Dana Blankenhorn

The 2020s: The Machine Internet

(This is Part II of a three-part series on technology in the 2020s, for publication while I’m at the Heidelberg Laureate Forum in Germany.)

The 2010s were the decade of clouds and devices.

But it was done through human intermediaries. People did the input and the output came from people.

Even if you’re talking to your computer, you’re still in there directing it. Our interfaces in 2019 are, in that way, not that different from what they were in 1979. Fingers are replacing mice, voices are replacing keystrokes, but you’re still making the decisions.

That’s what I think will change most in the 2020s.

It all seems frightfully late to me. I wrote about this stuff as The World of Always On as far back as 2002. Then again, I wrote A Guide to Field Computing in 1993, before the iPhone was a gleam in Steve Jobs’ eye.

The Machine Internet has been delayed by the human element. Right now, most “analysts” still assume this will keep it from happening. They’re pushed out the date for self-driving cars from 2019 to 2029. They think autonomous technology must be perfect to be useful.

It only needs to be better than you.

The Political Triumph of Tech

Some 40 years ago, when I was commuting up the West Loop of I-610 for the Houston Business Journal, oil seemed to be in big political trouble.

We know how that turned out.

Today, in 2019, it seems that “Big Tech” is as friendless as “Big Oil” was then. But history sort of rhymes. These only seem to be different days, and you don’t have to be able to rhyme benzodiazepine to figure it out.

Reporters without brains call the reaction against tech their big story. But it’s the reaction to the reaction we need to be looking at.

Where Elizabeth Warren is Wrong

Like a lot of people, I admire Sen. Elizabeth Warren of Massachusetts, or as the great Charlie Pierce calls her Senator Professor Warren (SPW).

But, again like most people, I can’t vote for her for President.

The reason, in my case, is Warren’s attitude to the Cloud Czars. Warren is staking a big part of her candidacy on running against them.

Let’s set aside, for a moment, the fact that the Czars – Microsoft, Apple, Amazon, Google and Facebook – now command a combined market cap of nearly $4.5 TRILLION. Never mind that they dominate the business world, or that democracy always follows the Golden Rule – he who has the gold makes the rules. Democrats aren’t going to win the White House over the objection of the Czars and the bulk of the technology industry.

My beef here has to do with her proposal to break up the Czars, starting with Amazon.

Her argument against Amazon is that the company can see which brands people are buying, then put an Amazon version into the market and wipe out the other seller. It’s like she never heard of store brands.

Store brands have been a feature of American retailing practically since brands. Kroger does it with food. Target does it with clothes. Walmart does it with both. Walmart calls their store brands “Great Value.”

The Death of Cable (and what comes after)

On March 25 Apple announced the death of the cable television model.

What replaces it is, in a word, the Internet. Streaming services, yes, but with far more interactivity than cable or broadcasting ever offered. True integration between audiences and programming, whether you need news, sports, or entertainment. Available wherever you happen to be. All you need is a mobile phone.

This is the entertainment model of the future.

Sounds great. People are now paying $200-250 per month for bundled Internet and TV service, with the TV taking up two-thirds of that bill. They’re paying another $60 or so for mobile Internet service, with calling bundled in.

There’s a lot of money at stake.

I covered the birth of the present world. I covered it twice.

World War III, The Internet War

World War III is an Internet war. It has been ongoing for over a decade.

When the conflict was between countries like Pakistan and Ireland, or Ukraine and Russia, we could afford to ignore it.

Then it came to our own shores. November 8, 2016 was this war’s Pearl Harbor.

Yet we still haven’t reacted, because once the enemy is in the tent the media thinks going after them is friendly fire.

There’s nothing friendly about it.

Sure, there are efforts underway at Google and Facebook to boost “real news” and dissuade “fake news.” Yes, there are efforts underway in Congress to control online political spending. Yes, there is the Mueller probe.

But these are nothing. We still see the Internet War as something we can stop with higher firewalls, or bigger budgets.

We can’t.

The Streaming Crash of 2019

For the last several years, a lot of companies have been trying to fit through a very narrow door.

That door is streaming.

The success of Netflix, and of podcast stars like Marc Maron, has caused a heart attack in the entertainment world. Suddenly everyone, and every company, is aiming for a taste of this action.

They can’t all get it.

There aren’t enough hours in the day to listen to a fraction of the podcasts available now. I have a half-dozen in my phone, and I can’t get to all of them. Long-haul truck drivers can get to a lot, and people who work as security guards may listen for 8 hours per day. But a single Joe Rogan podcast can run 4 hours. Maron does 3 hours every week.

CBS, NPR, the BBC and others are hitching their wagon to podcasts. Spotify plans to spend $500 million on podcasts, an industry that generates $700 million in annual revenue.

These numbers make no sense.

Common Carriers

A key to understanding 2019 will be the issue of common carriers.

In just one decade the “Cloud Czars” – Apple, Microsoft, Google, Amazon and Facebook – have replaced the telecommunications and broadcast industries with a new system, using their infrastructure.

We don’t make overseas calls anymore. We Skype. We don’t watch TV. We stream.

The cloud was built without government subsidy or interference, in a competitive free for all in which the winners invested while the losers did not. The industries replaced by this infrastructure were built as monopolies, under systems of regulation controlled by the Federal Communications Commission and, when necessary, courts.

This made sense, in terms of both capital preservation and technology, at the time.

Democracy's Business Model Problem

When I started as a reporter, 40 years ago, there was a strict separation between “data” and “service.” There was usually just one layer of data.

The service was a phone call. The data was the time, duration and number called. The data was used to generate a bill for service. AT&T still mails customers this data.

There was also another layer of data, hidden beneath the services data, namely the content of the call. This was only available to law enforcement, with a warrant. A number might be tapped or (when technology permitted) a subject might have all the numbers they used tapped. This data was secured. It could only be used in criminal investigations. Civil cases could be tossed if this data were misused.

In print, there were similar splits between service and data. Editorial was the service. Subscriber lists were the data.

Facebook and the Fall of Free

Facebook has no friends.

Mark Zuckerberg thought he had billions of friends. He was wrong.

That’s one of the clear lessons of the Facebook scandal.

The way competitors, celebrities and the media are piling on Facebook is something to behold. I said they were vulnerable to something like this at the start of the month.  I was right.

Facebook is uniquely vulnerable because it has no customers. It doesn’t sell anything to people. Amazon sells stuff to people, and so when Trump goes after Amazon, Jeff Bezos sees his customers defending him. The same thing is true of Apple, which is why Tim Cook didn’t hold back on attacking the heart of the Facebook business model when given the chance on MSNBC.

Microsoft and Google have (so far) kept quiet about Facebook’s troubles, and for the same reason. Both run services supported by advertising. Microsoft has been backing away from this throughout the century (the MS on MSNBC is like the Cheshire Cat’s smile as it disappears). Google has been trying to diversify into products and autonomous cars. But their dependence still exists.

There’s one more important point to make about all this.

The Facebook Scandal

Facebook could disappear. 

This is the difference between Facebook and the other “Cloud Czars,” as I call them. (Picture from the excellent blog of Lisa Vanengen.)

We don’t need Facebook. Not the way we need, in the 21^st century, the information search capability of Google. Or Microsoft’s software. Or Apple’s devices. Or Amazon.Com.

Facebook, by contrast, is entirely optional. Not only is the main service optional, but so are Instagram and Messenger. We can get along very well with Snap and WeChat. The mass move can happen by word of mouse. There is a price below free, and if we don’t want to pay it we don’t have to.

This is something people like Jim Cramer don’t yet understand. This makes what is happening, or not happening, at Facebook different from what happened at Target or even Equifax. Add to that Facebook’s enormous capital budget – it’s putting $1 of every $4 it collected last year into new cloud data centers this year – and you have an existential problem.