What even is Big Tech?

an investigation

When the great financial crisis struck, we knew pretty quickly it was the Big Banks to blame. It didn’t really matter whether the culprits were Goldman Sachs or JP Morgan or Morgan Stanley: they were all pretty much the same.

Similarly, whenever the climate change debate happens, we know it’s Big Oil that’s behind the nay position. It doesn’t quite matter whether it’s Shell or Exxon or BP. They are mostly interchangeable.

And before that, when the world was hotly debating whether tobacco causes cancer, we had Big Tobacco arguing it didn’t. Didn’t matter whether it was Philip Morris or BAT.

And now, for technology, we have Big Tech. Meta was called in front of Congress, Alphabet and Microsoft have testified, and Amazon and Apple remain in the crosshairs of antitrust and FTC. There's public outcry and pundit anguish that it's the largest and most dominant industry we've ever seen and yet it's not regulated.

Now, it still does happen, but it used to be an individual corporate level inquiry. IBM got investigated in the 70s. Microsoft in the 90s. These weren’t some sign of massive collusion at an industrial scale, they were the government fighting back against the bad actions of a few bad corporate actors.

The Big Tech we’re talking about these days is a different beast. And they seem pretty different from each other. We have:

• Microsoft’s an enterprise software company that provides the tools that every company uses. But they also have a large social network in LinkedIn, cloud platform in Azure, gaming platform with Xbox, search engine with Bing, etc.

• Amazon is the biggest logistics company, and also has the leading cloud platform in AWS, media in Amazon Prime Video, and increasingly advertising

• Meta’s the leading social media company and an advertising giant, and also has a large-ish AR/VR company inside, strong AI open source entities, and

• Alphabet is the undisputed search advertising giant, with a large cloud platform and a leading AI research lab

• Apple’s the largest electronic retailer (good way to describe it?¹), build their own leading chips, and increasingly, perhaps, a leading AI company

The major reason for the current furore revolves around around the troubles we have had from social media (citation still needed). This is the new original sin for big tech. Their interest in our data, their using this for advertising money and gain. It's the revisionist version of their original sin.

So is that the reason for big tech moniker? Because it evokes an image? An image of a large relatively monolithic industry which can be loved or hated like the Borg.

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But looked at in another way, the reason Apple and Microsoft are two of the larger companies to have ever existed is also because people love their products! Yes there's some network effects, but it's not like any of the best selling products don't have competition. Extremely stiff competition.

So is there even such a thing as big tech I wonder? Or is it just a disparate group of quasi conglomerates which occasionally have overlapping business interests? I honestly can't tell what the phrase is meant to help understand.

It's the same with startups. The era of Big Tech in silicon valley also was bemoaned to ignore the “real” industries. Somehow ignoring he biggest VC stories of the last decade and half included transportation (Uber, Lyft), food delivery and logistics (Flexport, Door Dash), good old payments (Stripe, Square), proper banking (Chime), buying houses (Openrent), data warehouse software (Snowflake), social media (Snap, TikTok), not to mention satellites, space factories, drug discovery …

This isn't an industry. This is an entire economy.

It's not to say there aren't commonalities. One might be that this is more about the employees, who are often of a similar type. They are smart, educated, sometimes virulently self-educated, software engineers and salespeople and BD people who are quite often outsiders to these very industries. And with it bring naïveté and optimism and chutzpah in huge measures.

And another side that's true here is that apart from the employees the investors are also surprisingly homogenous across these companies. The same people initially fund rockets and banks and insurance companies and taxi companies.

Which also means that they are the linchpins of much of the economy, with predictable small network effects. And that does deserve a moniker. Though, again, what to do after identifying these funders seems pretty unclear.

As a parenthetical, people unfamiliar with venture capital like to focus on the capital part, as if they hold all the power, but the truth about much of startup ecosystem is that for any good company the VCs are the buyers. The VCs are individually almost always small owners with at best a board position. They're not directing the companies like private equity.

But anyway, the point could be that there's a relatively small group of people who are, collectively, rewriting the economy. Not that they do everything, but that once they lead it usually pulls the rest forward, like those tugboats that pull supertankers through a channel.

Which feels like power I agree, but it also feels like we don't know what we want when we push back against things they do. The result is that most arguments against it seem like they're quite generic. That's why much of the normal politician noise against Big Tech hits so shallow. Unlike with the banks or oil or tobacco etc, there just isn't an easy way to target them as a collective.

You could target Amazon for being big and having a private label, but what about Walmart? You could go after Google for their search, but the second biggest search engine is run by literally one of the largest companies to have ever existed, and until recently nobody much used it. Nor did users pay for supposedly better alternatives. You could go after Facebook for their social dominance but they're barely holding it together against TikTok, and from their recent stock slide they're hardly invincible.

There's no easy way to fight Big Tech because it doesn't exist. In the old fantasy stories it’s the act of naming a thing that gives you power over them. This isn’t too dissimilar to public discourse about big tech.

Like, privacy isn't a technical problem like fossil fuel pollution, it affects any company dealing with data. Which, today, is every company. So are questions like subtle influence over our elections or public discourse.

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Now, putting on my skeptical hat, one might say the one area where all of these companies are similar is that they deal primarily in software. Which means that any company where the majority of your first class citizen employees write software can be classified as technology companies. In fact this is the best steelman that I have been able to make for this point of view.

And it has some validity. Because ultimately the skill that allows you to write code in one domain can quite often be transported to another².

Some of course would have been for things that are clearly needed for everyone, like creating a website or writing queries into a database or doing some analytics, but a lot of it will be highly context dependent. The code that is written when you were an engineer at Uber where you have to deal with the travelling salesman problem is going to be different to the code from an enterprise software company focusing on network security.

This code though is effectively a stand in for papers and pens that used to exist before, as a sort of managerial efficiency metric. It's distilled knowledge that was painstakingly automated. It requires process information and it requires domain knowledge and it requires deep user understanding.

But since the processes and procedures are dramatically different from industry to industry, trying to figure out what exactly is the commonality to make sure that big tech can be held accountable is surprisingly difficult.

You could ask them to be responsible for things like above; the website, or backend databases, or some forms of permitted analytics, but these are much simpler and much more focused items compared to for example the entirety of the tobacco legislation or identifying the harms from coal-fire pollution.

What this means is that on the one hand we did have software that ate the world. It remains the amorphous glue that connects the workings of all industries. But when people say things like “software is the largest industry in the world and it's not regulated” it's worth noting that software isn't really that big an industry. However, software is used in every industry.

Industries are defined by what they produce or affect. Oracle makes database software that's used everywhere from travel to finance to hospitals. Regulations and blame, naturally, happens closest to the use case where any damages could happen. As it should!

Which is why in those cases software does have stringent standards it needs to adhere to. Software has to pass very strict inspections if it's to be used in a plane, for instance. Or in a hospital. Or in a nuclear reactor. Because the regulation isn't for the fact that Homer uses Microsoft Word, it's what he's using it for.

Which is also why we don't regulate software, we regulate particular software. Just because English grammar is weird is no reason to slip towards a bad theory of the world.

In finance where we regulate or understand investment banking as different to VC different to hedge funds different to pension funds different to commercial banking, and each with a specific understanding of what makes it unique. Until we can be so specific regarding problems and their solutions, the moniker only just serves to confuse, not illustrate.

The companies we place inside the Big Tech group do shape our societies as we find how to use things it made, and watch as it changes the way we deal with the world. It's a force that reflects our intertwined relationship with technology itself. It is our process information made distilled knowledge, and it doesn’t fit inside a category neatly, no matter how evocative the naming.

1. It’s America’s most successful manufacturing firm, a reader notes

2. One way to see how fragile this is, is that everyone in “tech” thinks others in tech are poseurs. Hardware people look down on software people. Software people look down on data science people. Data science people look down on everyone else. Machine learning people laugh at all of them. Not to mention front end Vs backend Vs data pipeline people Vs internal tool people Vs etc etc etc.

And even if these seem legitimate people also fight over the tools they use, like which browser or which IDE or vim vs emacs or tabs vs spaces or format for commenting on code or the way to actually write code or encapsulate ideas or a thousand other things both trivial and consequential.

Tech is a never ending internecine battle of egos and opinions played out in real time even as they're building everything from rockets to banking apps.