Learning to trust is a two-way street

As the world turns digital, tech companies need to establish firm principles for how they use our data. If they don’t regulators will do it for them.

IBM executive chairman Ginni Rometty

-

-

Big tech may have been the darling of the pandemic in investors’ eyes but during the course of the past few years it increasingly has been viewed as a superspreader when it comes to the way it is infiltrating every aspect of our lives.

Regulators certainly have the current giants — Google, Facebook, Apple and Amazon — in their sights.

Chief executives were hauled in front of the US congress in July to answer questions from the House judiciary committee. In October, the committee’s damning 500-page report concluded big tech: “Wield their dominance in ways that erode entrepreneurship, degrade Americans’ privacy online, and undermine the vibrancy of the free and diverse press”, the House judiciary committee concluded in its nearly 500-page report. “The result is less innovation, fewer choices for consumers, and a weakened democracy.”

In Europe, regulators are starting to crack down on big tech too. This month, Margrethe Vestager, the European commissioner for competition, accused Amazon of using “big data” to illegally distort competition in France and Germany. And the EU’s Digital Services Act, due to be presented in early December, is expected to force companies to reveal the underlying algorithms upon which they make decisions.

In a speech on October 29, Vestager said, “the more we come to understand how much we depend on these platforms — and how little we really understand or control the choices they make — the more people’s trust in digital technology begins to waver. And without that trust, we won’t be able to get the most out of the potential of digitisation.”

As digital giants get bigger and their ability to both hoover up and analyse our personal information grows exponentially with tools like artificial intelligence, trust will become a battleground issue.

Ginni Rometty, the executive chairman of IBM told the World Economic Forum this year that trust would become the “defining issue of our time”, given the power that can be amassed via the collection of data.

“If this era is going to thrive then people are going to have to trust the technology but they have to trust the era will be inclusive for them as well,” Rometty told the forum.

Airbnb co-founder and chief executive Brian Chesky. Picture: Supplied

The wrath of regulators and the ire of customers is something that Airbnb co-founder and chief executive Brian Chesky is familiar with.

Speaking on The Australian’s Forward Slash podcast, Chesky said that as the company rapidly expanded following its formation in 2008, it hit numerous issues including major trust and safety incidents in 2011, discrimination on the platform in 2016, and political policy issues, specifically around concerns that local residents were being pushed out of neighbourhoods as accommodation was turned into Airbnb dwellings.

“When I came to Silicon Valley in 2007, there was a point of view that online companies should give community members the tools to monitor themselves,” Chesky said.

“In hindsight that was flawed thinking (that) we’re ‘just platforms’. Hundreds of millions of people later on Airbnb, billions of people later on other platforms, that’s not enough. We all are coming to a reckoning in this industry that we have to take more responsibility for the activity on our platform.”

For Chesky, the foundational ideals of a tech start-up may be enough to guide them in the early days, but as firms mature and start to exploit the advantages of rapid scale, more self-awareness is needed. “When you have a mission statement like ‘we’re trying to make the world better’, if you’re not careful you think the bigger you get, the better you’re making the world, not realising, there’s all sorts of unintended consequences.”

Mike Cannon-Brookes, co-founder of ­Atlassian and Australia’s highest profile tech leader, told Forward Slash that founders create firms with the best intentions, but oftentimes the externalities that are inherent in business aren’t apparent until the company is much ­larger.

“Having talked to a lot of technology leaders (they) are generally much more focused on leaving the world a better place,” he said. “They don’t always get it right, they sometimes don’t understand the impacts of the technology that they’re creating. And that’s an incredibly hard thing.”

Cannon-Brookes said the challenge for tech companies is that as they are relatively new, the externalities they create are not fully understood, especially as they scale into new areas. That was particularly the case where companies’ products are free to use, as is the case with Google and Facebook.

“Technology companies have delivered massive utility and hence have had massive returns. Everything for a utility cost of zero because (of) the business model that came with it … is quite phenomenal and we need to be very careful about how we understand these forces over time.

“We have to, as a society, understand these types of businesses, we have to understand their strengths, their weaknesses and we have to manage through that and it’s usually done with some form of regulation.

“(With) the current crop of mega tech giants, the challenge is most of their products are free. The customers love their products and so that makes it incredibly hard. They’re certainly not unpopular if one would deem (them) to be too powerful.”

Atlassian chief executive Mike Cannon-Brookes. Picture: John Feder/The Australian

Cannon-Brookes said that in the tech industry, curbing the power of dominant firms usually took place through disruption, where the complacent incumbent was forced to adapt, or was rendered obsolete by the creation of a new business model. So far that hasn’t happened to the current rank of giant tech firms, and despite the growing regulatory clamour, there has not been a substantial impact on their market power.

Airbnb has had that test thanks to COVID-19 and it has been a searing experience for Chesky, who almost overnight watched his business shrink by 80 per cent. With a degree in industrial design, Chesky applied a designer’s ethos to his decisions and drew on the experience of launching during the 2008 financial crisis, where writing out a “series of principles” helped navigate turbulent times.

The first three guiding principles Chesky drafted for the pandemic were: be decisive, preserve cash, and protect the brand. The fourth principle was to respect all the stakeholders in the company.

“I thought if this is as big a crisis as we think it is, people will remember how people handled this crisis,” Chesky explained.

“And I wanted us to be an example, for other companies, so we had to act with all stakeholders in mind, our employees, our guests, our hosts, our shareholders, and society more broadly. Therefore, we had to make principled decisions, not just business decisions”

Those guiding principles informed a company-wide reset. The company had branched out into multiple areas of the travel market, from content publishing to luxury properties to flights.

Chesky said that people started reaching out to him throughout the pandemic telling him how much they wanted the company to survive.

“People said that Airbnb, at its best, is not about travel and it’s not about real estate. It’s about connecting people,” he said.

“What I now realise that I didn’t see at the time was there is a real benefit of focusing. When we do re-expand, it’s going to be focused on different ways for people to connect. Sometimes you don’t realise the reason the first thing works so well is because it was this community-based model built on trust and connection.”

While new-era tech firms are only now seeing their first tests, 109-year old IBM has seen many. Ginni Rometty believes the company owes its longevity to sticking by its principles and realising that data would become the fuel for the digital economy, codified new principles for trust and transparency in 2013.

Those principles state that the purpose of Artificial Intelligence and cognitive systems is to augment — not replace — human intelligence; that the company is committed to protecting the privacy and ownership of clients’ data and any insights derived from it; and that new technologies, including AI must be transparent and explainable.

“Once (principles) are written down, it means you have to audit yourself against everything you do and keep doing it, because it’s easy to veer away from your first intentions,” Rometty said.

IBM’s view is that if it focuses on being “good tech” — investing in impactful research, even if it doesn’t have an obvious and immediate economic benefit — it will continue that long history of innovation, rising above the vicissitudes of fads and political cycles.

Chesky, having embraced his humanistic design principles during the pandemic has this advice for fellow tech leaders who might be thinking about resetting their businesses.

“The principle for tech companies, (for) all of us is to remember is we can either lead our way in the future, or we can get dragged into the future,” he said. “Don’t assume that every incremental dollar, every incremental user, every step forward, is a step forward for society. In fact, I would say the best thing for shareholders is that society wants you to exist, especially in a day and age like today. So I think the rules for business are evolving quickly. And those who react slowly and aren’t decisive, do so at their peril.”

-

Read The Australian’s policy on commercial content here.