If you think that the technology companies have been cowed or deterred by the brickbats it has had to duck the past year and is taking a defensive posture—think again. If you thought tech’s intrusion in our lives might slow down, what with Congressional investigations and negative press coverage and such, it’s not going to happen. At least if the news leaking out of Silicon Valley comes to pass. From all indications, it looks like full steam ahead for the industry in 2019 and beyond with innovations aimed at invading every aspect of our lives.
Reasons For Tech’s Continued Growth
Tech stocks have gotten slammed over the past half-year and Congress is clamouring for regulation. In fact, the industry itself, probably recognizing the possibility of its technology running amok, is embracing regulation for the first time, too. But don’t expect all this to happen anytime soon or that it will slow the avalanche of innovation barrelling down on us. One reason is that the tech titans are too flush with cash. Apple, Amazon, Facebook and Alphabet, Google’s parent company, together generated $166.9 billion in revenue in the third quarter of 2018 alone — up 24 percent from a year earlier when the four companies hauled in $134.4 billion. Not too shabby!
The other reason for arguing against retrenchment is that they are already loaded with innovative, creative human talent and are primed to recruit even more aggressively. They just don’t seem to consider in their playbook. “The tech companies are not flinching,” said Bob Staedler, a Silicon Valley consultant. “Nothing has hit them on the nose hard enough to tell them to cut back. Instead, they are expanding. They’re going around the country acquiring the best human capital so they can create the next whiz-bang thing.”
Our Insatiable Appetites For All Things Tech
The third reason for steaming ahead is demand. We simply have grown dependent on the technology and have a seemingly insatiable appetite for more despite our worries about our privacy being invaded. “Much as people are now wary or even unhappy with the outsized power held by Facebook, Google, Amazon, etc., they are simultaneously quite dependent on the services they provide,” said David Autor, an economist at the Massachusetts Institute of Technology. One need only look at tech’s penetration into our lives to confirm this.
From media, telecommunication, transportation, marketing, medicine, and more, their imprint is all over our lives and is growing. We know this from the huge build-up of human capital even just over the past year. In all, Google’s employment increased 21 percent in the last year. Facebook’s workforce rose by 45 percent in that time, to 34,000, and it is advertising 2,700 additional jobs. Google is reporting some 3500 openings. Amazon’s employment rolls tripled over the last three years, due to more warehouses and swallowing up Whole Foods. It is now the second U.S. company to employ more than 500,000 people — not even taking into account its contractors.
Employees Need Room To Work
All those bodies need room to work and that means companies putting their cash reserves to work to accommodate them. Anyone who thinks that Big Tech has become gun-shy in this environment is misconstruing recent dips in stock valuations as indicative of the companies’ big picture approach. The recent expansions and real estate acquisitions tell the real story. Google, for one, is buying up dilapidated properties and transforming them into affordable housing for the hordes it will hire. The result will be a new Google campus of eight million square feet with offices for 20,000 workers. This figure dwarfs its total 2009 workforce.
Facebook is keeping apace. Last spring, it devoured one million square feet in Silicon Valley’s community, Sunnyvale for its fast-growing community operations team, tasked with the safety and security problems of its users. Soon it will occupy 750,000 square feet space in a San Francisco tower and will become third-biggest tech tenant in the city, eclipsed by only Salesforce and Uber. Expect similar stories from the other tech titans in the coming months.
Will Regulation Stop The Advance?
The recent common share-price decline is one thing—and maybe only a temporary hiccup in the growth forecast. Long-term, however, is the fear of regulation, a sense that the party is over for Facebook, Google, and Amazon, just as it was for John D. Rockefeller’s oil monopoly in 1911. There seems to be universal consensus that the tech industry needs to be regulated but the saving grace for the tech industries’ growth is many aren’t comfortable with that power to the government.
“The government doesn’t have a good clue,” said Mr. Bajarin, the consultant. “They’re not even asking the kind of questions that would drive regulation. This leaves regulation up to the companies themselves- a dubious proposition, at best—but one that will guarantee the unimpeded march forward despite the temporary headwinds. While some would maintain that it is akin to putting the fox in charge of the hen house, industry observer’s claim it would eliminate the only real obstacle in its way to unparalleled new heights for Big Tech. And that’s why there will be more tech in our lives going forward, not less. And so, the love/hate relationship that exists with technology continues.