Hours after Facebook appeared before a Senate panel Wednesday to account for the company’s role in the spread of Russian misinformation on its platform, chief executive Mark Zuckerberg got on a conference call with investors to celebrate a milestone: For the first time in its history, Facebook had earned more than $10 billion in quarterly revenue.
Zuckerberg followed up with still more staggering numbers: His company had made $4.7 billion in profit from July to September, a 79 percent increase over the same period last year. And the company now boasts nearly 2.1 billion monthly users.
Facebook isn’t the only tech company reporting big successes to Wall Street these days. Alphabet, Google’s parent company, recently reported revenue of $28 billion between July and September — a 24 percent jump compared to the same period last year. Amazon, while it has not prioritized profits, reported a stunning 34 percent jump in sales compared to last year, at roughly $44 billion. (Amazon chief executive Jeffrey P. Bezos also owns The Washington Post.) And Twitter said last week that by the end of the year it may see its first-ever profitable quarter.
The tech industry’s ongoing strong financial performance reflects a soaring economic outlook. But it is increasingly at odds with worsening political winds in Washington as policymakers worry that Silicon Valley has become too dominant, too invasive and too out-of-control.
“There is a looming coalition of conservatives skeptical of liberal West Coast companies, and progressives who worry about bigness in any form,” said Darrell West, director of the Brookings Center for Technology Innovation. “And what the tech companies have to worry about is if this becomes a bipartisan issue and if this unites the left and the right against them. That would be a seismic shift in American politics.”
For Silicon Valley, the Russia probe is merely one dimension of a broader kind of political reckoning taking place in Washington. Politicians are now talking urgently about tech firms’ moral obligation to protect America’s highest principles — something rarely said about other industries.
“The prospect of Silicon Valley companies censoring speech or news content is troubling to anyone who cares about a democratic process with a robust First Amendment,” Sen. Ted Cruz (R-Tex.) told the top lawyers of Facebook, Google and Twitter in a Senate hearing earlier this week. And on Wednesday, Sen. Ron Wyden (D-Ore.) told the lawyers that more than mere collections of algorithms, the firms they represented stand for major civic institutions — with all the responsibilities that implies.
The question of what, if anything, tech companies truly owe to the public is becoming increasingly salient as their products become ever more central to our lives. After conquering desktop and mobile search, Silicon Valley has transformed our social networks, upended the entertainment industry, disrupted brick-and-mortar commerce and now even wants to enter our homes with smart devices that know when we’re away or puttering around.
Underlying much of this expansion is a digital advertising industry that has thrown America’s attention economy into overdrive.
“Facebook, in particular, has invented among the most powerful attention-seizing and human manipulation tools ever invented,” said Tim Wu, the Columbia University law professor and former senior adviser to the Federal Trade Commission.
The social network is on track to earn $38.6 billion this year — a 43.6 percent jump from 2016, according to the research firm eMarketer. By the end of the year, it said, Facebook and Google together will account for 49 percent of all digital advertising on Earth.
Despite those massive numbers, chief executive Mark Zuckerberg said that Facebook is extremely committed to cutting down abuse — so much so that it’s willing to sacrifice future earnings.
“We’re investing so much in security that it will impact our profitability,” he said. “Protecting our community is more important than maximizing our profits.”
Other companies have made similar commitments. In a blog post this week, Google general counsel Kent Walker wrote that the company takes preventing abuse of its platform very seriously.
“While we have found only limited activity [by Russian actors] on our services, we will continue to work to prevent all of it, because there is no amount of interference that is acceptable,” Walker wrote.
Those commitments reflect urgent moves by Facebook and Google to manage the backlash they face in Washington. And it’s not hard to see why: Between tech’s growing dominance in virtually every aspect of the economy, and the industry’s missteps in the political arena, Silicon Valley’s fortunes have turned with surprising speed in a city more often known for working at a glacial pace. The industry has become a massive target.
The changing winds have put tech companies at greater risk of regulation, with lawmakers such as Sens. John McCain (R-Ariz.), Amy Klobuchar (D-Minn.) and Mark R. Warner (D-Va.) pushing legislation to require greater transparency in political advertising.
It’s unclear how heavily Washington may ultimately come down on the tech industry. But it’s unmistakable that a sea change is underway. Even as the companies continue to report record-breaking results, political pressure is forcing them to come to terms with the unintended consequences of the systems they built — and control.
Twitter, Facebook, Amazon and Google declined to comment for this story.
Facebook and Google’s enormous profits may buoy Wall Street. But it’s a different story in Washington. – Washington Post