Companies in this turbulent sector must address the risks and disruptive potential of their products and services.
At first glance, the technology industry seems to be having a great year. The big five in the U.S. — Alphabet, Amazon, Apple, Facebook, and Microsoft — have recorded impressive revenue figures, earnings gains, and stock market valuations. Their Chinese counterparts, notably Alibaba, Huawei, and Tencent, are doing almost as well, leveraging their market leadership in China to aggressively build market share internationally. Startups in both countries continue to grow into unicorns, going public in significant numbers. It’s easy to argue that the success technology companies enjoy today is well deserved, given the growing power and importance of the advances that the industry is deploying — the Internet of Things (IoT) and edge computing, the cloud, advanced data analytics, artificial intelligence (AI), and machine learning — and the practical ways they can be applied, including in autonomous vehicles (AVs), advanced supply chains, e-commerce, industrial manufacturing, and so many others.
But the risks and disruptive potential of technology may, for the first time in its history, be outrunning the industry’s ability to manage them. Government leaders, regulators, the media, customers, and even investors increasingly hold tech companies accountable for the unintended consequences of their products. Serious efforts are under way to regulate privacy and antitrust issues — for example, the European Union’s General Data Protection Regulation (GDPR), governing how private data can be collected and exploited, took effect in May 2018. In the U.S., powerful institutional investors have been pressing companies to take greater responsibility for the social consequences of their activities and products. BlackRock chairman Larry Fink, in the January 2018 edition of his annual letter to CEOs, suggested that if companies want BlackRock’s continued support, they must consider issues such as slow wage growth, climate change, and automation, as well as growth and profitability, as part of their strategies. The investor consulting firm Jana is teaming with the California State Teachers’ Retirement System to launch an investment fund that rewards companies that act responsibly. Their initial joint public relations campaign proposed that Apple help fight smartphone addiction among children. It may be a harbinger of broader change that, with the mid-2018 announcement of its forthcoming Screen Time tool, Apple is directly addressing the concerns raised by this campaign.
It’s as if the whole industry has been asked to mature at once. It can realize its full market potential only by acknowledging the risks its products and services present to the industry and to the world in which they operate. It can thrive only by offering solutions, whether rooted in technology or not, to manage and limit those risks, while still enabling the connections and opportunities that people have gained from their devices.