I read a great Tumblr post today. No idea who wrote it, but it’s an expression of extreme annoyance with Google(s goog), PayPal(s ebay) and other online behemoths that have grown way beyond the “startup” stage but that still don’t provide proper, human customer support because it’s hard to scale at low cost.
“It’s easy to make big money when you get to keep all the profits,” the Glass Balcony post points out, before complaining about the impact of these low-outlay ways on real people:
“Relying on automated support systems is no longer adequate. As the amount of online fraud grows over the years, automated systems are becoming less efficient. There is no accurate measure for that, however it’s anecdotally known that it’s more common nowadays for Google to shut down perfectly well-standing and long-standing AdSense accounts for invalid activity without providing the actual reasons for shutdown. Ditto for PayPal withholding the funds of customers.”
We all marvel at how quickly these companies grow and at their bounteous financials, but we don’t often enough sit back and consider why it is these companies can perform so well.
A huge part of that is down to enabling technologies, from the web itself to cloud computing and, yes, natural language processing and other technologies that will make automated customer service more useful and reliable. But that’s only part of the picture.
At this stage in the game, these companies are playing by different rules to everyone else. In the context of the post I mentioned above, customers are not customers: instead, they are users. If the exchange of money isn’t central to the relationship, as it is with an e-commerce operation such as Amazon(s amzn), then customer support becomes an afterthought – after all, most of the users aren’t paying with anything more than their personal data anyway, so what should they expect?
But that’s only one facet. Pull back, and this iconoclasm becomes even more concerning.
I’m not suggesting that Amazon, Google and Facebook(s fb) are breaking any laws, but they certainly don’t pay much tax either, relative to their revenues. In Europe, this is becoming a big issue, which is unsurprising given our current age of austerity. After all, if small businesses are struggling in this economic and technological environment, is it really fair that the megacorps taking their business away (particularly in retail) are so big and international that they don’t have to play by the same rules?
Bear in mind that Amazon is supposedly operating at a loss. The company’s margins are so low that it can destroy most competition, yet it somehow continues to expand. If the company paid taxes at the rate that small businesses need to, this situation would be entirely unsustainable.
The economic benefits for anyone other than Amazon are sometimes hard to see. Small businesses that would have paid their taxes in full are going under, and those public revenues are not being replaced. Of course these web giants are based somewhere – usually the U.S. – but their money often goes through a dizzying series of countries before it finds some tax haven where it can rest quietly. And from the companies’ perspective, why not? They operate everywhere; they can pick and choose.
That can sometimes lead to a sense that the web giants don’t feel beholden to any particular society. Consider these extraordinary quotes from Larry Page at yesterday’s Google I/O Q&A session:
“The pace of change in the world is increasing… We haven’t adapted mechanisms to deal with that. Maybe some of our old institutions like the law and so on aren’t keeping up with the rate of change that we’ve caused through technology. The laws when we went public were 50 years old. The law can’t be right if it’s 50 years old, that’s before the internet…
“We also haven’t built mechanisms to allow experimentation. There’s many exciting things you can do that you just can’t do because they’re illegal or against regulation. That makes sense, we don’t want our world to change too fast, but maybe we should set aside a small part of the world. I like going to Burning Man, for example, that’s an environment where people can try different things.”
Some have mocked Page for “wanting to start his own country”, but that risks missing Page’s point. He just sees Google as a special case that should enjoy at least limited exemptions from the rules that apply to smaller, pre-internet-style concerns. “If your rules weren’t written for us,” he seemed to say, “they shouldn’t apply to us.”
I sympathize with this view to a very limited extent: the pace of technological change does mean that regulators and legislators need to speed up their own operations if they want to keep up. Where Page and I part company, though, is that he wants Google to be hassled less and I want to see, for example, new data privacy laws that put meaningful and practical limitations on what companies such as his can do.
The great benefits of the free market system are supposed to be its enabling of genuine, merit-based competition and the resulting benefits to society. What we’re seeing here is a reduction in competition and variety, the concentration of wealth in the hands of a few giants, and the rise of players so big as to feel untouchable. The lack of genuine customer service mentioned at the start of this article is both symptomatic of this situation and one of its many drivers.
That sense of invulnerability and entitlement will affect us all, not only in terms of public finances, but in other fields too, such as data protection. These companies are worth more than many countries, and you can tell they know it.
In short, I’m worried about where this industry is going. I’m all for progress – I’d have chosen a strange field of journalism if that wasn’t the case – but perhaps it’s time to aim for a wider evaluation of what’s going on here. It’s not about being positive or negative. It’s about making sure that the massive societal changes this industry is effecting work out for the benefit of society as a whole.
After all, that’s why many of us are in this game to start with.