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FTC is cranking up the heat, Meta's woes continued and will Elon Musk sink Twitter?
Good morning! This is a year-end special edition of The Signal. This week we will publish a series of articles on what happened during 2022 and also give a peek into what to expect in 2023. Today, we write about the rumbles in big tech this year.
After two years of constant, anxiety-led doom-scrolling and a virus on the wane (except in China), 2022 could have been all about respite. Learning to live a little more again, putting things in perspective. Except, none of that happened. It was almost as if the world’s foremost chaos agents—read Vladimir Putin and Elon Musk—hatched something up in their battle for constant attention, and voila, 2022!
Thankfully, making sense of the chaos around us is something we embrace at The Signal and enjoy in equal measure. We didn't disappoint, staying atop some of the biggest developments and shifts in technology, policy, and regulation.
With the curtains drawing on 2022, it's time to look back a little and use that to sneak a peek into what lies ahead in 2023. While we can't promise that they'll come true (they're predictions, after all), what we can tell you is that 2023 is likely to be just as eventful (if not chaotic) as 2022 was. Let's dive in!
The antitrust play
The so-called Big Tech companies may have banded together to defeat an antitrust legislation in late 2022, but if the US Federal Trade Commission (FTC) commissioner Lina Khan’s intentions are to be read, it's looking like a long 2023 for some of these companies.
Why is that? To quote a report in The New York Times, Khan’s FTC is using “novel” or “little used arguments” to challenge deals—again, a marked departure from the time antitrust cases would end up being settlements.
The biggest test of that thesis could be Microsoft’s mega $69 billion acquisition of gaming studio Activision Blizzard. For the last few years, Microsoft has been hailed for steering clear of antitrust scrutiny—despite its infamous past (the Microsoft vs United States case of 2001 being a landmark in Big Tech antitrust history).
That said, how the FTC decides this could again be precedent-setting. Unlike traditional antitrust cases, which are about competition, this one specifically involves vertical integration.
Slow but steady
Beyond antitrust, large tech companies should brace themselves for a year when the wheels of regulation slowly start moving. Europe and India could soon be leading the way. These jurisdictions have seemingly adopted a slightly different approach towards regulations in contrast with the US putting its eggs in the antitrust basket. Enter legislation.
The EU’s landmark antitrust legislation—the Digital Markets Act—came into force towards the end of October 2022. It was followed by the Digital Services Act, a legislation that governs illegal content, advertising transparency, and misinformation, in November. The compliance timeline (for enforcement) for these companies, i.e. very large online platforms and very large search engines, is no later than 1 September 2023, after which the region can start enforcing.
India, too, has been updating its laws, such as the revised Digital Personal Data Protection Bill and the Digital India Act. The draft of the latter is expected sometime in early 2023, with a potential passage in the monsoon session of Parliament. What this could bring is fresh compliance obligations for these large technology companies and their local counterparts. They couldn’t have asked for a worse timeline.
Tweets, toots, and Elon
We’re not writing it off just yet, but signs are that centralised social media networks could be slowly fading away. Just look at Facebook (the social network) as a hint, which is losing its relevance in regular discourse. Now throw Elon Musk’s Twitter into the mix, and you’ll know things aren’t looking so great for centralised social media.
The concept of one man (Musk, in this case) or a company (in Facebook’s case) having a disproportionate amount of power in dictating what flies and does not on a social network is rightly being critiqued and questioned. While Musk’s erratic ownership of Twitter has, thankfully, made content moderation a more mainstream topic, decentralised alternatives such as Mastodon are having a moment (again!).
Free speech might be an attractive proposition for some of Musk’s devout fans, but it isn’t a product advertisers are buying. This matters because advertising accounted for nearly 89% of Twitter’s revenue last year. That’s a $1.5 billion hole Musk has to fill from somewhere, and that might come from the $8 Twitter Blue subscription panacea Musk is currently hawking to users. Simply put, the numbers don’t add up.
Meta, Apple, and all that
Among the club of big technology companies, Meta and Apple stand out. For various reasons, of course. While Meta’s struggles—both with its existential pivot to the Metaverse and its flailing business model—stand out, Apple’s error-free run seems to be ending.
If you believe Reuters columnist Lauren Silva Laughlin’s prediction, 2023 could see Mark Zuckerberg split his social media business and the metaverse vertical. This doesn't sound unreasonable, given the bloodbath in digital advertising in the last 15 months or so—businesses have cut down their marketing spends, and Apple’s App Tracking Transparency changes have wreaked havoc. But Zuckerberg, it would appear, is doubling down on the Metaverse by upping spending to 20% in 2023.
Apple, on its part, has different problems it hopes to fix, and soon. It was compelled to open up its lucrative walled garden, the App Store, by Europe and has shown an inclination to do so. The heart of the Apple universe, the not-so-humble iPhone, may just be an Achilles’ heel, given the raging virus in China and its efforts to quickly diversify its supply chain. It would be safe to assume that more manufacturing facilities would be likely popping up in India and Vietnam, where Apple devices could both be manufactured and exported.
AI goes to the dinner table
The fag end of 2022 threw a December surprise, particularly one that the likes of Google weren’t expecting: OpenAI’s now-viral conversational AI chatbot, ChatGPT. Google’s core business, search, will likely be disrupted if ChatGPT scales.
Why is that? Because, unlike Google search offering mere information, ChatGPT, to quote Bloomberg’s Parmy Olson, offered “answers that were clear and comprehensive” to her own queries. Which begs the question about Google’s reluctance to open up its own “sentient” AI LaMDA to the public, especially since the company has hitched itself to the AI wagon over the last few years. That could change in 2023, especially with OpenAI receiving the backing of Microsoft, Google’s distant rival in digital advertising.
While it is still early days, ChatGPT’s emergence has begun a race to speculate its immediate impact on everything, most importantly jobs. Some early hints point to the AI-fication of the content-writing industrial complex, an area that came into its own in the last seven-eight years or so.
But beyond ChatGPT, 2022 saw substantial progress in generative AI. DALL-E, Stable Diffusion, and Midjourney had their respective moments in the sun. With considerable momentum, 2023 could see them become part of mainstream discourse.
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