SIGNALS

“These companies copy other peoples' inventions, flood the market with chintzy products sold at bargain basement prices, and make consumers pay with their privacy.”

And that, my friends, in 25 words or less, is a full-throated indictment of today's Big Tech/Big Data consumer electronics industry, at least according to Eddie Lazarus, Chief Legal Officer at Sonos. Mr. Lazarus, don't hold back. Tell us what you really think. Do me a favor. Read that quote again, and consider what it says. Does that pretty much sum things up? And if so, what does that mean for the future?

I'm old enough to remember when consumer electronics was a beautiful thing. Around the world, guys like Sidney Harman, Amar Bose, and Akio Morita started their own companies and built an industry. But even at their height, these companies operated almost like Mom and Pop companies. The workers routinely saw the boss wandering through the factory floor. Even lowly members of the audio press corps had access; I had the pleasure of dining with all three gentlemen. Pure class.

And the products they built. Oh, the products. Things of beauty. Sure, they all sold mass-market stuff, but their real passion was the high-end components. One look would tell you that they were lovingly designed and manufactured. These were companies that took immense pride in their work, worked hard to establish their reputations and worked even harder to keep them.

Something else that was apparent was their dedication to innovation. I have to give Sony special mention for that. Sony was one of the first companies to use transistors in non-military applications. The first Sony transistor radio literally started a revolution in the consumer electronics industry and under Morita's leadership, the company never let up. Technology behind products like the Trinitron, the Walkman, and the Compact Disc were true game-changers.

Fast forward to last week. The House Judiciary Committee’s Antitrust Subcommittee released a 400-page report entitled, “Investigation of Competition in Digital Markets.” The report prompted the commiserating quote from Mr. Lazarus. Alert readers will recall that I previously discussed the Sonos patent lawsuit against Google. The report criticizes what it characterizes as monopolistic practices of the world's largest technology companies such as Amazon, Google, Apple, and Facebook. Authored by House Democrats, citing problems that also concern many Republicans, the report suggests a bipartisan and profound discomfort with Big Tech and Big Data.

The issues surrounding Big Tech/Big Data are numerous and far-reaching, from suppressing innovation to eroding privacy. I urge you to read up on the subject; the importance of the issue is well worth your time. You can read a precis of the report here. I think the question of innovation is a good place to start. Clearly, Big Tech/Big Data companies have immense resources; they can hire the best people and invest literally billions in new product development. But the size of the companies, and the number of pies they have fingers in, can lead to problems.

Back in the day, when Sony developed a new television, their sole motive was to make a profit. Nothing wrong with that. And the best way to make a profit was to innovate and develop the very best TV they could, with the highest picture quality possible. The competition responded with their own best innovative efforts. Consumers benefited because we got really good TVs.

Today, a company's motive is still to make a profit. But the best way to do that is complicated. They might wind up making TVs that are pretty good, and will be purchased by many people, and they can harvest and sell data from those many customers. The more customers, the more data. They might make money from the TVs, but they might make even more money from the harvesting. The question is whether consumers are better off. Are we getting the best possible TV with the best possible picture, or are we getting something else?

So, can Big Tech/Big Data companies innovate in the traditional sense of the word, or do they even want to? Would a Harman, Bose, or Morita be able to start a small audio company today and prosper? Even if they could, and if they succeeded, how long before a Big Tech/Big Data company bought them, and absorbed them into the amorphous corporate blob? So we ask the question, does Big Tech/Big Data stifle innovation? If so, that would be profoundly bad.

Okay. You're thinking – Pohlmann distrusts Big Tech/Big Data. Maybe. Next time I'll revisit this topic but I'll defend them. And my line of defense might surprise and shock you.