Remember how, in late 2018, the Financial Times declared “techlash” — the backlash against the giant US technology companies and all they represent — the word of the year? It also made the shortlist for Oxford Languages’ word of the year, but then lost to “toxic.” To judge by the amount of negative publicity the companies continue to generate, techlash continues — but as far as markets and users are concerned, it is an empty word.
Every year since at least 2018, Facebook has led the S&P 500 companies in the number of days it faced negative news sentiment, while Alphabet’s Google and Twitter have been in the top 10. [Bloomberg uses supervised machine learning to determine the sentiment in news stories from the point of view of an investor who holds a long position in a stock. The indicator used here is the daily average news sentiment.]
Facebook averaged 255 negative news days in 2018 through last year and has had 157 such days so far this year; Google and Twitter have not been far behind.
However, the ceaseless beating that the companies have been taking in the news contrasts with the relentless rise in their stock prices. In 2018 and 2019, Facebook was the S&P 500 company with the most days when its stock price rose, despite negative news sentiment. Last year and this year, Google took over the top spot, with Facebook close behind.
Seemingly anything could be published about these companies — privacy-invading data-gathering practices, promotion of pernicious political views and anti-vaccine propaganda, monopolizing power, enormous fines imposed by regulators in Europe and the US, lawsuits and antitrust proceedings — yet nothing would deter investors from buying them.
Since the start of 2018, Twitter’s market capitalization has increased by a factor of 2.8, Google’s by 2.6 and Facebook’s has doubled. Meanwhile, the market capitalization of the S&P 500 has increased a mere 69 percent — and these years have been when news sentiment has been consistently worse for the three tech firms than for any of their S&P 500 peers.
Arguably, the market has been reacting to the companies’ stellar financials, not all of the negative coverage. For example, Google’s net income has grown by more than 30 percent per year during this time, and Facebook’s profit growth has averaged more than 40 percent.
However, ordinary users have grown to regard the tech whales as evil. This year’s Edelman Trust Barometer showed the lowest-ever public confidence in technology companies, at 68 percent, down from 76 percent in 2017, while trust in tech in the US is even lower at 57 percent. Trust in social media as an information source is also at its lowest level.
These trust levels cannot be easily reconciled with the user numbers that the tech companies report to investors. Facebook has said that it has 1.9 billion daily active users, up 460 million since the first quarter of 2018; Twitter has 206 million, up 86 million.
Even if the companies exaggerate these hard-to-check numbers by, for example, not adequately counting users with multiple accounts, the steadily growing profits are not, after all, the result of price gouging — that is not an accusation that the Googles and Facebooks of this world have faced. Instead, they reflect advertisers’ continued reliance on them, a reliance that would not be there if the ads did not convert to sales.
If users really considered the tech leaders evil, they would abandon them in droves. Network effects are difficult to overcome: Facebook’s WhatsApp messenger appeared to bleed users after a change in privacy standards, but ended up showing exemplary resilience.
The power of these effects can be frightening: A US government ban on Huawei’s use of Google software all but killed the Chinese company’s Android phone business, driving a high-quality hardware producer into a ditch because most users could not imagine a Google-free life.
However, viable alternatives exist, even in heavily monopolized areas such as Internet search, not to mention mobile messaging. It is just that the household names are not really any less attractive for most people than these alternatives. They are not evil enough for the daily user to go to any trouble at all.
When regulators take action against Big Tech, they understandably react to media reports — that barrage of negative news sentiment, but the media are Big Tech’s direct competitors in battles for audience attention and advertising dollars.
Journalists might be naturally motivated to Google, Facebook, even Twitter as evil, no matter how objective they try to appear. These companies have all but ruined the professional world and the industry in which journalists started out. Most officials and politicians grew up in the same world. To them, reacting to sustained media sentiment, like the kind that has developed around Big Tech, is a matter of long practice.
Yet when it comes to ordinary users, the professional media are yet another increasingly unreliable source. Journalists might gloat about declining public trust in social media, but the same Edelman Trust Barometer shows the lowest confidence in traditional media since at least 2012 — 53 percent globally, down from 63 percent in 2018, at the beginning of the “techlash.”
Fifty-nine percent of respondents say that journalists intentionally mislead them and that they are more interested in pushing ideologies than in reporting facts. With the majority feeling that way, it is not surprising that people do not attach much importance to media’s attacks on tech.
For example, ProPublica, the non-profit organization that promotes investigative journalism, has revealed the little-known fact that contract workers check not just the messages reported by users as pernicious, but also those that came immediately before them.
Rather than deny this practice, Facebook has said that it is normal to examine the context when complaints are made, and that doing so does not undermine the privacy protections accorded by end-to-end encryption.
To everyday users, if they take notice of the controversy at all, it pits one relatively untrustworthy source against another.
Given the news climate and regulators’ behavior, tech companies are among the biggest lobbying spenders. According to OpenSecrets, Facebook spent US$19.7 million last year and US$9.6 million so far this year on lobbying.
However, these amounts are tiny given the scale of its operations. If techlash were real, they would be woefully insufficient to defend the social networking giant from popular anger.
As it is, the media keeps chipping away at tech power, and regulators will bite, sometimes painfully, but they would not undo the highly questionable business models that sustain digital advertising leaders. Users just do not care enough for a tech counterrevolution to break out.
Some people are in constant search of alternatives to tech giants’ services, replacing them everywhere they can and replacing the services their still using as soon as comparable alternatives become available. Yet they have no illusions about undermining Big Tech’s market power in any meaningful way. There are enough of these people to keep smaller competitors alive, but that’s the extent of it — techlash, after all, is a niche phenomenon.
Leonid Bershidsky is a member of the Bloomberg News Automation team based in Berlin.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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