Why, just look at the time: It’s News You Can Use!

In this recurring series on the CallRail blog, we review the most important recent headlines in technology and marketing, and explain what it all could mean for your business.

Because — as the old saying goes — following the news isn’t just good civics, it’s good for business.

1) FTC announces task force to monitor competition in tech markets (FTC Press)

With an avowed mandate of bringing more transparency to the inner workings of the biggest tech firms, a newly empaneled initiative at the U.S. Federal Trade Commission (FTC) could become a powerful counterweight to digital juggernauts like Google, Twitter, Facebook, and Amazon.

The move comes following a series of high-profile acquisitions in the tech industry, which in turn sparked criticism that U.S. regulators are doing little to stem monopolistic and anti-competitive practices from the biggest tech companies.

“The role of technology in the economy and in our lives grows more important every day,” FTC Chairman Joe Simons said in a statement announcing the commission. “As I’ve noted in the past, it makes sense for us to closely examine technology markets to ensure consumers benefit from free and fair competition.”

Marketers should pay careful attention to one particular power of this initiative: To dissolve mergers and break up big tech companies, if the commission is able to demonstrate “competitive harm” to markets. Savvy digital marketers are likely to cheer for the breakup of the Facebook-Google ad duopoly — antitrust action will spur competition, ensuring lower and more transparent ad pricing.

2) Microsoft employees protest company’s military contract for VR tech (BBC)

At least 50 Microsoft employees have published a petition asking that the company cancel a contract with the US military to provide augmented reality technology. In the letter, developers and engineers of the company’s HoloLens VR headset demanded that the technology “must not be used to help people kill.”

The signees are also asking for Microsoft to cease development on all military technology, and to draft a public policy statement on future military partnerships. They are also calling for the creation of an “independent, external ethics review board” that would oversee compliance with these policies.

Previously, Microsoft had agreed to a $479 million deal to develop technology and hardware prototypes for about 100,000 VR headsets. “We always appreciate feedback from employees and have many avenues for employee voices to be heard,” a Microsoft representative said in response to the petition.

In this case, the petition will almost certainly be unsuccessful: The Microsoft Corporation retains exclusive ownership of HoloLens, and has announced it will continue to pursue lucrative military contracts. Nevertheless, this incident raises important questions about the future of the technology industry.

Just as users and consumers are demanding a greater say over how their personal data is shared and used, technology developers and engineers are starting to demand similar rights. Many tech companies may soon have to ask themselves: Should the people who create the technology we enjoy have a say in how the fruits of their labor are used?

3) EU to complete preliminary investigation of Facebook by summer (Reuters)

The European Union’s lead commissioner on regulating Facebook has announced that the first of seven investigations into the company’s data-sharing practices will be completed by summer 2019. The remaining investigations are expected to be concluded by the end of 2019.

Last year, the E.U. launched three separate investigations into the sprawling 2018 hacking attack that resulted in the theft of login codes for nearly 50 million Facebook accounts, including 3 million in Europe.

Since the initial announcement, the E.U. has also launched similar inquiries into other incidents, including the December 2018 revelation that a Facebook bug may have exposed the private data and photos of nearly 7 million users. The remaining probes in the investigation are related to complaints over how Facebook processes and stores personal user data.

The commissioner is also probing Facebook subsidiaries WhatsApp and Instagram, as well as Twitter, LinkedIn and Apple in relation to their processing of personal data and the transparency of their data processes. It’s worth paying close attention to this space, because the E.U. may be close to launching a comprehensive push for regulating the biggest tech companies.

4) Tech stocks take a beating as FAANG slide continues (CNBC)

Tech investors have had little to cheer about over the past few months. Apple briefly topped the $1 trillion valuation mark, only to backslide amidst widespread corrections and downgrades among the previously unassailable FAANG companies (Facebook, Apple, Amazon, Netflix, Google), which have fallen by a combined average of 4 percent.

But this focus on the market’s biggest movers and shakers has obscured an equally significant story: Major firms like AMD, Hewlett-Packard, Square, Nvidia, and Microsoft have all had a less-than-stellar Q1 of 2019. And that comes after a brutal Q4 of 2018, where NASDAQ’s much-touted ‘Technology Select ETF’ — a consortium of the top tech firms — underperformed miserably, losing nearly 24 percent of their value.

This downward trend has prompted concern from Morgan Stanley, which opined in a recent memo that tech stocks will be particularly vulnerable whenever the current market rally begins to lose momentum.

All signs are indicating that investors soon may have to begin shifting their resources away from the biggest players in the market, and look for opportunities with smaller, lower-yield companies. They may not see the same eye-popping returns, but the stability and peace-of-mind should be more than worth the tradeoff.

5) CA Gov. Newsom stuns with call for ‘digital dividend’ for tech users (CBS News)

California Governor Gavin Newsom has set off a flurry of speculation and recrimination after calling for residents of the state to receive a ‘digital dividend’ — a return on the massive revenues tech companies have generated by capitalizing on users’ personal data.

Fresh off of a 2018 election where he campaigned heavily on regulating the state’s biggest tech firms, the newly minted Democratic governor has asked his aides to formally submit his data dividend proposal to the state legislature. However, he has not indicated whether this proposal would take the form of a new tax on tech companies, payouts to individual users, or something else entirely.

“Companies that make billions of dollars collecting, curating and monetizing our personal data have a duty to protect it,” Newsom remarked in his ‘State of the State’ address on Tuesday. “California’s consumers should also be able to share in the wealth that is created from their data.”

Under Newsom’s proposal, tech companies that use personal data for ad targeting, for example, would be require to share some portion of their profits with the users whose data they’re leveraging.

However, tech industry lobbyists, critics, and activists have all expressed skepticism about Newsom’s proposal. “[The governor] is off to the wrong start on protecting consumer privacy,” said Jeffrey Chester, executive director of the Center for Digital Democracy. “They shouldn’t be tricked into giving away their privacy for a small discount. Selling it for a few bucks isn’t the answer and will make the problem worse.”

While investors and tech firms are doubtlessly nonplussed by yet another bit of bad news that could bite into their profit margins, they ignore this development their own risk. Just as oil was the key catalyst of 20th century economic development, data has become the critical market mover in the 21tst century. And as we’re seeing now, the debates around the latter are shaping up to be as fraught as the debates around the former.

This debate will only be the first of many, as we collectively grapple with how best to balance privacy and profit in our increasingly data-driven world.

***

You may have noticed a theme with the five stories I’ve selected for this week’s installment of News You Can Use. (And, frankly, for many of the other news stories I’ve highlighted in this space.) These stories all express a healthy skepticism — and often, criticism — of the the biggest technology companies and their near-total market dominance.

I’ve been selecting these stories not because I agree with every single assertion they make, but because they offer marketers a valuable window into social and consumer sentiment around technology. As I discussed in my Super Bowl commercials analysis piece, we’re seeing more and more signs that society has become uncomfortable with the rapid, life-changing pace of technological progress and automation.

These stirrings represent what many analysts and critics have dubbed ‘The Techlash‘: A still-nascent backlash against the business practices (and market dominance) of the biggest tech companies.

Effective marketers — now, and in the future — are likely to be the ones who are attuned to this audience sentiment. That means reacting appropriately to criticism, including redressing grievances when appropriate.

‘Tech’ may not be considered a four-letter word just yet, but we’re getting close.

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