Big Tech’s downfall: Is it the beginning of the end of Web2?[Column]| coindesk JAPAN | Coindesk Japan

After 20 years of ruling and reshaping our lives, “Big Tech” is finally starting to fade.

In the first three weeks of 2023 alone, more than 46,000 people at U.S. tech companies have lost their jobs, according to venture database Crunchbase. By the way, the number of layoffs in 2022 is 107,000.

Microsoft recently announced grim forecasts for 2023 corporate demand for its cloud service Azure, coincidentally with a major outage around the same time.

Meanwhile, the U.S. Justice Department has filed a lawsuit against Google that could spell the end of its monopoly advertising business. Add in the turmoil on Twitter since Elon Musk took over as CEO, and Meta’s share price slump due to declining revenues in 2022, and the broader downturn is spreading across the industry that brought us Web2. I can understand that.

Is this just a cyclical phenomenon, or a long-term shift that marks the end of the Web2 giants’ era? If the latter, what will come next?

For those who want a Web3 economy where centralized Internet platforms will have less impact on our lives and where people and businesses will have more control over their data and content, Big Tech’s predicament is a sure sign of a brighter future. and hope.

However, it is possible that this downturn will pass and that things will return to normal, or that new architectures will emerge around artificial intelligence (AI) and the Metaverse that the dominant centralized companies are currently embracing. be.

Periodic? long term?

It is easy to claim that it is cyclical. Easing monetary policy before 2022 will cause companies to invest heavily in new, pre-mainstream technologies such as AI and VR (virtual reality). But now, with higher interest rates, customers of those companies are spending less on products and services they used to earn, such as online advertising and data storage, forcing companies to cut spending.

From that point of view, the status quo is simply a diet exercise, and Big Tech will be able to profit from advances in new technology when it hits the mainstream, staying healthier. be able to.

But it’s worth noting that cyclical financial vulnerabilities have coincided with a loss of public confidence in the tech industry. It’s a trend that could portend a longer-term decline in the outlook for tech companies. Public opinion drives the political response, and perhaps Big Tech’s greatest weakness lies in American politics.

According to the Edelman Trust Barometer, an annual trust survey released last April, trust in the tech industry is higher globally than in other industries (such as media). Crucially, however, trust in the tech industry is at an all-time low in the United States, where Congress has the greatest power to decide the fate of the industry.

A question mark to the Web2 economic system

Not surprising given the constant negative news in recent years. With many now acutely aware of Twitter’s major problems around hate speech monitoring, bots and disinformation, debates around identity and reputation remain unresolved, if not exacerbated by Musk’s appointment as CEO. It also reveals the inner workings of Meta (formerly Facebook), where the misuse of user data led to rare bipartisan cooperation in Congress.

The decline in trust is also timed to intensify regulation of Internet platforms, first in Europe and now in the United States. The US Justice Department’s lawsuit against Google may pose the biggest threat ever to the Web2 giant’s economic model.

The antitrust lawsuit, which accuses Google of “corrupting legitimate competition in the ad tech industry,” could overthrow the centralized mechanisms that turn billions of users’ data into money.

Despite criticism of this “surveillance capitalist model,” the major platforms have steadfastly defended and deepened it. This is because it has provided stable profits to its shareholders. Ending it would put a question mark on the very advertising and data-driven Web2 economic system.

What next for Web2?

If this is the beginning of the end for Web2, what comes next?

The future should be Web3. But that alone is enough to give a name to the unknown world after Web2. The question is, who will control the system of the future?

The idea of ​​us being in control is appealing because we are the ones who produce the critical data and content that powers the Internet economy. I support any effort to achieve that, whether it’s something blockchain-based, an NFT, or something else. But there is no guarantee that such a paradise will emerge.

Without thoughtful efforts by all stakeholders to establish a fair framework for decentralized identities, credentials, encryption, and data storage, the “platform-less” Web3 could turn into a giant data monopoly. may be controlled. Moreover, the organization may be the same big tech as it is now.

Big tech working on AI

AI, for example. ChatGPT’s popularity once again highlights its importance to the future digital economy. Many believe that this technology will spell the end for today’s Internet searches.

In the world of ChatGPT, you no longer ask search engines to provide you with a list of websites with relevant information. You can ask an AI chatbot a question and get an answer in text or voice. Google will no longer be needed.

But Google Search may die, but what about Google AI?

Parent company Alphabet has been pouring heavily into developing AI systems, and Pichai mentioned AI several times when it recently announced 12,000 layoffs.

The winner may not be Google, but Microsoft, which has partnered with Elon Musk’s OpenAI. Microsoft recently invested $10 billion (about 1.3 trillion yen) in OpenAI, which developed ChatGPT. Even before that, it has already spent $3 billion (about 390 billion yen).

Or will these companies lose the competition and nominally decentralized projects such as Ethereum dominating the world of NFTs and DeFi (decentralized finance) will dominate? Would such a future be desirable?

what we really want

At CoinDesk’s IDEAS conference last year, Osmosis Labs co-founder Sunny Aggarwal said that Ethereum is a platform for software developers and new ideas to follow their own standards and rules. described as an “empire” that aspires to

Agarwal believes that a collection of independent chains linked by the Cosmos protocol, which is also being developed by Osmosis, is the next step for a truly democratic and open internet.

Is Cosmos’ vision for interoperability the solution, is Polkadot founder Gavin Wood’s vision the answer, or is entrepreneur Frank McCourt’s project The answer lies in the Decentralized Social Network Protocol (DSNP) underpinning Project Liberty’s mission to fix the Internet. not as important as the fact that

If we want a decentralized internet and we don’t want our lives to be manipulated by centralized public or private organizations that use AI and data mining, then we must unite and do it. must be strongly demanded.

We need laws, standards bodies and a multi-stakeholder governance system. If you don’t do well, you have a lot to lose.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
| Image: Rachel Sun/CoinDesk
｜Original: Tech’s Money Woes: Beginning of the End for Web2?