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To understand where our digital lives are headed next, I’m going to steal a line from All the President’s Men: Follow The Money.
Why is Spotify capitalized in podcasts? Because streaming music is a financial death trap and Spotify has to find something it isn’t. Uber’s quest to get it all is a classic tactic: when a company isn’t profitable, use it as a foundation to sell something else. Apple is branching out into fitness subscriptions and (possibly) cars as it tries to find a second act after the iPhone.
The companies that determine how we spend our time and money and transform the industry make decisions based not only on what convinces us, but also on what helps their bottom line.
That’s not bad! Money is practical! And I simplify the complex strategies of companies too much. While winning motives don’t explain everything, they’re a useful lens for seeing where technology is going and why.
To illustrate this, I’m going to look at two successful tech giants: Amazon and Google.
Amazon got its start in retail, where it’s considered great to make pennies on every dollar of goods sold. Almost anything Amazon does next is relatively more profitable than buying mixers and dog food from the manufacturers and reselling them to us.
This is one reason Amazon can get into a plethora of different businesses that may not make sense right away – even groceries that are close to making a profit. It’s the magic of starting life with lousy profit potential. Anything new is probably more profitable.
Google, on the other hand, has found its way into digital advertising, which is basically pure profit. Almost everything it does next pales in comparison.
Even if Google does not make as much profit with every new dollar in sales, the company is creating new business areas and expanding its technologies to new areas. This also applies to Amazon.
However, the different sources of profit from Amazon and Google make for an interesting dynamic. Selling cloud computing software to businesses generates most of Amazon’s pre-tax profits. However, for Google, which is in the same business and eager to compete with Amazon, cloud computing will never be as profitable as Google’s main money machine. Does this subtly reduce Google’s incentives to take this business seriously?
This is also a problem for Apple. Selling an Apple car may not make the same profit as it used to. Apple is likely targeting the luxury auto market, and even the fancy automakers are most likely making lower profit margins than iPhones. (Seriously, Apple is really good at money.)
I don’t want to be myopic. Apple’s rethinking of transportation is an exciting prospect for us and could turn the company into a technology leader for decades. However, companies’ profit motives influence which technologies they vigorously pursue or not.
Tech companies love to talk about it, guess our deepest desires, and change the world. Money is a rude motivation. But sorry. Money makes the world and technology move.
Let’s do TikTok again?!?!
The sound you hear could be my frustrated screeching.
The agreement to continue operating the TikTok app in the US under the partial ownership of Walmart and Oracle… likely failed, the Wall Street Journal reported.
You may recall that this deal last year was the result of the bizarre spectacle in which the President of the United States publicly negotiated a business deal with some of the most powerful leaders in the world.
This was due to concerns that TikTok is owned by Chinese internet giant ByteDance. Since there is little separation between private companies and the government in China, some American officials feared that the short video app could be used to spread propaganda and steal Americans’ personal information.
Some of the concerns about TikTok were legitimate; others appeared to be motivated by misguided nationalism. In any case, the U.S. government’s threat to shut down TikTok and the scramble to make its property more American were nil.
But now there is a chance for a do-over. The Journal reported that the Biden administration was setting its own response to the potential risk of Chinese software.
This time, let’s take a closer look at how we go about this. Because while TikTok is the first hugely popular technology in America to come from China, I doubt it will be the last.
This time around, let’s see how you can make all kinds of apps – not just TikTok – more transparent about material dictated by computers that can entangle people in conspiracy theories. This is an opportunity to reconsider the largely unbridled collection of American data by foreign and domestic corporations.
This is also an opportunity for Americans and our government to grapple with what we want to do so that global technology is less dominated by the United States. One question is whether American officials and the general public should draw attention to the most serious foreign technological threats. (It might not be TikTok.)
And all of this requires that our politicians and companies like Facebook stop using China as a boogeyman.
TikTok Part 1 was pointless. Let’s let the continuation mean something.