"The State of Technology at the End of 2016" (Facebook, ecommerce et al)

From Stratechery:

This is the third year I have written an article summarizing the state of technology. In 2014 I described the three historical epochs of consumer technology — the PC, the browser, and mobile — and the outline of the fourth, which I suggested was messaging; in 2015 I refined the fourth to be Facebook specifically (it is clearly WeChat in China) and wondered if Slack could form a similar foundation for the enterprise.

Each of these epochs laid the ground work for what followed: PCs were where browsers ran, and browsers enabled the build-out of cloud services that made mobile so compelling. Then, the omnipresence of mobile devices created the conditions for social media, specifically Facebook, to dominate a staggering amount of attention. What, then, has Facebook wrought?
Well, Donald Trump, for one.

From Startup to Establishment
For most of its existence Silicon Valley has been synonymous with startups; even during the rise of the PC it was Redmond-based Microsoft that became the establishment. The scrappy underdogs were clustered alongside the San Francisco Bay, and disruption was their mantra. And disrupt they have: while the IT era was about making existing companies more efficient, the Internet era has shaken the very foundations on which those companies rest. The media is the starkest example: Google and Facebook didn’t create better newspapers, but rather reduced newspapers — and all other forms of media — to just another piece of content no better or worse than cat GIFs or baby pictures jostling for attention in their carefully manicured gardens.

The pervasiveness of those gardens — not just Facebook and Google, but Apple and Amazon as well, and Microsoft at work — can at times seem overwhelming; these companies are anything but scrappy startups, and their relative market caps — five of the top eight (and the top five at the end of last quarter) — confirm that Silicon Valley is very much the establishment. That establishment, though, is of a far different nature than what came before.

Facebook, the Media, and Trump
The dispute about Facebook and fake news is the most obvious example: while previous claims of bias were about sins of commission — editors and journalists fitting the news to their preconceived notions — Facebook and Google both are being accused of a sin of omission: not actively removing purposeful mistruths from their platform. Critics contend that Facebook in particular bears some responsibility for recent election results, that absent “fake news” Donald Trump would not be the president-elect.

In fact, Facebook is responsible for Trump’s election, but not because of fake news, at least not directly. Rather, as I explained in the spring, the devolution of traditional media driven by Facebook’s commodification of content was not an isolated event: the power of America’s political parties stemmed directly from the fact that media (and its paid advertising model) was the gatekeeper of information. From that piece:

[Facebook has created] a curious dynamic in politics in particular: there is no one dominant force when it comes to the dispersal of political information, and that includes the parties described in the previous section. Remember, in a Facebook world, information suppliers are modularized and commoditized as most people get their news from their feed. This has two implications:

• All news sources are competing on an equal footing; those controlled or bought by a party are not inherently privileged
• The likelihood any particular message will “break out” is based not on who is propagating said message but on how many users are receptive to hearing it. The power has shifted from the supply side to the demand side

This is a big problem for the parties as described in The Party Decides. Remember, in Noel and company’s description party actors care more about their policy preferences than they do voter preferences, but in an aggregated world it is voters aka users who decide which issues get traction and which don’t. And, by extension, the most successful politicians in an aggregated world are not those who serve the party but rather those who tell voters what they most want to hear.

Telling users what they want to hear is, of course, the real reason fake news gains traction: Facebook has monetized confirmation bias with its singular focus on engagement, and while I count that as a lesser evil than active political censorship, the broader point is that everyone and everyone — mainstream media, Macedonian teens, even political parties — are competing on a playing field where by default no one has a louder megaphone than anyone else....MORE