Skip to Content, Navigation, or Footer.
The Tufts Daily
Where you read it first | Thursday, March 28, 2024

Anita's Angle: Trouble for big tech

anita

This earnings season, investors in public technology companies had to curb their excitement for the first time in a long while. Revenue growth is cooling down at Amazon, Google and Snapchat. Twitter is losing active users. Facebook is releasing its earnings report this week, and many analysts expect the trend of decelerating revenue growth from the second quarter to continue. The tech world, marked by its idealistic culture and high-growth mentality, may be in for its first reality check.

Although one quarter is far too short of a time frame to evaluate and diagnose financial troubles, the regulatory threat looms on the horizon as Silicon Valley companies face increased domestic scrutiny. While the United States has not even considered going as far as the European Union did with its General Data Protection Regulation, the world’s most stringent set of internet privacy protection laws, the state of California recently passed three bills that should set off alarm bells for the tech world’s darlings. The bills seek to resolve the issues of data privacy, net neutrality and lack of gender parity on corporate boards. California is limited in its ability to enforce these regulations due to a lack of buy-in at the federal level and the fact that many tech companies headquartered in California are legally chartered in Delaware and other states. But despite these constraints, California is setting a legal standard that reflects growing discontent from consumers and citizens. These new rules spook tech companies enough that they will seek to preempt them from taking effect by pushing for laxer regulation at the federal level.

Regulation may be an uphill battle for Washington to actually pass, but public scrutiny surrounding the culture in tech companies will continue to intensify in the meantime. Netflix is just one example -- this week, the Wall Street Journal published an investigative piece exposing the company for its competitive culture where “blunt firings” have become more commonplace.Google’s employees protested earlier this month upon media reports of the company secretly working on a search engine that would comply with Chinese censorship policies. And while Google pulled out of competition for the Pentagon’s $10 billion cloud computing contract due to concerns about the deal not reflecting its corporate values, Microsoft and Amazon have been criticized for reaffirming their commitment to such defense contracts. Axios’s Kia Kokalitcheva explained that “these big public tech companies are being pushed to acknowledge their responsibilities in the workplace and society, and can no longer hide behind the idealism of 'changing the world.

The tension between technology giants and regulators is only getting started, and the public has realized that as both consumers and critics of the same platforms, it is getting caught in the crossfire. Fears of regulation posing a significant threat may seem far-fetched for now, but technology companies should be even more worried about the court of public opinion, as slowing user growth threatens the very core of their business models.