Things aren’t looking too good across the pond lately for the innovators and entrepreneurs who populate Silicon Valley. As of this week, Google faces the very real prospect of having to break up its operations in Europe.
That’s the biggest news, but there’s more. Uber, the ride-sharing service intent on revolutionizing not just taxi industries but the whole of transportation, is now banned in Germany and mired in squabbles from London to Singapore. Whisper, a hot social-media platform that promises to disguise identities, has just been caught tracking its customers’ whereabouts even when they decline the app’s “geolocation” option.
It starts to look as if Big Data, America’s latest export, may come packaged with a freebie called Big Trouble. The Europeans, in particular, are sketching out red lines limiting the immense power of companies trading in digital connectivity, the “sharing economy,” and everything-about-everybody oceans of stored information.
Investors are so far sanguine about Silicon Valley’s legal problems, ethical transgressions, and executive pratfalls, but watch this space. Valuations are certain to drop if Google is forced to separate its search engine from its other lines of business. Its databases will be less complete and its search engines potentially less effective. Uber now operates in 229 cities, up from one (San Francisco) when in launched in mid-2010, and a round of financing last summer valued it at $18.2 billion. What’ll happen to that (and the IPO the markets chatter about) if the growth slows?
Google’s case could prove a larger corporate calamity than Microsoft’s 16-year war with European regulators, which ended up costing the company fines of €2 billion ($2.48 billion). This is the opinion of Joaquín Almunia, the European Union’s outgoing competition commissioner, who has been investigating Google for four years now.
The running gripes against Google are two. One concerns data protection and privacy—the “right to be forgotten,” as Europeans call their claim that Google cannot store all the data it amasses on individuals indefinitely. The other concerns antitrust law and how Google manages search results. The allegation is that it manipulates results to favor companies in which it has interests to the detriment of others. The search engine, in other words, is not “neutral,” in E.U. terminology.
Once Edward Snowden revealed Silicon Valley’s collaborations with the National Security Agency and its mass surveillance programs, Google had little chance of prevailing on the privacy question. In May, the European Court of Justice ruled against Google, ordering it to delete references to a user’s past if the user requests it. Google now braces for a tidal wave of requests.
The European Parliament is about to get very tough on the antitrust issue. It just signaled it will agree on a text recommending Google’s breakup early this week and vote on it Thursday. The recommendation then goes to the European Commission to be considered by Almunia’s successor, Margrethe Vestager.
The Germans, out to halt Big Data’s advance since Snowden told them the NSA was tapping Chancellor Merkel’s cellular telephone, appear to be the principal force driving this offensive. Vestager will work alongside Günther Oettinger, the new digital economy and society commissioner, a Merkel ally, and a hawk on the privacy question. Thursday, to put the point mildly, is unlikely to be a happy Thanksgiving Day for Google in Europe.
As to other zippy Silicon Valley companies, well, Uber seems to be hitting walls or bouncing off them so often it seems to be on purpose. After taxi drivers staged summer protests in cities across Europe, German courts banned Uber from the German market in September.
And Ubergeddon, as The Wall Street Journal calls it, now goes global. Last Friday, Singapore announced that it would begin restricting the service’s activities early next year.
Apart from the bans and restrictions, Uber executives have had a three-year run of sexist, tasteless, unethical remarks in public places. The latest: Emil Michael, Uber’s VP for business, suggested publicly that the company should hire investigators to expose the private lives of critical journalists. Then it transpires that the New York office used Uber’s “God View” to monitor a journalist’s cross-town journey to a meeting with Uber executives.
That was last week alone. We already knew of CEO Travis Kalanick’s threat to punish potential investors in an upcoming round of financing if they put money into competing car-sharing services.
You are forgiven if you’ve never heard of Whisper, but millions of social-media users have. Last month the Guardian reported that the app, launched in 2012, tracks users, stores information on them in searchable databases, shares data on users in the military with the Defense Department, is developing a version of the app to meet Chinese censorship standards—and lied about most of this when the British daily questioned its executives. Nice.
All this is reported in European media more prominently than in the U.S., reflecting more rigorous traditions of corporate regulation and protections for individuals and interest groups.
The regulatory and legal blockages are not all that is at issue with these companies. As The New York Times’ Farhad Manjoo noted last week, “Technology companies live and die by culture…. A company’s ultimate success or failure is determined less by anodyne technological prowess than by the values and behavior of people who work there.”
All too true. I see a couple of problems at work here.
First, images of enlightened good intent may be de rigueur in Silicon Valley—Uber’s Kalanick uses a picture of Jefferson on his Twitter account—but they are images and no more. The culture projected is Big Data and corporate revenue at any cost—neither of which go down as quietly in Europe as among Americans.
Second, some of Silicon Valley’s stars are turning out to be idiots savant—immensely gifted in the lab and around the open-plan office, proven clods in circumstances requiring social and political sophistication, notably in what we call public space—and again, Europeans tend to value this more than Americans.
A hundred years ago Thorsten Veblen, the noted social critic, termed the then-emerging class of corporate engineers “a somewhat fantastic brotherhood of over-specialized cranks, not to be trusted.” It’s worth thinking about this as Silicon Valley collides with European sensibilities.
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