Below please find the usual weekly summation,
the positives being yet another week of new all-time records and drop in
jobless claims, the negative being retails sales being a tad below
expectations. On the Ritholtz Sunday
reading list is this New York Times article that offers a different perspective
on the whole FAANG phenomenon. FAANG is
the acronym that has been used of late in the financial news to describe the coalition
of tech companies – Facebook, Amazon, Apple, Netflix, and Google, which
together make up a rather disproportionately large percentage of the
market. The article offers the point of
view that maybe FAANG is not doing investors or the economy at large such a
great service after all. Have a great
week.
Succinct Summation of Week’s Events 10.13.17
Succinct Summations for the week ending
October 13th, 2017
Positives:
1. The S&P 500, Dow Jones Industrial Average, and Russell 2000 all made new all-time highs.
2. Consumer sentiment rose from 95.1 to 101.1, well above the 95.4 expected.
3. Jobless claims fell from 260k previously to 243k.
4. Producer prices rose 0.4% m/o/m and 2.6% y/o/y.
Negatives:
1. Retail sales increased 1.6%, below the 1.8% expected increase.
2. NFIB small business optimism fell from 105.3 to 103, its lowest level of the year.
3. Core CPI rose just 0.1% m/o/m and 1.7% y/o/y, below the 0.2% and 1.8% expected rises.
4. MBA mortgage composite index fell 2.1% w/o/w.
Tech Giants,
Once Seen as Saviors, Are Now Viewed as Threats
OCT. 12, 2017
SAN FRANCISCO — At the start of this decade,
the Arab Spring blossomed with the help of social media. That is the sort of
story the tech industry loves to tell about itself: It is bringing freedom,
enlightenment and a better future for all mankind.
Mark Zuckerberg, the Facebook founder,
proclaimed that this was exactly why his social network existed. In a 2012
manifesto for investors, he said Facebook was a tool to create
“a more honest and transparent dialogue around government.” The result, he
said, would be “better solutions to some of the biggest problems of our time.”
Now tech companies are under fire for creating
problems instead of solving them. At the top of the list is Russian interference in last year’s presidential election.
Social media might have originally promised liberation, but it proved an even
more useful tool for stoking anger. The manipulation was so efficient and so lacking in transparency that the
companies themselves barely noticed it was happening.
The election is far from the only area of
concern. Tech companies have accrued a tremendous amount of power and influence.
Amazon determines how people shop, Google how they acquire knowledge, Facebook
how they communicate. All of them are making decisions about who gets a digital
megaphone and who should be unplugged from the web.
Their amount of concentrated authority
resembles the divine right of kings, and is sparking a backlash that is still
gathering force.
“For 10 years, the arguments in tech were
about which chief executive was more like Jesus. Which one was going to run for
president. Who did the best job convincing the work force to lean in,” said
Scott Galloway, a professor at New York University’s Stern School of Business.
“Now sentiments are shifting. The worm has turned.”
News is dripping out of
Facebook, Twitter and now Google about how their ad and
publishing systems were harnessed by the Russians. On Nov. 1, the Senate
Intelligence Committee will hold a hearing on the matter. It is unlikely to
enhance the companies’ reputations.
Under growing pressure,
the companies are mounting a public relations blitz. Sheryl Sandberg,
Facebook’s chief operating officer, was in Washington this week, meeting with
lawmakers and making public mea culpas about how things happened during the
election “that should not have happened.” Sundar Pichai, Google’s chief
executive, was in Pittsburgh on Thursday talking about the “large gaps in
opportunity across the U.S.” andannouncing a $1 billion grant program to
promote jobs.
Underlying the
meet-and-greets is the reality that the internet long ago became a business,
which means the companies’ first imperative is to do right by their
stockholders.
Ross Baird, president of
the venture capital firm Village Capital, noted that when ProPublica tried last
month to buy targeted ads for “Jew haters” on
Facebook, the platform did not question whether this was a bad idea — it asked
the buyers how they would like to pay.
“For all the lip service
that Silicon Valley has given to changing the world, its ultimate focus has
been on what it can monetize,” Mr. Baird said.
Criticism of tech is
nothing new, of course. In a Newsweek jeremiad in 1995 titled “Why the Web Won’t Be Nirvana,” the
astronomer Clifford Stoll pointed out that “every voice can be heard cheaply
and instantly” on the Usenet bulletin boards, that era’s Twitter and Facebook.
“The result?” he wrote.
“Every voice is heard. The cacophony more closely resembles citizens band
radio, complete with handles, harassment and anonymous threats. When most
everyone shouts, few listen.”
Such complaints, repeated
at regular intervals, did not stop the tech world from seizing the moment.
Millions and then billions of people flocked to its services. The chief
executives were regarded as sages. Disruption was the highest good.
What is different today
are the warnings from the technologists themselves. “The monetization and
manipulation of information is swiftly tearing us apart,” Pierre Omidyar, the
founder of eBay, wrote this week.
Justin Rosenstein, a
former Facebook engineer, was portrayed in a recent Guardian story as an apostate:
Noting that sometimes inventors have regrets, he said he had programmed his new
phone to not let him use the social network.
Mr. Rosenstein, a
co-founder of Asana, an office productivity start-up, said in an email that he
had banned not just Facebook but also the Safari and Chrome browsers, Gmail and
other applications.
Justin
Rosenstein, a former Facebook engineer, recently said he had programmed his
phone to prevent him from using the social network on it.
If social media is on the defensive, Mr.
Zuckerberg is particularly on the spot — a rare event in a golden career that
has made him, at 33, one of the richest and most influential people on the
planet.
“We have a saying: ‘Move fast and break
things,’” he wrote in his 2012 manifesto. “The idea is that if you never break
anything, you’re probably not moving fast enough.”
Facebook dropped that motto two years later,
but critics say too much of the implicit arrogance has lingered. Mr. Galloway,
whose new book, “The Four,” analyzes the power of Facebook, Amazon, Google and
Apple, said the social media network was still fumbling its response.
“Zuckerberg and Facebook are violating the No.
1 rule of crisis management: Overcorrect for the problem,” he said. “Their
attitude is that anything that damages their profits is impossible for them to
do.”
Joel Kaplan, Facebook’s vice president of
global public policy, said the network was doing its best.
“Facebook is an important part of many
people’s lives,” he said. “That’s an enormous responsibility — and one that we
take incredibly seriously.”
Some social media entrepreneurs acknowledge
that they are confronting issues they never imagined as employees of start-ups
struggling to survive.
“There wasn’t time to think through the
repercussions of everything we did,” Biz Stone, a Twitter co-founder, said in
an interview shortly before he rejoined the service last spring.
He maintained that Twitter was getting an
unfair rap: “For every bad thing, there are a thousand good things.” He
acknowledged, however, that sometimes “it gets a little messy.”
Despite the swell of criticism, the vast
majority of investors, consumers and regulators seem not to have changed their
behavior. People still eagerly await the new iPhone. Facebook has more than two
billion users. President Trump likes to criticize Amazon on Twitter, but his
administration ignored pleas for a rigorous examination of Amazon’s purchase of
Whole Foods.
In Europe, however, the ground is already
shifting. Google’s share of the search engine market there is 92 percent,
according to StatCounter. But that did not stop the European Union from fining it $2.7 billion in June for
putting its products above those of its rivals.
A new German law that fines social networks
huge sums for not taking down hate speech went into effect this month. On
Tuesday, a spokesman for Prime Minister Theresa May of Britain said the government was looking“carefully at
the roles, responsibility and legal status” of Google and Facebook, with an eye
to regulating them as news publishers rather than platforms.
“This war, like so many wars, is going to
start in Europe,” said Mr. Galloway, the New York University professor.
For some tech companies, the new power is a
heavy weight. Cloudflare, which provides many sites with essential protection
from hacking, made its first editorial decision in August: It lifted its
protection from The Daily Stormer, basically expunging the neo-Nazi site from
the visible web.
“Increasingly tech companies are going to be
put into the position of making these sorts of judgments,” said Matthew Prince,
Cloudflare’s chief executive.
The picture is likely to get even more
complicated. Mr. Prince foresees several possible dystopian futures. One is
where every search engine has a political point of view, and users gravitate
toward the one they feel most comfortable with. That would further balkanize
the internet.
116COMMENTS
Another possibility is the opposite extreme:
Under the pressure of regulation, all hate speech — and eventually all dissent
— is filtered out.
“People are realizing that technology isn’t
neutral,” Mr. Prince said. “I used to travel to Europe to hear these fears. Now
I just have to go to Sacramento.”
No comments:
Post a Comment