What's next for Tech after its ‘decade horribilis'?
At the start of the just-ended decade, technology, for the most part, was seen as a force for good. Ten years on, platforms like Google and Face
book are being mocked for their callousness on data privacy and the spread of misinformation. The New York Times described the 2010s “the decade tech lost its way”. Ironically, the decade had begun with the “Arab Spring” and social media was hailed as an enabler of democracy and freedom of expression. As the curtain fell on tech’s “decade horribilis”, there was renewed hope that it might yet deliver on its promise.
Here are some of the things that are likely to define the next 10 years in tech:
Regulation
Around the world, regulators are taking a hard look at the business practices of big tech firms like iPhone maker Apple, software behemoth Microsoft, e-commerce powerhouse
Amazon.com, search giant Google’s owner Alphabet and social media supremo Facebook. Tech’s Big Five now have a combined market capitalisation of over US$4.94 trillion ($6.8 trillion). Over the past decade, the total market value of the five has risen seven-fold. Yet, tech honchos were not popping champagne corks this past holiday season to celebrate how much value they have created. Indeed, they were hunkered down, pondering their next move. Tech giants are in the crosshairs for sucking everything into their vortex, abusing their powers, collecting far too much information about us without our approval, and then monetising our data to boost their already hefty bottom lines.
Detractors have dubbed tech’s Big Five as “unregulated monopolies”. Amazon has disrupted retail, cloud services and logistics, yet still thrives on selling unsafe products on its platform while using its near-monopoly power to strong-arm competitors and suppliers. Google and Facebook algorithms have destroyed the media industry with their hammerlock on the global advertising market through programmatic ads. With its control of Instagram and WhatsApp, Facebook is the dominant social media platform accused of spreading disinformation, weaponising racial hatred, and using voter suppression tactics, and is increasingly seen as a threat to democracies worldwide.
It is not just left-wing US presidential candidates who want Google and Facebook on a tighter leash. The US Federal Trade Commission (FTC), Department of Justice, several US states as well as congressional committees have initiated inquiries into their anti-competitive behaviour. Moreover, the European Union has imposed US$7 billion in fines on Google over the past four years, and more penalties are likely. There have also been calls to break up Google which acquired YouTube for a song a decade ago.
But breaking up the tech giants will not be easy. It could take up to a decade, perhaps longer, to level the playing field, even if there is political will. Action is needed because tech giants continue to stifle competition and innovation. If we want to continue seeing the sort of value creation in tech that we saw over the last decade, regulators need to put their foot down and create an environment where a thousand unicorns, or private tech firms valued over a billion dollars, can bloom.
Still, I will not bet against Big Tech. While it is possible that one or two tech giants might falter, or indeed forcibly broken up, the rest will become even bigger and more powerful.
Splinternet
Despite the recent truce, the ongoing US-China trade war and the battle for tech supremacy will eventually lead to two separate technologies – one dominated by China, and the other by companies in the Western world. Unfortunately, the rest of the world will have a stark choice: Back one or the other. Will Asians use Google’s Android, Apple’s iOS or the new mobile operating system that Huawei is working on? Will they search on Google or Baidu, or use WeChat’s search engine? Will they order goods from one of Alibaba’s platforms or Amazon? Will they use ApplePay, Google Pay, Alibaba’s Alipay or Tencent’s WeChat Pay? Will they tweet on Twitter or Sina Weibo?
Washington wants to prevent Chinese firms from buying US-sourced technology components, investing in US tech firms as well as exporting their tech products to America. Beijing isn’t taking it lying down. It recently launched a US$20 billion fund to support Chinese independence in a range of manufacturing technologies to complement another US$20 billion fund to boost development in semiconductors.
China’s decision to consciously decouple from American tech, building separate domestic manufacturing capacity for components it previously imported and securing its own supply chains, only reinforces tech’s Balkanisation, which in turn could lead to the de-rating of global tech giants. China’s tech ecosystem would look like a beautiful bonsai to investors, confined mostly within its borders. The
Alibabas and Tencents of the world will be de-rated, as will many American tech firms that can sell almost everywhere except in the world’s second-largest market.
Like it or not, you are being watched and all sorts of data about you is being gathered through your smartphone, watch, tablet, computer, as well as your car, shopping habits, travels, financial transactions, and visits to the doctor, restaurants and theatres. Every time you are in a public space, be it a mall, office building or train station, your image is being recorded. Soon you would be able to board a plane, see a movie or watch a soccer match in a stadium without a physical ticket because cameras will recognise that you have already paid for your ticket since your details are stored somewhere in the cloud.
Surveillance will get worse, even in some of the most liberal countries that pride themselves on protecting privacy. Moreover, the debate around surveillance and privacy will only get louder in future, but we are too far along in the surveillance economy to turn back.
Augmented reality
In the past few years, big tech themes have included AI, machine learning and deep learning, digital payments, blockchains and the cloudbased subscription economy – peddling software-as-a-service. Increasingly, tech firms are selling hardware-as-a-service. Ten years from now, few of us will own smartphones, or even cars. Our subscription to a car or phone service will give us access to the latest hardware. Instead of smartphones, we will have wearables or a combination of EarPods and some form of glasses. Apple is expected to introduce its augmented reality glasses in 2022. Facebook, which has had little traction with its Occulus virtual reality glasses, is pouring billions into developing both AR and VR technology. Microsoft, which has had tepid reaction to its own mixed reality HoloLens headset, is aggressively investing in mixed reality. Despite the fiasco of the Google Glass, Alphabet too has ambitious plans for its AR and VR forays.
We are likely to see more traction on AI and digital payments in the new decade, but don’t bet against incumbents like big banks.
JPMorgan, which pooh-poohed bitcoin two years ago, is working on its own stable coin, JPM Coin. Facebook’s digital currency Libra is probably as good as dead now, but I will predict that in the new decade that we will see several sovereign digital currencies. China is closest to becoming a digital currency pioneer.
The most talked-about disruption in the new decade will be the gradual switch to electric vehicles (EVs) and the arrival of autonomous vehicles (AVs) on our roads, particularly Robotaxis. The big EV push, which is just starting, will gain momentum in the first half of the decade, followed by major traction for AVs in the second half.
At the end of 2019, there were over 410 unicorns worldwide. The new crop of unicorns will come not just from firms in blockchains, AI, payments or software. Instead, they will emerge from the 5G-enabled Internet of Things like driverless cars and remote robotic surgery. HealthTech is emerging as the next b-ig thing. Apple and Amazon are clear leaders here. Google, which bought Fitbit last year, is spending billions in healthcare using AI. Climate Change Tech will likely be a close second as startups begin to tackle the next big environmental challenge. I will also bet that companies that prioritise data privacy will get to unicorn status faster than their peers that don’t.
Emerging unicorns may also include pioneers in quantum computing which uses supercomputers equipped with advanced processing powers, as well as edge computing which enables connected devices like driverless cars to process data closer to where it is created, or the “edge”. Essentially, edge computing will provide driverless cars with an alternative to sending data to a far-away remote server or a centralised “cloud” for processing. As edge computing gains traction, driverless cars will become a reality sooner than we all expect.
The recent implosion of co-working unicorn WeWork will likely have far-reaching consequences on deciding who gets funded and how long unicorns stay can stay private in the new decade. Valued at over US$49 billion by its VC investors, WeWork sought a listing in October at a valuation between US$75 and US$100 billion. By the time investors read through its pre-IPO prospectus, or S-1 filing, the firm was just weeks away from bankruptcy. It was bailed out by its largest investor, Japan’s SoftBank Group, and is currently valued at just under US$7.5 billion.
The lesson we have learnt from the WeWork saga is that public markets are far better in separating the wheat from the chaff than a handful of VCs in the private markets. SoftBank founder Masayoshi Son became the world’s richest person at the height of the 2,000 tech boom by overpaying for tech startups. When the bubble burst, Son, whose net worth declined 95% in the aftermath, spent the next decade nursing his wounds until he struck gold with a US$20 million investment in Chinese e-commerce pioneer Alibaba Holdings which turned into US$120 billion, or a 6,000fold gain. In the aftermath of the botched WeWork IPO, it might take Son more than just a decade to get his mojo back.
After the nightmare of the just-ended decade, tech desperately needs to get its act together and start delivering on its promise – not just as an agent of change or disruption, but also as a force for good.