Em­bat­tled Big Tech firms keep ex­pand­ing

The News & Observer (Sunday) - - News - BY DAVID STREITFELD

Sil­i­con Val­ley ended 2018 some­where it had never been: em­bat­tled.

Law­mak­ers across the po­lit­i­cal spec­trum say Big Tech, for so long the ex­alted em­bod­i­ment of Amer­i­can ge­nius, has too much power. Once seen as a force for mak­ing our lives bet­ter and our brains smarter, tech is now ac­cused of in­flam­ing, rad­i­cal­iz­ing, dumb­ing down and squeez­ing the masses. Tech com­pany stocks have been pum­meled from their highs. Reg­u­la­tion looms. Even tech ex­ec­u­tives are call­ing for it.

In the face of such a sus­tained as­sault, this might be a good mo­ment for Big Tech to lie low. It could de­vote some of its moun­tains of cash – Ap­ple alone has $237 bil­lion in the bank – to gen­uine good works, and al­lay wide­spread fears it wants to con­trol your data and your des­tiny.

That is not the path the com­pa­nies are tak­ing.

“The tech com­pa­nies are not flinch­ing,” said Bob Staedler, a Sil­i­con Val­ley con­sul­tant. “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.”

There is so much of life that re­mains undis­rupted. The com­pa­nies are com­pet­ing to own the cloud – to be­come, in essence, the in­ter­net’s land­lord.

They have de­signs on cities: Google made a deal in 2017 to re-imag­ine a chunk of water­front Toronto from the ground up. Ama­zon is re­work­ing the def­i­ni­tion of com­mu­nity from the in­side, as ware­houses in ru­ral ar­eas pro­vide the ur­ban mid­dle class with ev­ery­thing they want to stay home all week­end.

These changes are only be­gin­ning to re­de­fine so­ci­ety.

When ev­ery home has an Ama­zon Echo, Google Home, an Ap­ple HomePod or some other smart speaker, the com­pa­nies are al­ready sig­nal­ing, all hu­man and meta­phys­i­cal needs will be ful­filled. For those who in­sist on ven­tur­ing out, there will be driver­less cars op­er­ated by Big Tech. And the com­pa­nies are plung­ing fur­ther into ar­ti­fi­cial in­tel­li­gence, with con­se­quences un­clear even to them.

To ac­com­plish all this, Big Tech needs hun­dreds of thou­sands of new em­ploy­ees, which means it needs some­where to put them. This isn’t a mat­ter of re­con­fig­ur­ing a floor or two at cor­po­rate head­quar­ters. It means build­ing new cam­puses around the coun­try.

Big Tech’s push into New York City and the Wash­ing­ton area has been well-doc­u­mented in re­cent months, with Google bulk­ing up in the first and Ama­zon plan­ning satel­lite of­fices in both. But even in its back­yard of Sil­i­con Val­ley, which is a mess of traf­fic con­ges­tion and hous­ing prices that have at­tained lev­els even well­paid engi­neers can scarcely af­ford, there is a boom that, if any­thing, is ac­cel­er­at­ing.

Any­one who wants to be­lieve Big Tech is chas­tened should visit a sec­tion of San Jose just west of down­town, a jum­ble of car washes and auto-body shops with a sprin­kling of mod­ern apart­ments. On a short street there is a house nearly a cen­tury old, a tiny thing with only one bath. Google bought it and an­other house last month in a pack­age deal for $4 mil­lion, ac­cord­ing to county doc­u­ments re­viewed by the San Jose Mer­cury News.

Mul­ti­ply that real es­tate trans­ac­tion by dozens, big parcels and small, to­tal­ing hun­dreds of mil­lions of dol­lars to date. Google is plan­ning very long term here. The buses, light rail, Cal­train and Am­trak trains that con­verge on the Diri­don Sta­tion tran­sit cen­ter will give the com­pany an op­por­tu­nity to em­bed mass tran­sit into its growth. The even­tual re­sult will be a new Google cam­pus of 8 mil­lion square feet with of­fices for 20,000 work­ers, a fig­ure that is more than the com­pany’s to­tal em­ploy­ment in 2009.

But Diri­don Sta­tion is just a part of Google’s Sil­i­con Val­ley ex­pan­sion. A week be­fore the com­pany got the two houses, it bought a 100,000-square­foot build­ing in Palo Alto, Cal­i­for­nia, for $70 mil­lion.

Face­book keeps grow­ing, too. In the spring, it leased 1 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. And it will soon move this year into 750,000 square feet in a San Fran­cisco tower, mak­ing it the third­biggest tech ten­ant in the city, af­ter Sales­force and Uber.

In to­tal, Google’s em­ploy­ment in­creased 21 per­cent in the last year. Face­book’s work­force rose by 45 per­cent in that time, to 34,000, and it is ad­ver­tis­ing 2,700 ad­di­tional jobs.

Ama­zon’s head count tripled over the last three years, thanks to its ware­houses and the ac­qui­si­tion

of Whole Foods. It is only the sec­ond com­pany in the United States to em­ploy more than 500,000 peo­ple – and that is not count­ing its con­trac­tors.

The ex­pan­sion un­der­lines the dizzy­ing truth of Big Tech: It is barely get­ting started.

“For all in­tents and pur­poses, we’re only 35 years into a 75- or 80-year process of mov­ing from ana­log to dig­i­tal,” said Tim Ba­jarin, a long­time tech con­sul­tant to com­pa­nies in­clud­ing Ap­ple, IBM and Mi­crosoft. “The im­age of Sil­i­con Val­ley as Nir­vana has cer­tainly taken a hit, but the re­al­ity is that we the con­sumers are con­stantly vot­ing for them.”

The con­tra­dic­tion is be­com­ing in­creas­ingly ob­vi­ous. One im­por­tant way Big Tech serves its cus­tomers is by track­ing their move­ments and pur­chases, which is be­gin­ning to un­nerve some peo­ple. In a Pew Re­search Cen­ter sur­vey in June, 42 per­cent of adult Face­book users said they had taken a break of sev­eral weeks from the site. But even as we say we trust tech less, we in­vite it deeper into our lives.

Ap­ple, Ama­zon, Face­book and Al­pha­bet, Google’s par­ent com­pany, 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.

“Much as peo­ple are now wary or even un­happy with the out­sized power held by Face­book, Google, Ama­zon, etc., they are si­mul­ta­ne­ously quite de­pen­dent on the ser­vices they pro­vide,” said David Au­tor, an econ­o­mist at the Mas­sachusetts In­sti­tute of Tech­nol­ogy.

Big Tech needs to be reg­u­lated, many are be­gin­ning to ar­gue, and yet there are wor­ries about giv­ing that power to the gov­ern­ment.

“The gov­ern­ment doesn’t have a good clue,” Ba­jarin said. “They’re not even ask­ing the kind of ques­tions that would drive to reg­u­la­tion.”

Which leaves reg­u­la­tion up to the com­pa­nies them­selves, al­ways a du­bi­ous propo­si­tion.

With so lit­tle to re­ally worry about, Big Tech is plan­ning for a fu­ture far be­yond any present-day tur­moil. Google, which has 3,500 job open­ings, says it is too early to say what the thou­sands of Diri­don em­ploy­ees will do. But Jonathan Taplin, direc­tor emer­i­tus of the An­nen­berg In­no­va­tion Lab at the Univer­sity of South­ern Cal­i­for­nia, has a good idea: ev­ery­thing.

“They’re in the trans­porta­tion busi­ness, the med­i­cal busi­ness, ev­ery busi­ness,” said Taplin, a fre­quent critic of how Big Tech took over a de­cen­tral­ized, in­de­pen­dent in­ter­net. “There is no as­pect of your life that they will not be in­volved in.”


Google is con­sid­er­ing buy­ing this empty lot in San Jose, Cal­i­for­nia. The com­pany is putting to­gether a cam­pus that will to­tal 8 mil­lion square feet with of­fices for 20,000 work­ers. Even as Big Tech com­pa­nies con­fronted chal­lenges in 2018, their am­bi­tions were not dimmed and they con­tin­ued to plan for a fu­ture far be­yond any present-day tur­moil.

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