Don't Bogart My Blog: On Tech: Profits steer our digital future

February 10, 2021

Profits steer our digital future

Dae In Chung

By Shira Ovide

To help understand where our digital lives are going next, I'll steal a line from "All the President's Men": Follow the money.

Why is Spotify going big into podcasts? Because music streaming is a financial death trap and Spotify has to find something that isn't. Uber's push into delivering everything is a classic tactic: If one business isn't profitable, use it as a foundation to sell something else that is. Apple is branching into fitness class subscriptions and (maybe eventually) cars because it's trying to find a second act after the iPhone.

The companies that shape how we spend our time and money and remodel industries make choices based not only on what's compelling to us but also on what's helpful to their bottom lines.

This is not bad! Money is handy! And I'm oversimplifying companies' complex strategies. While profit motives don't explain everything, they are a useful lens to see where technology is headed and why.

To illustrate this, I'll look at two successful tech giants: Amazon and Google.

Amazon got its start in retail, where making a profit of a few pennies from each dollar of merchandise sold is considered great. Just about anything that Amazon does next is relatively more profitable than buying blenders and dog food from the manufacturers and reselling them to us.

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It's one reason that Amazon can wade into a gazillion different businesses that might not make immediate sense — even groceries, which is a skimpy profit business. It's the magic of starting life with crummy profit potential. Anything new is probably more profitable.

Google, on the other hand, got its start in digital advertising, which is basically pure profit. Just about anything it does next pales in comparison.

Even if Google doesn't make as much of a profit on each fresh dollar of sales, getting into new fields keeps the company humming and extends its technologies into new areas. That's true for Amazon, too.

But Amazon and Google's divergent profit origins create an interesting dynamic. Selling cloud-computing software to businesses generates the majority of Amazon's pretax profits. But for Google, which is in the same business and wants badly to compete with Amazon, cloud computing will never be as profitable as Google's main money machine. Does that even subtly reduce Google's incentives to get serious about this business?

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This is an issue for Apple, too. Selling an Apple car may simply not generate the same profit as it's used to. Apple is probably aiming for the luxury car market, and even the fancy car companies most likely generate lower profit margins than those of iPhones. (Seriously, Apple is really good at money.)

I don't want to be myopic about this. Apple rethinking transportation is an exciting prospect for us and could keep the company a technology leader for decades to come. But corporations' profit motives will affect what technologies they pursue vigorously or not.

Tech companies love to talk about divining our deepest desires and changing the world. Money is an uncouth motivation. But sorry. Money does make the world and technology go 'round.

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Let's do TikTok all over again?!?!

That sound you're hearing might be my frustrated shrieking.

The arrangement to keep the TikTok app operating in the United States under the partial ownership of Walmart and Oracle is … probably not happening, The Wall Street Journal reported.

You might recall that this deal last year was the result of the bizarre spectacle involving the president of the United States negotiating a business deal in public with some of the world's powerful executives.

This was motivated by concerns about TikTok being owned by the Chinese internet giant ByteDance. Because there's little separation in China between private companies and the government, some American officials feared that the short-video app could be abused to spread propaganda and steal Americans' personal information.

Some of the concerns about TikTok were legitimate, and some seemed motivated by misdirected nationalism. Either way, the U.S. government's threat to shut down TikTok and the scramble to make its ownership more American amounted to nothing.

But now, there's a chance for a do-over. The Journal reported that the Biden administration was determining its own response to the potential risk of Chinese software.

This time around, let's be more thoughtful about how we approach this. Because while TikTok is the first wildly popular technology in America that originates from China, I doubt it will be the last.

This time, let's consider ways to make all kinds of apps — not just TikTok — more transparent about material dictated by computers that can pull people into conspiracy theories. This is a chance to reconsider mostly unrestrained harvesting of Americans' data — by foreign and domestic companies.

This is an opportunity, too, for Americans and our government to grapple with what we want to do about global technology becoming less dominated by the United States. One question is whether American officials and the public should be focusing attention on the most serious technology threats from abroad. (TikTok might not be it.)

And lastly, all of this requires our politicians and companies like Facebook to stop using China as a catchall boogeyman.

TikTok Part 1 was pointless. Let's make the sequel mean something.

Before we go …

A less shouty Facebook feed. Maybe: The company shifted its computer formulas in a test to show people less material deemed political, my colleagues Kevin Roose and Mike Isaac reported. The goal is to make the feed feel less heated, but Facebook stopped similar experiments in the past after determining that they reduced the time people spent on the app.
Don't ignore Twitter vs. India: On grounds of free speech, Twitter is refusing the Indian government's demands to block some accounts belonging to journalists, activists and politicians, BuzzFeed News wrote. My colleague Karan Deep Singh wrote that Twitter did block or hide from view hundreds of other accounts on government orders. This might be the biggest showdown so far between a social media company and a democratically elected government.
These people are good. More people like this, please. My colleague Sharon Otterman and CNN wrote about people who are using their tech expertise to pinpoint open coronavirus vaccination appointments and round them up on simple websites or on social media.