18 Things, Part 3
18 Things is a slightly different take on the usual “Annual Predictions” posts. Over the last few weeks I’ve posted 18 things I believe might happen in 2018, with a brief overview of why. Each prediction has a confidence level (an idea nicked from Scott Alexander), so I can come back at the end of the year and see how I went. I’ve mostly stuck to my circle of competence, but please don’t read in to anything too much, and definitely don’t go betting your house on any of these…
13: Fake news will continue to be an issue as long as we try to solve it with technology
Prior to November 2016, fake news wasn’t a thing. We’re now 13 months in to this new post-truth world, and the genie can’t be put back in the bottle. Despite government enquiries and ongoing media attention, no progress will be made on countering fake news as long as we try to solve it with technology.
Fake news is the logical extreme of filter bubbles. It’s related to several other meta-trends happening in technology right now - the opaqueness of algorithms, the growth of AI, and the dominance of walled gardens. It’s also a reminder that while the internet has enabled a lot of amazing things to scale, bad things scale too.
Solving fake news is something that needs to happen. However solving it with more technology probably isn’t the solution, because it’s not a technology problem. Tech legend (and founder of EFF) Mitch Kapor puts it well, “One of the main reasons most computer software is so abysmal is that it’s not designed at all, but merely engineered”. We engineered our way in to the filter bubbles, but that doesn’t mean we can engineer our way out.
14: Online retail continues the march offline
You can’t talk about online retail in western markets without focusing 90% of your time on Amazon. And if you focus on Amazon you’ll notice that online retail is increasingly becoming about offline retail. So in 2018 expect to see Amazon acquire another large offline retailer (likely in the UK) for over $4B.
If you spend too much time reading about Amazon, you might be surprised to learn that online retailing still only accounts for 8.4% of overall retail spend in the US. Physical retail is still a huge opportunity, and so it wasn’t a huge shock in 2015 when Amazon announced the opening of a physical bookstore. In 2017 Amazon came close to opening more bookstores than Barnes & Noble closed.
If you’re in retail the problem is not that you’re being disrupted, it’s that your industry is transforming without you. It’s not about technology, it’s about customer centricity. One challenge with retail is that it’s a slow process, a problem Amazon solved this year by buying WholeFoods for $13.4B. It would be surprising for them to stop the acquisition strategy with just that one purchase.
15: Tech is the new junk-food, founders are the new bankers
As many people and businesses shift away from the near-religious worship of “disruption”, 2018 will see an increase in public concern about the affect technology is having on society, and on the benevolence of tech’s billionaire founders.
The argument that technology is bad for society is not a new one. In the current digital revolution people like Nicholas Carr and Jaron Lanier have been sounding the alarm for years. Nor is the argument unique to this revolution. Newspapers, radio, and TV were all going to bring about the downfall of society.
But underneath the easily dismissed Luddism there are valid arguments. The scale and speed with which negative outcomes and externalities can occur is now global and instant, a unique feature of this revolution. Add to this the revenue growth expectations of what are now some of the world’s largest companies, and there are valid criticisms of big-tech.
Despite the self-driving cars, AI, and VR wizardry, Google and Facebook are advertising companies. And while Amazon is not primarily an ad company, it’s incentives are not far off Google and Facebook - get people to buy things. Despite sloganism around “connecting communities” and “do no evil”, the primary concern of these companies is increasing advertising revenues, seemingly at any cost. As public companies (albeit with private control), Wall Street actually has every right to demand the delivery of more profit.
But many of those who have delivered that outcome over the past few years are now questioning whether it was worthwhile, and the impact their work is having on the world.
None of this is helped by the activities of Mark Zuckerberg and Travis Kalanick over the past 12 months. Zuckerberg’s bizarre not-running-for-president-seriously presidential tour of the US was topped off with a tone-deaf VR tour of flooded Haiti, complete with hi-fives. Meanwhile Kalanick’s leadership of Uber (too many failures to list really) has many questioning whether all this regulation stuff might actually serve a purpose after all. To quote Scott Galloway, “In the 20th century big tech saved the world, in the 21st it’s f*ing it up”.
Confidence level: 90% (definitely one of the more subjective predictions though)
16: Bad stuff scales too
The internet has allowed a lot of good things to scale. Sadly though, whenever good things are created people will work out how to use them for bad things. The bad things come in many forms and only make headlines when they’re easily explainable, like Russians meddling in elections via social media. But the biggest threat for most people right now is the amount of personal data being collected and stored online. And 2018 will likely see the biggest breach and dump of personal data ever.
This decade has been dominated by an obsession with big data - collecting as much data about customers and users and businesses as possible. The result is mountains of data, usually stored with terrible security.
While a big data breach from a brand will no doubt affect that brand directly, it will also impact consumer behaviour and privacy awareness. Over the next few years, data will shift from being an asset to being a liability. The irony is that the mountains of data probably don’t make marketing any more effective anyway.
17: Government proposals on algorithmic transparency laws
Algorithms increasingly govern our lives, often in ways we can’t quite see. There’s a growing concern about the impact of these algorithms, and a growing desire to be able to see and understand them. So in 2018 expect to see initial proposals (likely from the EU) on the introduction of algorithmic transparency laws.
Only a few years ago, trolley problems were a niche topic amongst ethicists, economists, and philosophers. In 2017, they’re the topic of Atlantic think-pieces, and New Yorker cartoons. Trolley problem discussions represent our increasing unease about decisions made by technology that are out of our hands, and now out of our view.
It’s human nature to imagine how things go wrong. But it’s not the self-driving cars that we should be concerned about. Algorithms are silently and invisibly defining the media we consume, the medical treatment we receive, the education we get, and the time we spend in prison (if that’s your thing).
Many believe we’ve already gone too far, and the time for some type of accountability and transparency for tech-companies was yesterday. The Algorithmic Justice League is fighting algo-bias today, author Steve Sammartino thinks we should label algorithms like we label food, and tech-godfather Tim O’Reilly believes “we’ve already had our Skynet moment”. Personally I’m with them, this is one prediction that needs to come true.
18: The walled gardens win
The web is now well in to its twenties. When it was born it was open, free, and collaborative. The last two decades have been a process of closing and commercialising, the building of walled gardens. While there’s a nostalgic drive to “save the web”, the walled gardens have won. In 2018 we’ll likely see Google and Facebook capture more than 100% of digital advertising growth globally, and Facebook representing more than a quarter of time spent online by Australians (currently sitting at 21%).
In 1996 John Perry Barlow wrote his Declaration of the Independence of Cyberspace, warning corporations and governments that “You are not welcome among us. You have no sovereignty where we gather”. Skip forward 21 years and we are on the verge of the end of Net Neutrality, a clear signpost for the end of the period of massive innovation on an open web.
Walled gardens winning means many things. For publishers and media companies it means that their digital advertising revenue will decline, while they simultaneously face competition as publishers and content creators from Google, Facebook, and Amazon. For brands it means an even more challenging environment for connecting with existing and new customers, with a decline in control and visibility as you are forced to play on the walled garden’s terms.
New innovation is needed, and it will happen eventually. And while the trendlines all seem to point in one direction, I expect 2018 to be the last year of growth in developed markets for these “traditional” digital companies (but more on that in 12 months).
- December 2017