NewCo Daily July 17, 2017
Watson Slapped, Is Content King?, and a Call for Antitrust from…the Journal?
Welcome back to the Daily. We’re back to our Monday-Wednesday-Friday schedule, but absent our fearless writer, Scott Rosenberg, who’s moved on to a publication we all love, Backchannel. I’ll be writing the Daily for now, please be gentle with me, as Scott’s prose is hard to match. But for today, enjoy what seems to be a building narrative: the role of tech in society is getting a bit too big for its own britches.
It Ain’t Elementary, Watson
IBM’s stock suffered a high profile downgrade late last week, thanks to an analyst report which essentially called bullshit on Watson, IBM’s high-profile “AI as a service” unit. The report, from investment bank Jeffries, used the failure of a cancer diagnosis project at M.D. Anderson as a jumping off point to conclude that IBM’s significant investments in Watson would fail to return shareholder equity anytime soon. Jeffries also pulled data from major jobs posting sites that showed IBM to be far behind Amazon, Facebook and Microsoft when it comes to attracting AI-related talent. That’s a problem for a company that has made Watson the center of its public brand (you did see the ads with Bob Dylan and Serena Williams, right?).
IBM has a knack for identifying massive industry parades, then jumping in front of them, selling expensive technology and consulting services to large enterprises fearful of missing the next big thing, but even more fearful of headlines like the ones created by the M.D. Anderson project.
But if you take a longer look at the story, parts of it start to fall apart. It’s still the very early innings of AI as a service, and missteps and failures are to be expected. In particular, the M.D. Anderson project appeared to fall apart because of cost overruns related to incompatible IT platforms and the extraordinarily complex work involved in structuring and preparing massive amounts of data to be ingested by Watson’s machine learning systems. That’s a problem that can only be solved over time, and through an ecosystem of innovation that has already yielded plenty of startups IBM most likely is already in the process of snapping up.
IBM can and should be held accountable for oversimplifying what is still an underdeveloped market. But a review of IBM’s previous claim-staking — e-business in the 1990s, “Smarter Planet” in the 2000s — demonstrates a long term savvy that’s always paid off for the firm. And the charge that IBM is falling behind consumer giants in the quest for AI talent? Apples to oranges, for the most part. Amazon, Facebook, and their kin are mainly building consumer facing applications — newsfeeds, recommendation engines, voice-driven apps like Alexa. IBM has always been in the business of servicing enterprise clients, and that’s not likely to change.
The King Is Dead. Long Live The King!
Content isn’t king anymore, argues Andreessen Horowitz partner Benedict Evans. Technology has defanged the old monarch, and the business of creating and owning media assets is now a sideshow to the tech sector’s larger ambitions. While content was once a lever that tech companies used to scale (think Apple with iTunes, or Amazon with books), we’re past that stage — streaming has jumped most platform’s walled gardens, and tech has moved on…but to what? That question isn’t really addressed, and is worth pondering — because while content may no longer be king in tech, it’s still sovereign in the world of humans, as far as we can tell. And if the next big thing is augmented reality (AR), well, one wonders — what good is any reality without something to experience?
Tide Turns for the Tech Giants
When you’ve secured the top five spots in the world’s largest economy, you should expect some pushback. Over the past few days, US tech giants have seen their leadership challenged by the two most influential newspapers in finance —the Financial Times and the Wall St. Journal. (Both are behind paywalls — thanks to the impact of those same tech giants, one could argue).
Writing for the FT, columnist Rana Foroohar points to Jawbone, the once high flying Valley startup, which crashed earlier this year as investors realized that its core market would most likely be dominated by tech’s dominant platforms (that’d be Apple, Amazon, and Google, in this case). In Jawbone’s failure, Foroohar argues, one can see the outlines of yet another bubble story in the Valley — investors talk up a big market story (wearables!), crown a startup as the leader, then the easy money flows — till it crashes and burns. In the end, the winners will be the same — the platforms with the most consumer data. And we all know who those are.
Over at the Journal, columnist Jonathan Taplin ponders if it might be time to regulate those same tech giants. “Over the past decade, Google, Facebook and Amazon have wreaked havoc on much of the creative economy — journalists, musicians, authors, filmmakers,” he writes. “In the decade ahead, the tech behemoths will use their dominance in artificial intelligence to overturn much of the service economy as well, including transportation, medicine and retail. With what result?”
Tapping into our collective angst around the impact of AI and automation on jobs and our economy, Taplin argues that the “digital barons of Silicon Valley” are failing to ask societal-level questions about the impact of their technology-driven monopolies. And that will — and should — lead to government’s ultimate last resort: Anti-trust regulation.
Note: Today also marks the beginning of a new content partnership between NewCo Shift and Medium, in which NewCo Shift will produce high quality content for Medium’s membership. Check out our first series, on AI’s impact on the computing industry, here.