By Shira Ovide
IT was another momentous year for the technology industry — not necessarily in a good way. Here is Bloomberg Opinion’s assessment of the eight biggest themes in technology for 2018 and what they tell us about the industry’s future.
Similar to 2017, a common thread in several of these themes is disillusionment about technology or the companies behind it. The list, in reverse order of importance:
8. Hopes and Fears for Driverless Cars: In the eight years since Google’s driverless car project first hit the news, much progress has been made, but there have also been some serious setbacks. Early this year, an Uber Technologies, Inc. automated car with a backup driver struck and killed a pedestrian — a tragic sign of how far autonomous transportation is from being ubiquitous, reliable and trusted. Tesla, Inc. and Google spinoff Waymo also struggled at times with driver-assistance technology and a new driverless taxi service, respectively. There’s promise for autonomous driving technology, but it will take years to come to fruition, and it may not be a transportation cure-all.
7. Tech Employees Find a Voice: Workers spoke out against their employers on important issues including Google’s work on a possible web search service for China, use of technology for military projects or law enforcement and payments made to executives accused of improper workplace behavior. The employee activity helped spur policy changes in some cases — or what critics called window dressing. Tech companies’ most valued assets are their employees, and now those people want more of a say in how their companies treat them and how they influence the wider world.
6. Good News/Bad News for Chips: Chipmakers grappled with a US-China trade battle that slapped tariffs on their goods, and there were fears of a crash after a five-year industry boom. In bright spots, there were advances in purpose-made chips from tech companies such as Amazon — good for market competition but bad for giants such as Intel. And TSMC reached a manufacturing milestone that showed the made-to-order chip company is the most important, largely unknown tech power. It’s clear that computer chips will be essential electronic brains for the future with computing everywhere, but the path there is tumultuous.
5. Uber’s Quieter Year (in a Good Way): Chaos was the norm for Uber in 2017, with repeated controversies over its workplace culture, legal and regulatory problems, boardroom divisions and the ouster of Travis Kalanick as CEO. What a difference a year and new boss make. New CEO Dara Khosrowshahi won some peace with regulators and employees and struck a deal to throw money at restive stockholders. Uber will never be completely free of crisis, and doubts remain about its viability. But Uber’s relative calm, and its path to a 2019 IPO, show how quickly a company in crisis can turn the page.
4. Money, Money Everywhere: With exceptions, it was another flush year for superstar young technology companies. Investments in tech start-ups are set to surpass $200 billion this year, according to PitchBook data, which would be the largest funding haul since the dot-com bubble. Tech IPOs broke out after a soft patch, and 2019 may bring listings from young guns such as Uber; Lyft, Inc.; Pinterest, Inc.; and China’s Bytedance Ltd. But China had a wobbly year for start-up investments, and some newly public companies faltered. The big fear: Elite start-ups founded since the financial crisis have never lacked for fresh cash and built their businesses accordingly. If money gets tight, things could get ugly.
3. China Versus US: The countries’ feud meant the industry was never free from the political winds. The White House intervened to reverse an effective corporate death penalty for China’s telecom-equipment maker ZTE Corp. US fears about China’s telecom-and-smartphone giant Huawei Technologies Co. led the US government to quash Broadcom’s proposed megamerger, and it sought to fan security concerns among Huawei customers. The arrest of a top Huawei executive is souring relations between the two countries. The developments showed the tech industry isn’t a harmonious sun but planets with separate orbits.
2. Cracks Widen for Big Tech: Simultaneously, the global technology superpowers were too powerful for their own good, and too vulnerable. There was a continued reckoning about the terrible downsides of popular internet hangouts such as Facebook and YouTube, and lawmakers in multiple countries questioned whether tech giants needed to be broken up or otherwise handcuffed. Inside China, the industry was roiled by clashes with the government. In the same year that Apple, Inc. and Amazon.com, Inc. each briefly reached $1 trillion in stock market value, growth hiccups hit those two, plus Facebook, Inc., Tencent, and other giants. It bears watching whether regulators seek limits on tech giants just as their power ebbs on its own.
1. Facebook’s Catastrophic Year: It’s hard to think of any big company in any industry that had a worse 365 days. There was the scandal over Cambridge Analytica, which epitomized Facebook’s years of lax privacy standards. Mark Zuckerberg acknowledged that use of Facebook’s social network hit a wall, and its advertising machine sputtered — sparking a record loss of stock market value. Important insiders fled, and the moral leadership of senior executives came under question inside and outside the company. The United Nations blamed Facebook for sowing ethnic violence in Myanmar; the company was a punching bag for lawmakers; and there were more ugly details about foreign propagandists abusing Facebook for mischief.
The company has done much to try to repair itself, but Facebook is the world’s ills reflected online and magnified. It’s not clear how Facebook recovers without a fundamental overhaul of its system of hands-off advertising, massive data collection and reward for attention-seeking. Facebook has weathered many storms in its nearly 15-year history, but this is the most intractable crisis period. Expect more shake-ups next year.
Shira Ovide is a Bloomberg Opinion columnist.