Disruptive Samson’s Next Haircut
Blockchain might be the little engine that could topple Amazon, Apple, Facebook and Google
MUCH AS MANY OF US LOVE
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.