A Massive Sigh: Big Tech Lets Us Down. Again

Freda Liu: We’re opening today’s show with a massive sigh, shrugging shoulders and a look of hangdog despondency. Or business as usual as Matt Armitage calls it.

Freda Liu: Why the long face?

Matt Armitage:

• Said the barman to the horse.

• That joke is almost as bad as last week’s my dog has no nose.

• There’s something that a lot of people don’t know about me.

• I’m fun. I consider myself a happy and optimistic person.

• Even if no one else does.

• I would rather be putting together shows about the tech breakthroughs that are making lives better.

• Instead of talking about billionaires and mega corporations throwing their weight around and trying to push their vision of the future on the rest of us.

• This is another one of those grumpy weeks for me.

• We can’t ignore big breaking stories – even though I would often like to.

• In the past few days reports have broken about some not so pleasant ways that big tech companies are alleged to have acted to shape public opinion.

• And how they have gone above and beyond normal lobbying activities in order to shape governmental and regulatory policies in their favour.

• I should add that these are allegations at this point – emerging stories broken by investigative journalists that are likely to evolve.

• Think Cambridge Analytica, the Panama Papers

• And Uber seems to be the target of this latest leak of internal documents.

• We’ll get to that in a bit: first, after turning the Twitterverse upside down earlier this year.

• Elon Musk has decided that he doesn’t want to spend $44bn taking over Twitter after all.

Freda Liu: Before we get into any of that, what would you have liked to talk about this week?

Matt Armitage:

• I don’t know. It certainly wouldn’t make an entire episode.

• But how about the trend for point five selfies?

• Have you heard about those?

Freda Liu: [replies]

Matt Armitage:

• It’s really simple –

• I don’t know who remembers the photo of Joe Biden and his wife with former president Carter and his wife that was taken last year.

• And there was a lot of chatter about the way the picture was distorted so that the Bidens looked huge and the Carters looked tiny, like kids.

• Because it was taken very close up using either a fisheye lens or an ultra-wide.

• So the perspective was distorted.

• Point five selfies are basically people taking selfies using the ultra-wide camera function on their phones.

• The normal magnification is x1, the ultra-wide is often x0.5.

• And the results are weird and distorted.

Freda Liu: And you would talk about that because…

Matt Armitage:

• Because it’s being used as an antidote to the antiseptic posed selfie.

• It’s the opposite of pretending to be living your best life.

• And presenting an image of perfection all the time.

• Most of us are messy people with messy lives.

• And point five selfies reflect that a little better, even if the idea is a little self-conscious.

• You still aren’t presenting the real you, it’s you warped in an uglier manner.

• But we’ve all been to those places – usually cafes – that have a feature wall for selfies and group shots.

• And you see groups of people taking shots over and over again, repetitions of the same poses designed to show how much fun they’re having.

• They’re not having fun – they’re trying to create the artifice of having fun.

• They might have had fun before the photo, during it, not so much.

• So the point five selfie is a nice reaction to that over-preened, over-perfected style of social media shots.

• Maybe it’s generational – maybe it’s Zoomers saying to Millennials, get out of the way.

• This is how we do things now.

Freda Liu: Thank goodness that’s the fun out of the way! Shall we start with Twitter?

Matt Armitage:

• Yes, this is the easier story to unpack.

• In a nutshell, Elon doesn’t want Twitter any more.

• That’s it. If you’re not a Musk stan, that’s as much of the story as you probably need to know.

• Which is unfortunate, because he made a formal bid for the company and, unless he can prove that Twitter is in material breach of their agreement.

• He’s either on the hook for a $44bn takeover bid or he has to pay a $1bn break fee.

• I think it was March or April when all this started – from nowhere Musk suddenly became the biggest single shareholder in Twitter.

• And announced that he wanted to buy – effectively taking it private again.

• And reform what he saw as some of its shortcomings.

• Chief among which was Musk saw to be a roll-back of the platform’s commitment to free speech.

• And a growing liberal bias amongst the company’s staff.

• He thought it had departed from the democratic town square principles the company was founded on.

Freda Liu: What’s changed?

Matt Armitage:

• After putting together a consortium of investors and getting debt financing in place, he seems to have cooled on the idea.

• There were weeks of tweets taking pot-shots at Twitter staff and board members.

• A very weird thing to do to improve morale in a company you’re trying to take over.

• And of course there has been that spectacular crypto crash and the ongoing stock market correction.

: 2022

• Possibly more importantly, Tesla shares are also worth a whole lot less.

• And Musk’s debt financing was largely based on his Tesla shares.

• On top of which, Twitter’s most recent earnings reports didn’t demonstrate the predicted growth.

• So you have an asset with a declining value, debt financing that is similarly stretched by market conditions

• and an uncertain financial outlook for the company.

Freda Liu: Could this be a renegotiating tactic?

Matt Armitage:

• It’s possible. Brinkmanship is part of Musk’s modus operandi, or whatever.

• He tweeted a few weeks ago along the lines that it might be possible to renegotiate.

• And tactics like this – although unusual – have worked for other companies in the past.

• And it seems that Twitter wants to be bought out.

• There are reports that some investors see Musk as the best chance to see a return on their investments.

• But the whole thing is quite bizarre. As the Washington Post points out:

• Twitter wasn’t looking for a buyer, and now Musk doesn’t want to buy.

• So the company that didn’t want to be sold is planning to sue the person who doesn’t want to buy it.

Freda Liu: From what we know, Elon Musk’s attorneys filed papers on Friday 9th alleging numerous material breaches.

Matt Armitage:

• Yes, so one of the claims that Elon Musk has been making over the past few weeks is that Twitter has not been forthcoming about the number of bots and spam accounts on the platform.

• And that it is potentially including fake accounts in its daily active users calculations.

• Twitter has made announcements that it removes between 500k to a million accounts a day.

• It claims it has made all the data it can available to Musk’s team.

• I guess there are user privacy concerns about what can be shared with third parties, including potential buyers.

Freda Liu: Wasn’t one of his claims to clean up the platform and be more vigorous at removing these bots and spam networks?

Matt Armitage:

• Again, not a lawyer…

• This is one of the points it’s being argued undermines his own claims.

• It’s also alleged that the agreement he signed with Twitter was pretty loose by the normal standard of these things.

• And that, consequently, it gives him very little wiggle room in terms of having it cancelled.

• Twitter has maintained that it is prepared to sue Elon Musk to force the deal through on the agreed terms.

• In terms of renegotiating the deal, Twitter may not have much room to manoeuvre.

• This is the deal agreed with shareholders. They’re the sellers. Legally, Twitter has to get them to agree to any new sale terms.

• In the meantime, Twitter has put a pause on new recruitment.

• Its shares fell again after the announcement of Musk’s filing.

• And it’s reported that morale inside the company isn’t great.

• Uncertainty about future ownership, job security, public bashing by Musk.

• But it does bring us back to a central point – one we’re going to explore more after the break.

• Which is the power of big tech companies and the people that run them.

• A quick question for you Freda. How much a part of your life is Twitter?

Freda Liu: [replies]

Matt Armitage:

• Who uses the platform any more?

• People in tech, politicians, journalists?

• To anyone under the age of 15, explaining Twitter is like trying to explain getting music from a cassette tape to a millennial.

• A lot of blank stares and bored incomprehension.

• I see that you’re pretty active on TikTok…

Freda Liu: [replies]

Matt Armitage:

• We should be Twitter’s core audience. The fact we’re not speaks to a wider problem the platform is having with new users and retentions.

• I’m a lazy social media person anyway – but it’s TikTok along with some of the decentralised socmed platforms that excite me.

• It appeals to me in the way that Instagram did when it first came out.

• And in a way that Snapchat somehow never did.

• So I do wonder if we’ll get to the end of this year to find out that billions of dollars have been spent flinging mud back and forth.

• On a channel that no one’s really listening to any more.

BREAK

Freda Liu: I’m here with Mr Happy Joy Joy. I thought we were going to talk about the science of sighing today, but no, it’s Big Tech as usual. You mentioned Uber at the start of the show.

Matt Armitage:

• Yes. I’m not going to get too far into the details of this show.

• Partly because there’s new information being released every day.

• Drip-feeding – so that in the time between recording this and you hearing it, we will definitely be behind the story.

• And also because some of the allegations are things that Uber hadn’t responded to or disputes at the time we recorded this.

• Which is why I’m at pains to say that this information is in the public domain but that’s not to say that Uber has a different interpretation of the information presented.

• So, the Uber files are based on a whistle-blower leak of emails, texts and WA messages.

documents from the period: 2013

• They were leaked by one of the company’s former lobbyists, called Mark McGann.

• And, according to the Guardian, which is publishing the revelations.

• It covers more than 40 countries that Uber was operating in or seeking to operate in at the time.

• And the Guardian has shared the details with some 40 media organisations so that it can be reported on more thoroughly.

Freda Liu: What do some of the bigger allegations in the leak reveal?

Matt Armitage:

• This is where I get to the big sigh part, I guess.

• A lot of it relates to lobbying and regulation – which makes sense as the whistleblower is, or I guess now, was a lobbyist.

• You know, I did practically anything rather than do the notes for this. I wasted an entire afternoon looking at fail army clips on YT.

• That’s how much I don’t want to talk about this stuff.

• Where are we?

• That Emmanuel Macron, the current French President, and then economy minister was lobbying helping to swing support in the French cabinet in favour of Uber.

• A senior member of the EU helped to lobby Dutch politicians on Uber’s behalf.

• Allegedly secretly.

• Undeclared meetings with British politicians.

• Issues around the legality and illegality of the way the company operated in some countries, in terms of transport laws.

• Issues about tax liability.

Freda Liu: Isn’t this something we’ve come to expect as part of doing business in the 21st century?

Matt Armitage:

• I think that’s the issue. It’s what we suspect that we’re sure goes on.

• Getting the confirmation is just the depressing icing on the cake.

• We know that big companies recruit political activists.

• Uber has or had two of Obama’s heavyweight aides – Jim Messina and David Plouffe on staff.

• I do like his name, it sounds like the noise a pebble makes when you throw it in a lake.

• Facebook has a former British deputy PM running its PR affairs.

• By the same token, we know that big companies routinely fund academic research that is likely to show them in a flattering light.

• Uber is one of the pioneers of the gig economy concept.

• Not just as a gig economy employer – but also as a vocal proponent of the economic benefits of this kind of work.

• It’s not necessarily wrong or suspect.

• But if I offered you a fat fee to produce a paper for me about the benefits of having cats rather than children.

• Who are those results likely to please?

• I am looking for someone to produce that paper, by the way.

Freda Liu: So, it’s really that this is being laid bare that we find objectionable?

Matt Armitage:

• Partly. I don’t think we’re projecting any haloes over most of these companies.

• What is surprising, I think… objectionable is a value judgement…

• Is the sophistication of the networks and the lengths the companies will go to to get their way.

• Take the example of David Plouffe. He was able to convince the US ambassador to UK to hold an embassy event where Plouffe could talk about the gig economy.

• Not a traditional lobbying event, but nevertheless one where British ministers and politicians would be present,

• as well as media and business leaders, all receiving Uber’s view of the world.

• With the seeming endorsement of the US government.

Freda Liu: How about the company’s connections to the media?

Matt Armitage:

• As I mentioned, that charm offensive in terms of academic research and wider promotion of the gig economy concept.

• Was one way to cast Uber in either a spotlight or reflected glory.

• Lots of newspaper pieces, tv reports, podcasts.

• Pretty much what I’ve been doing for the past few years.

• And the gig economy does have its good sides. But it also needs protections for the workers.

• The recognition that they are employees and not bot-controlled independent partners.

• What was more surprising was the revelation of the company’s alleged attempts to engage media tycoons as lobbyists.

• And offer them Uber equity on favourable terms.

Freda Liu: And this was to guarantee coverage?

Matt Armitage:

• No. the company has never really had problems in terms of generating headlines.

• Media tycoons have political power.

• And at the time, in the mid 20-teens.

• There was a lot of negativity around the company.

• Some cities and countries were trying to ban the company.

• There was the infamous rape case in India.

• In France, taxi drivers were taking to the streets to protect their metiers and their meters.

• So pivotal news outlets with the power to shape public opinion and take on politicians and grassroots movements that opposed them.

• Would be a key asset.

• And finally, well, not finally….There’ll be more to come.

• The lack of hubris of executives.

• Reports that former CEO Travis Kalnick allegedly told aides to the then VP Biden, that every minute the VP kept him waiting was a minute less time he would allocate for him at Davos I think it was.

• I don’t know about you, but I find that astounding…

Freda Liu: [replies]

Matt Armitage:

• Why would anyone behave like that, for starters? Simple common decency?

• We’ve both been covering startups for long enough to know that it isn’t genius that makes emergent companies successful.

• It’s timing and luck as much as it is anything else.

• We’ve all seen amazing ideas, companies and talented founders fail.

• Right market, wrong time. Sudden drying of VC cash.

• Any number of variables.

• So who is Travis Kalnick? One of the lucky guys.

• The lack of hubris. Especially given that the company was operating at a loss on other people’s money for a lot of that time.

• This is the kind of thing that people find distasteful. That gives them such a low opinion of Big Tech.

• If you have that kind of disdain for a Vice President. Now a president.

• How are you likely to feel towards your customers? Your users? To your workforce. Your investors?

Freda Liu: How has Uber reacted?

Matt Armitage:

• Quite openly. Which is commendable. Although their reply references employing Eric Holder, a former US attorney general hired to overhaul their business practices.

• Which is another example of that open door I was talking about, but I guess we have to give them the benefit of the doubt that he’s there to do what they say he’s there to do.

• I’ve helped a number of clients with reputation and crisis management issues over the years.

• And transparency is something I always advocate.

• Don’t act cagey, don’t resort to ‘what aboutism’.

• The more you try and obfuscate, the more people will dig for information.

• The easiest story to deal with is the one in front of you.

• Keep people focused on that. If you need to change your company as a result, then change.

• I’ll paraphrase the opening part of Uber statement. I don’t normally:

on Uber’s mistakes prior to: 2017

• It goes on to quote all the myriad ways that CEO Dara Khosrowshahi has changed the company’s values. Yada yada.

• That’s a pretty unvarnished statement from a company worth billions.

• I’m not going to debate whether Uber has changed, if it’s a better company now.

• That’s another show. But the transparency and recognition of past mistakes is quite unusual for Big Tech.

• Very different from the defensive way that some other companies who have found themselves under a similar spotlight in recent years have reacted.

Freda Liu: Without getting into the realm of virtue signalling, is this an indication that Uber has learned its lesson?

Matt Armitage:

• I don’t think it really matters. It’s like Twitter.

• We attach an outsized importance to the company.

• Uber is a drop in the global economy. It just demands a lot of our attention.

• And that gives us this idea that it has outsize clout.

• Going back to the example of Tesla and Ford from a couple of weeks ago.

• Ford’s revenues last year were $136bn. Tesla was $53.8bn.

• Not to belittle Tesla’s achievement. Ford has been doing this for a hundred years.

• Tesla a couple of decades. That’s amazing.

• But which company do we spend more time talking about? The company with $136bn in revenue or the one with $53bn?

the Presidential election of: 2024

• And we see in the Uber papers a callousness from some senior executives towards issues like violence at anti-Uber protests, or the legality of the service.

• Frankly, we deserve better.

Freda Liu: What about the politicians on the receiving end of the lobbying?

Matt Armitage:

• I think the British ones will be fine. They’ve got so many other scandals going on that this wouldn’t even count as wallpaper.

• Macron could be in some danger.

• He won the Presidency, but lost his parliamentary majority so he could be politically vulnerable towards shifts in public opinion.

• Badly behaved global companies are not generally something the people who adopted liberty, fraternity and equality generally favour.

• And there lies another problem. Politicians have been talking about taking on Big Tech…

• With increasingly loud voices over the past few years.

• What we want, and what we’ve always needed are level and rational policies that deal with the issues and try to anticipate the future.

• Yes, investigations can help to expose the level of cosiness between regulators and Big Tech.

• But we also don’t want kneejerk legislation from lawmakers trying to prove that they’ve got the biggest anti-tech muscles.

• Tech is a long way from being perfect.

• These industries have enormous potential to shape the future. The gig economy, just one example, is far from perfect.

• But millions of people rely on it for their income. It has introduced flexibility into the workforce and welcomed in people who were excluded from traditional roles.

• So what we want are laws that help people to make the most of these opportunities,

• And to ensure that it doesn’t move in the opposite direction, which is bonded servitude controlled by bots.