After two decades of dominating and reshaping our lives, “Big Tech” is finally looking weak.
According to Crunchbase, More than 46,000 employees have lost their jobs at US-based tech companies In the first three weeks of 2023 alone, 107,000 people were laid off in 2022. This week, Microsoft offered a bleak forecast 2023 enterprise demand for its Azure cloud services that were accidentally affected A major malfunction At the same time, at the same time The Department of Justice (DOJ) issued a lawsuit against Google It can end its monopolistic advertising activity. Add to that the turmoil at Twitter since Tesla owner Elon Musk took over, Meta’s poor stock performance in 2022, its earnings plunging, and we’re seeing broad-based malaise across the industry that Web2 brought us.
The question is whether this is a cyclical phenomenon or a secular shift, the end of an era of Web2’s titans. If it’s the latter, what comes next?
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Those who want to see a Web3 economy in which centralized web sites have less influence on our lives and where people and businesses have more control over their data and content naturally believe that Big Tech’s woes herald a brighter future. But this moment of distress will pass and we can either return to the status quo or a new architecture will emerge around artificial intelligence (AI) and metawares technologies superseded by the same centralized organizations that dominate today.
Cyclic or Secular?
It’s easy to build cyclically: the loose monetary environment before 2022 has prompted these companies to invest heavily in new, pre-primary technologies like AI and virtual reality. Now, rising interest rates are forcing their customers to cut costs for these companies’ cash-cow product offerings like online advertising and data storage, forcing them to rein in their spending.
Seen that way, it’s a downsizing exercise that will put Big Tech in a healthy position to take advantage of new technologies as they gain mainstream use.
But it’s worth noting that the weakness of revolving funds coincides with a decline in public confidence in the tech sector, which could mean a more sustained, secular decline in its prospects. After all, public opinion drives political response and, arguably, Big Tech’s greatest vulnerability is in Washington, DC.
In April, the Annual Edelman Trust Barometer Overall, trust in tech industries is higher than in others around the world (including media businesses, unfortunately.) But the bottom line is that the policymaking apparatus in America has the greatest power to determine the industry’s fortunes. Trust in technology has fallen to an all-time low.
This is not surprising given the negative news that has been pouring in over the past few years. People now have a clear window into Twitter’s seemingly intractable problems of hate speech, bots, misinformation, and the debate over identity and reputation — all of which have not been solved, if not elevated, by Musk’s leadership. They’ve pulled back the curtain on Meta (formerly Facebook), whose well-documented abuse of people’s data inspired a rare case. Bipartisan agreement in Congress.
read more: The end of crypto Twitter as we know it?
Declining trust has coincided with an increase in regulatory action against websites, first in Europe and now in the US, and this week’s lawsuit against Google could be the biggest threat to the Web2 titans’ economic model.
The antitrust suit, which accuses Google of “distorting legitimate competition in the ad tech industry,” could directly upend the central mechanism by which these companies turn more than a billion users’ data into dollars. For all the mounting criticism of this “surveillance capitalism” model, the platforms strengthened and deepened it because it routinely delivered profits to shareholders. To top it all off, the ad- and data-driven Web2 economy is being questioned.
A fire in the frying pan?
ok But if this is the beginning of the end for Web2, what comes next?
Well, by definition, the future is Web3. But post-Web2 says nothing more than providing a word to describe the unknown world. Who controls that future system, that is the question.
The idea that we’ll all be in control is enticing as we create all the important data and content that drives the internet economy. I certainly support all efforts to achieve that based on blockchains and non-fungible tokens (NFT) or something else. But there is no guarantee that such a utopia will materialize.
Indeed, without deliberate efforts by all stakeholders to establish a reasonable framework around decentralized identity, credentialing, encryption, and data storage, a “platform-less” Web3 world could still be controlled by giant data-hogging companies. And it may even be the same.
Consider AI, and ChatGPT’s recent breakthrough underscores its importance to the future digital economy. As I wrote in December, Many see this technology ending internet search as we know it. In the world of ChatGPT, we no longer ask the search engine to provide us with a list of websites that are relevant to what we are interested in. We query an AI chatbot and the answers come back as text or audio. No need for Google, right?
read more: ChatGPT kills search and opens the way to Web3
Well, maybe we don’t use Google search anymore, but what about Google AI? The company’s parent, Alphabet, is investing huge sums of money to develop AI systems – a fact that has been mentioned several times. CEO Sundar Pichai’s note to employees When he announced 12,000 layoffs last week.
Together with OpenAI, founded by Elon Musk, the winner may not be Google, but Microsoft. The Seattle-based software provider invested $10 billion in the company that developed the ChatGPT technologyThat’s on top of the $3 billion already committed to the partnership.
Or these corporations could lose out, and end up with a nominally decentralized entity dominating everything, like Ethereum, the leading platform for NFTs and decentralized funds. Do we want it?
Co-founder of Osmosis Labs at CoinDesk’s Ideas conference last fall Sunny Aggarwal called Ethereum an “empire”. It wants developers of software and new ideas to conform to its standards and rules. Independent application-specific chains connected by the Cosmos protocol that osmosis creates, he said, are the way to a truly democratic, open Internet.
See: Sunny Agarwal of Osmosis Labs: Why Appchains are the Future of DeFi
Cosmos vision to interoperability solution, or Polkadot founder Gavin WoodsOr does the answer lie in the Decentralized Social Networking Protocol (DSNP). Frank McCourt’s Project Liberty Mission is to fix the Internet Perhaps more important than that is that the shape of the future Internet depends on us.
If we want a decentralized internet, if we don’t want AI and data mining, centrally controlled public and private companies to control our lives, we need to come together and push for it. We need laws, standards bodies and multi-stakeholder governance systems. There is much at stake.
The views and opinions expressed herein are those of the author and those of Nasdaq, Inc.