000 workers, a figure that is more than the company’s total employment in 2009,” among other projects.

Facebook’s growth was even more extensive – employment grew by 45 percent, necessitating the lease of a “one million square feet in the Silicon Valley community of Sunnyvale for its fast-growing community operations team, which deals with safety and security issues confronting Facebook users,” plus “750,000 square feet in a San Francisco tower.” And with their acquisition of Whole Foods and masses of warehouse employees, Amazon became “only the second company in the United States to employ more than 500,000 people – and that is not counting its contractors.”

What’s Next?

Experts agree that Big Tech will continue expanding to meet its lofty goals. Alphabet, Amazon, Apple, and Facebook “together generated $166.9 billion in revenue in the third quarter of 2018 alone – up 24 percent from a year earlier, when the four companies hauled in $134.4 billion.” Even still, these companies are in the nascent stages of becoming one-stop shops for all human needs. Tim Barjarin, an experienced tech consultant, told the New York Times that they are not quite halfway there: “For all intents and purposes, we’re only 35 years into a 75- or 80-year process of moving from analog to digital,” said Barjarin.

Calls for regulation are growing louder but less resonant when measured against the number of people who rely on Google or Amazon’s services. MIT economist David Autor characterized the populace as “quite dependent” on large tech companies despite their misgivings. In addition, many experts doubt that politicians can be trusted to get it right – Google CEO Sundar Pichai’s hearing before Congress in December was just the latest example of a gulf in understanding between politicians and the workings of Silicon Valley. “The government doesn’t have a good clue…they’re not even asking the kind of questions that would drive to regulation,” said Bajarin.

For now, that means companies will be left to regulate themselves. How effective that will be is unclear, but mounting evidence shows that additional criticism does not seem to matter much to tech’s heavy hitters. An economic slowdown or meaningful regulations may change that equation, but Big Tech appears to only be getting bigger.

Quandary Peak Research

Based in Los Angeles, Quandary Peak Research provides software litigation consulting and expert witness services. We rapidly analyze large code bases, design documents, performance and usage statistics, and other data to answer technical questions about the structure and behavior of software systems.