The 20th century was owned and operated by middle men. Industry began as the creation of something for which would be traded other goods, services, or cash. As production centralized, distribution (as always) rose to close the distance between the product and the consumer. Facilitating consumption became a business unto itself: printing, shipping, packaging, and all the rest. A respectable, powerful, and necessary business.
More recently, when certain products became capable of being distributed without this mighty infrastructure, that business ceased to become necessary, and correspondingly their power and respectability are now in decline. Words and media being the most portable data, the huge industries that have long facilitated their consumption are dying, slowly and poorly.
How long before the present titans of technology find themselves in a similar position? It’s hard to imagine exactly how it will happen, but the trends are easy enough to extrapolate.
The key to everything is decentralization. All the major players have benefited from it, though in different ways. Microsoft profited from the decentralization of PC hardware, from a few thousand mainframes and offices to hundreds of millions of households and individuals. Apple profited from the decentralization of software development, creating a platform on which creatives the world over compete to offer the biggest tithe. Google profited from the decentralization of advertising, and has financed its dativorous habits by what amounts to an unprecedented volume of microtransactions.
That’s not to say that no one has benefited from centralization, of course: Amazon centralized retail, and companies like IBM and Oracle have centralized R&D and services. But you can always invert this equation and say that the companies did not centralize the world’s demand, but rather decentralized the supply.
What emerges from this trend is a challenge: to identify the few things billion-dollar companies do or make today for which, in ten or even five years, they will still be necessary. This is a rolling challenge, of course, but there are a few inflection points, one of which I believe we’re experiencing.
The gate will keep itself
The question is crystallized in the recent controversy over whether Skype has a back door so the NSA can tap your conversations, or something vaguely equivalent that will provoke equivalent outrage. They probably do. But that’s not really relevant. What’s relevant is that it publicizes the fact that there’s really no reason to use Skype.
That is to say, there’s no real reason to use Microsoft’s product over a (for now, theoretical) reasonably similar one. And not one made by a competitor, strictly speaking at least.
Why does there need to be a company in between two devices speaking mutually intelligible data to each other over a secure connection? The same question, with a bit of modification, applies to any number of applications and services. Nowadays, if I want a book or song, there’s a good chance I can buy it online from the person who makes it, with no third party except the payment processor. Why should it be different with other kinds of data? Unless it is materially necessary for a company to touch that data (Google has a proper search algorithm, Facebook sorts through your friends’ updates), why should they?
Why, in other words, should we have to tolerate the idea not just that Microsoft is able to snoop on our data, but that they have anything to do with that data at all?
There’s a good, simple answer, of course. Companies like Microsoft actually produce and support the services we use and value. We pay them for the privilege of using them, and in some cases it is impossible to perform some tasks without them.
Just like how in 1990, it was impossible to purchase a piece of music without giving a little to Tower Records, a little to Warner, and a little to half a dozen other little remorae on the body of the artist. What of the major labels and studios will survive ten years from today? They have excellent recording facilities, of course, experienced producers, and so on, and will no doubt live to produce and sell music for some time to come. But none of them will argue that this has not been a transformative period. Some of them have already been transformed into history.
So, I think we will find, will be the case with major tech companies today, some of which only keep the lights on by squeezing every byte until money comes out. How long will they be able to reach those bytes? What absolutely critical functions do they perform?
How long, for instance, will people continue to support the App Store? Developers want access to as many buyers as possible, just like retailers want a storefront with lots of foot traffic. Retailers pay a lot for a spot downtown, and developers pay for presence in the app store. But what happens when foot traffic starts picking up where rent is free? What happens when the region of unlocked, “free market” devices becomes as rich and desirable as the Rodeo Drive of the App Store? Chaos first, of course, but then profit. Profit always comes after chaos.
How long will Google maintain its stranglehold on both the volume and speed of data storage and retrieval? Not forever, for a start. Localized tools for indexing and searching will be more important as fiefdoms of sites and services declare independence from Google — as, indeed, Twitter has already done (to mixed success, but it’s still early). Maps? Books? Web cache? Google is unquestionably the leader in storing these things today, but they know that whatever they accomplish, it’s only a head start in a marathon. Is it really so unthinkable that the efforts of a voluntary multitude could produce a Google-esque collection of data, mapping the virtual and real worlds and recording their history? It’s unthinkable to me that this would not emerge, given time. The tools in our hands are too powerful not to be applied to these problems.
But these vague complaints don’t get quite to the heart of what I want to suggest. Specifically, what will happen soon is that certain companies and services will be made totally redundant by the emergence of free and ubiquitous tools and protocols.
Why would you need a Microsoft video calling program when two computers can find each other on a crowdsourced DNS and send encrypted packets directly to one another based on a video interlink protocol designed and released for free by Swiss hackers?
Why will you need a Google cloud syncing service that keeps your calendar up to date and available, and directs emails to whatever device you’re using, when that service made into a default feature on your router or PC or rented or public server space?
Why will you use Facebook when you have a reliable and powerful way of keeping track of your friends’ latest pictures, updates, and location, but not tied to a company that wants to serve you ads with your data, and plays ball with the feds besides?
They’re fantasies right now, of course — but the kind of fantasies that come true in a couple years, not the kind that live for centuries in storybooks. Like promises that you would someday be able to download a DVD in seconds: pie in the sky ten years ago, but today it’s a bandwidth buffet. Naturally, other elements of progress have made that old dream seem quaint, like sci-fi predictions of the present (downloading DVDs is kind of a silly thing to do, really), and the same will happen with today’s predictions, however else they may prove true.
But the things these companies will be doing in a few years will be the things that only they can do. For Apple, that will be designing and making hardware — and to some extent, software, although they too will succumb in some areas to smaller, more maneuverable companies. Google will likely be able to tread water as a universal store of data and default service, but anonymizing (and increasingly, delocalizing) services, along with the further devaluation of traditional advertising, will clip its revenue wings. Microsoft will have a few proprietary high-value services it sells access to and which it jealously guards from duplication. But their feeling of entitlement over data (usually manifested in grotesquely overreaching terms of service) will cease to have any basis in reality.
Not everyone will suffer. Who can do what Intel and ARM and Foxconn and Sony do? They’ll be fine for now, and will continue competing amongst themselves. They aren’t facing the existential threat that others are, at least not until home replicators can produce nanoarchitecture.
And, importantly, interesting new ideas will continue to be built and expanded into new businesses, or new markets. Innovation grows in the cracks, like the grass on the sidewalk. And there’s never a shortage of cracks. Here’s one growing right now.
“One generation abandons the enterprises of another like stranded vessels,” says Thoreau. We abandon what we can, at any rate. And it is very likely that the vanguards of the web fleet are about to meet with considerable resistance, though to say they are stranded now or will be in ten years is certainly an exaggeration. But the part of their job that amounts to being data facilitators is about to come to a fairly abrupt end.
If it can be replicated, it will be. If not now, soon. First for less, then for free. First for the bleeding edge, then for the trailing edge. Does that sound like one of those “big ifs” to you? Actually, it’s just this side of “when,” and that’s only because of the friction introduced to the system by patents and monopolies — and those always look so petty in hindsight. It’s not in the nature of technological progress to let such inconsequential obstacles bar its advance. And woe betide the fools and unfortunates who won’t (or can’t) get out of its way.