Disruptive Sam­son’s Next Hair­cut

Blockchain might be the lit­tle en­gine that could top­ple Ama­zon, Ap­ple, Face­book and Google

Newsweek International - - NEWSWEEK - BY KEVIN MANEY @kmaney


Ap­ple, Al­pha­bet (née Google), Face­book and Ama­zon, we’re in­creas­ingly hear­ing politi­cians, ac­tivists and even tech veter­ans say they have turned into men­ac­ing mo­nop­o­lies. They are too pow­er­ful, know too much, will­fully crush whole in­dus­tries and, ap­par­ently, can eas­ily get hood­winked by Rus­sians.

Such fear and loathing means all those Sam­son-like companies should trem­ble, be­cause some new fringe tech­nol­ogy is about to come at them with bar­ber shears. In 1998, when the U.S. Jus­tice Depart­ment brought an­titrust charges against Mi­crosoft, Bill Gates’s com­pany ut­terly dom­i­nated desk­top com­put­ing. By the time the an­titrust suit was set­tled in 2001, early in­ter­net ap­pli­ca­tions were gnaw­ing at the supremacy of Mi­crosoft’s Win­dows, Of­fice and Ex­plorer. Turns out Mi– crosoft would’ve been hum­bled if the gov­ern­ment had done noth­ing.

Like then, it can be hard to­day to imag­ine how our mighty su­per­pow­ers could be threat­ened. Ap­ple reigns as the most valu­able Amer­i­can com­pany, and Al­pha­bet, Face­book and Ama­zon are in the top six. Gov­ern­ments worry about their power: Google and Face­book were marched be­fore Con­gress to tes­tify about how their ser­vices might have been used to turn the last elec­tion in Don­ald Trump’s fa­vor. Google is bat­tling Euro­pean Union an­titrust rul­ings. Ama­zon gets ac­cused of wreck­ing re­tail­ers such as Sears and Macy’s. Mean­while, Franklin Foer’s new book, World With­out Mind, cap­tures the grow­ing sense that the four “knowl­edge mo­nop­o­lies,” as he calls the companies, have all but sub­ju­gated hu­man­ity. “We are the screws and riv­ets in their grand de­sign,” he writes.

No com­pany is going to chal­lenge any of the big four head-on. Mi­crosoft proved the folly of that when it spent some­thing like $10 bil­lion try­ing to con­vince us to switch to its Bing search en­gine. Let me know if you ever hear some­one say they’ll set­tle an ar­gu­ment by Bing­ing the topic. In­stead, the con­tender al­ways arises from some per­plex­ing tech­nol­ogy fa­vored by the nerdi­est nerds. Now that tech­nol­ogy seems to be blockchain.

Over the past six months, tech­nol­o­gists have come to be­lieve that blockchain—a ver­sion of the tech that brought us bit­coin—can be used to build en­tirely new kinds of net­worked plat­forms, and these plat­forms can be em­bed­ded with in­cen­tives that could suck users, de­vel­op­ers and part­ners out of the mas­sive or­bits of Ap­ple, Al­pha­bet, Face­book and Ama­zon.

Jeff Stewart, a part­ner in blockchain in­vest­ment com­pany Ur­gent, tells me to think of it this way: Ap­ple, Al­pha­bet, Face­book and Ama­zon each es­sen­tially cre­ated an econ­omy. Users con­trib­ute some­thing—like con­tent, money (by buy­ing stuff), per­sonal in­for­ma­tion or thim­ble­fuls of their souls—and get a ser­vice or prod­uct in re­turn. De­vel­op­ers build apps in the econ­omy; re­tail­ers sell stuff; brands ad­ver­tise.

A whole lot hap­pens to en­able com­merce within that econ­omy, but the com­pany that built it sets the rules, de­cides what apps or part­ners live or die, re­veals only what it wants to or legally must—and then reaps al­most all of the re­wards. In one sense, these economies are fan­tas­tic. Who among us wants to give up the gad­gets, in­stant an­swers, long-lost friends and cheaply de­liv­ered stuff brought to us by the four gi­ants? Yet this model su­per-con­cen­trates power and wealth, and that can be harm­ful—like, for in­stance, if we want a healthy mid­dle class.

Blockchain holds the prom­ise of build­ing sim­i­lar economies that are more like co­op­er­a­tives—owned by all who par­tic­i­pate or in­vest. A blockchain is a set of oper­a­tional rules, en­coded in soft­ware. The rules can han­dle trans­ac­tions and con­tracts, set up so that if I do some­thing to con­trib­ute, I au­to­mat­i­cally get some­thing in re­turn. The blockchain is run on com­put­ers all over the world, co­or­di­nated by the rules in the soft­ware—it’s not trapped in one com­pany’s data cen­ters. This is how bit­coin works. No one owns or con­trols the bit­coin ecosys­tem. The soft­ware runs on ma­chines dis­trib­uted ev­ery­where and keeps track of ev­ery trans­ac­tion.

Let’s say you wanted to cre­ate a blockchain so­cial net­work to ri­val Face­book. Some peo­ple might use their com­put­ers to help run the sys­tem, and they’d get paid for that. If you put up con­tent, you’d get paid for that. If you buy ads, you’d pay for them with dig­i­tal cur­rency that would then flow to the con­trib­u­tors. “Now you have a bunch of peo­ple in­cented to make this ecosys­tem work and con­trib­ute to it, opening up in­no­va­tion,” Stewart says. Oh, and if you cre­ate some app or ser­vice that catches on, there’s no over­lord that might de­cide it will of­fer the same thing and de­stroy you.

Such a col­lec­tive ver­sion of Face­book, the think­ing goes, would give users and de­vel­op­ers more con­trol. You could set your own rules on how much pri­vacy to give up, or how much you’d get paid by ev­ery per­son who lis­tens to the mu­sic you post. At some point, some­one will set up a blockchain so­cial net­work that gets all the rules right and be­comes an at­trac­tive al­ter­na­tive to Face­book.

Can an on­line col­lec­tive work? That’s how Wikipedia got built. If it had been set up in the blockchain era, it could’ve had rules that let ed­i­tors and writ­ers get paid, per­haps charg­ing users a penny for each article read and au­to­mat­i­cally dis­pers­ing the funds.

This year, there’s been markedly more ac­tiv­ity around blockchain economies. Stewart and oth­ers have set up funds to in­vest in them. In Oc­to­ber, a com­pany called Steemit launched a blockchain-based sys­tem for pub­lished con­tent. Each story can be at­tached to its own set of rules for how much the au­thor will get paid and other re­wards for, say, cu­rat­ing or shar­ing the con­tent. Much more like Steemit is com­ing. If you Google (or Bing!) “blockchain news,” you’ll see ex­per­i­ments pop­ping up in Ukraine, Bahrain, China, Malta and across in­dus­tries from bank­ing to sports.

None of these are going to leave any big-tech CEOS home­less on San Fran­cisco’s Market Street. All these years after get­ting chas­tened by an­titrust ac­tions and the in­ter­net, Bill Gates is still a multi­bil­lion­aire, and Mi­crosoft re­mains one of Amer­ica’s most valu­able companies. But in tech­nol­ogy, hege­mony never lasts, and some­where out in the blockchain uni­verse, the rev­o­lu­tion is in­cu­bat­ing.

Some­one will set up a blockchain so­cial net­work that gets all the rules right and be­comes an at­trac­tive al­ter­na­tive to Face­book.

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