Last Monday, Facebook experienced an outage that lasted for about six hours. Users couldn’t access Facebook, Messenger, Instagram, Whatsapp or OculusVR.
The effects were felt across the world. Suddenly, everyone who relied on Facebook or WhatsApp for communication was left in a lurch. Even Facebook’s own employees had to rely on Outlook emails and Twitter (ouch!) to communicate.
The outage came a day before whistleblower Frances Haugen testified before Congress about her experiences at Facebook.
When she took the stand, Haugen called on Congress to change the business incentives that encourage Facebook to highlight harmful content for its users. And to push the company to be more transparent.
“It is unaccountable until the incentives change,” Haugen said. “Facebook will not change.”
Haugen also urged lawmakers to reform Section 230 of the Communications Decency Act, which shields internet companies from legal liability for its users’ content. She said the rules need to be changed to make Facebook responsible for its algorithms, which are used to rank content.
Senator Ed Markey (D-MA) answered Haugen’s call:
Here’s my message for Mark Zuckerberg: Your time of invading our privacy, promoting toxic content, and preying on children and teens is over. Congress will be taking action. You can work with us or not work with us, but we will not allow your company to harm our children and our families and our democracies any longer. Thank you, Ms. Haugen. We will act.
Haugen’s testimony is only adding more fuel to Congress’s fire. Regulators have been coming after big tech for months. Over the summer, lawmakers have proposed six different bills aimed at reining in big tech companies, including Facebook, Google, Amazon, Apple and Microsoft.
Whether the bills will pass in the Senate this year is questionable. But eventually, regulators will clamp down on big tech.
So what does this mean for investors?
Big tech companies won’t stop being profitable anytime soon. But as with any tech investment, investors should still look toward the future, however distant it may seem. And they should consider not just the technology itself, but the technology that surrounds it.
Cybersecurity is a major example. Remote work — which also isn’t going away anytime soon — often requires employees to access sensitive information. Crypto exchanges handle billions of dollars in transactions on a daily basis. Social media companies handle billions of users’ data at any given moment. All of this requires top-notch cybersecurity and encryption technology to keep information safe.
Artificial intelligence is another space worth watching. As scientists and engineers discover more ways to leverage AI capabilities, its potential applications continue to expand. The healthcare industry is a particularly exciting use case. As telehealth services continue to grow rapidly thanks to COVID-19, companies are using AI to collect patient data, analyze it and even provide health recommendations to patients. Some companies are leveraging AI to treat conditions directly.
And finally, investors should also keep an eye on social media. While Facebook is a dominant force today, a growing number of people are seeking alternative social networks. Many of them — like many of my own friends — have grown disillusioned with Facebook’s data mining and lack of privacy. And as regulators continue to crack down on the company, Facebook’s power may diminish. Discord, for example, grew from 56 million monthly users to 100 million monthly users in 2020 alone. It now has 150 million active monthly users. And growing privacy concerns are only creating more opportunities for new social media startups to reinvent the world that Facebook pioneered.
These are just a few examples of tech sectors that have enormous potential. Agile startups run by smart founders have the ability to disrupt and revolutionize dozens of industries.
And startups have at least one advantage over big tech. While big tech companies may have the revenue to dominate their markets, public opinion is turning on them. And it’s only a matter of time before the government tightens the leash.
When it does, startups will be there. And they’ll change everything.