Big Tech Needs To Take Positive Action To Avoid Falling From Glory

The music for Big Tech stopped last year after the Federal Reserve’s aggressive interest rate increases crushed demand for growth stocks. On top of this, regulators are going after the digital giants in an effort to get them to behave more responsibly and the growth of the cloud market is slowing down.

2022 FAANG drop

Last year, Meta Platforms Inc META plunged 64%, Netflix Inc NFLX followed with 51%; with Alphabet Inc’s GOOG, Apple AAPL and Amazon.com Inc AMZN also fell from grace with a drop of at least 27%. Together, the FAANG stocks lost more than $3 trillion in market value, dragging the S&P 500 down 19%, in what was its worst year since 2008.

Clouds Are Hiding Sunny Prospects

With increasingly cost-conscious consumers and intensifying economic pressure,Microsoft Corporation MSFT, Amazon and Google are also having to adjust to slowing growth in one of their most prospective markets.

Many customers are getting smarter at optimizing their cloud spending as large companies face sharply rising bills while they move more of their computing into the cloud. Critics argue that the biggest cloud providers failed to move fast enough to reduce fixed charges as the volume of business has soared which allowed for greater efficiencies that come from operating at a massive scale.

Even Wall Street Was Unpleasantly Surprised

The latest figures pointed to an unexpected slowdown in the prospective cloud market, which most experts believed is a story at its beginning. Companies are trying to turn the economic difficulty to their advantage by getting customers to buy more of their services or sign up to longer-term deals to increase revenue. Microsoft is tying previously distinct cloud services such as Azure, Microsoft 365 and Dynamics more closely together to tie the user to its products. 

There Aren’t Many Cloud Players

Despite the new pressures from customers to make their cloud spending more efficient, most experts said there was little sign of competition in the cloud industry becoming more severe. Moreover, companies face high switching costs if they try to change their provider. In an effort to eliminate smaller competitors, AWS is also offering discounts to customers that channel more of their cloud business to its data centers. 

The EU Is Going After U.S. Tech Giants

European regulators are determined to get US tech giants to stop avoiding taxes, elbowing out the competition and profiting from news content that needs to be paid for. On Wednesday, Irish regulators fined Meta for breaking the rules on personal data collection, with a penalty of $413 million. According to AFP, Meta will appeal. Meta was already fined more than $200 million in November due to a massive data leak that involved more than half a billion users. Wednesday’s ruling also forbids Facebook to collect personal data unless a yes/no consent option is given to the user. Meta needs to make one of its most polarizing decisions to date Along with Twitter, Facebook is accused of failing to take action against

disinformation and hate speech. 

In July last year, the European Parliament approved a Digital Services Act that compels internet companies to take responsibility for the content distributed on its platforms such as combating illegal content, hate speech and disinformation or facing fines of up to six percent of their global turnover. It comes into effect in 2023. Meta needs to decide if it will allow the former president to return to Facebook. 

The $300 billion company has said it will make the decision by January 7, 2023. Trump, whose use of social media helped him secure the presidency in 2016, was suspended from Meta’s platforms for igniting violence soon after a group of his supporters stormed the US Capitol in January 2021.

The decision will also have implications for Meta’s $118 billion-a-year business, potentially driving away advertisers or gaining significant income from Trump’s announced campaign.

Google Is Developing A Free Tool For Smaller Websites To Combat Terrorism

On December 13th, Meta launched an open-source software that other platforms can deploy to match terrorism content to existing images or videos in the database and highlight them for urgent human review. 

With Jigsaw’s tool, Google took the process further by helping human moderators make identify and remove terrorist material. With a staff of 70 people, Jigsaw’s loss-making division is not expected to become profitable as its mission is primarily to deliver non-monetary value.

The Message Is Clear

The above updates only amplify the fact that the world needs a healthier Internet ASAP and the technology that serves our well-being as opposed to deteriorating our mental and overall health. 

Regulators are forcing Big Tech to take responsibility for its actions and lead by example by taking positive action.