By Mark Richards.
At first glance, the Chancellor’s Spring Statement, and an article written by a Democratic wannabee in the US and Facebook’s longest period of ‘down’ time for ten years have little to do with each other? But are they the straws in the wind that will ultimately mean the beginning of the end for the tech giants that dominate the internet – and our lives?
Like me, you will have watched the Chancellor’s Spring Statement on Wednesday. I expect you took a day off work especially. You will have hung on his every word, marvelled at his mastery of complex economics, been thrilled for the vision he laid out for the country and – inevitably – fallen out of your chair laughing at his hilarious jokes.
…And no doubt you then went online to discuss the finer points of the speech with your chums, eager to see if their views on net public sector debt as a percentage of GDP chimed with yours.
Sadly, you could not have that discussion, because, on Wednesday, Facebook was ‘down’ for the longest period in ten years, only – at least for me – struggling back to life this morning.
At first glance, those two events from Wednesday have little in common, but in Facebook’s lengthy absence and in a very short section of the Chancellor’s speech, there were perhaps signs that we might be about to see the beginning of the end for the current internet giants.
On Wednesday Facebook – and associated companies like Instagram – suffered a severe disruption, variously described as its ‘worst ever’ or ‘worst for ten years.’
The company’s main social network, its two messaging apps and Instagram were all affected, with Facebook yet to offer an explanation. The last comparable disruption was in 2008 when the site had 150m users: today it has 2.3bn and for large parts of Wednesday they found that communicating via Facebook was virtually impossible.
Was it a DoS attack?
I suspect that Facebook will never give an explanation for the problem – “We are aware that some people are currently having trouble” was more or less all they said – and this will inevitably lead many people to suspect a DoS attack.
What’s that? DoS stands for Denial of Service. It is a cyber-attack in which the perpetrator tries to make a network unavailable to its intended users. This is usually done by flooding the targeted network with superfluous requests in a bid to overload the systems. In a Distributed Denial of Service attack (DDoS) the requests come from a host of different sources, making it impossible to stop the attack by blocking a single source.
In simple terms it is like a crowd of people standing in a shop doorway, making it impossible for legitimate customers to get into the shop.
It’s not just Facebook
Virtually all big companies – especially those with millions of customers – have faced this sort of attack. Companies that have ‘time critical’ events are particularly vulnerable – so a few years ago, for example, British bookmakers were frequently hit by DDoS attacks just before the Saturday afternoon football matches kicked off, or as the runners cantered to the start for the Grand National.
Facebook, though, is a problem on a far bigger scale. And as I have said above, if it was a DDoS attack, the company is certainly not going to tell us.
Who are the FAANGs?
Facebook is one of the FAANGs. It is an acronym for the internet’s biggest companies – Facebook, Apple, Amazon, Netflix and Google (although technically the parent company of Google is Alphabet). Clearly, these are not purely internet companies: Amazon owns Whole Foods and Apple has been known to sell the odd phone, but they are the US stock markets most popular and – over the medium term – best performing tech stocks. And they are very much the type of company that will be in the line of fire if some politicians and legislators get their way.
The next Presidential election
The US is due to go to the polls to elect a new President in November next year. Health permitting it is almost certain that the Republican candidate will be a quiet, unassuming chap called Donald Trump – you may have heard of him…
But who will oppose the sitting President? The current favourites among the Democrats are Bernie Sanders (who will be 78 this year) and California senator Kamala Harris.
Another frontrunner is Elizabeth Warren. I doubt that she will be the candidate, but her thinking is indicative of the prevailing mood among many leading Democrats, and she has made no secret of her desire to see the internet giants broken up. She argues that they have ‘too much power,’ have ‘bulldozed competition’ and that they use personal data for profit.
“Today’s big tech companies have too much power,” she wrote in an article. “They have bulldozed competition, used our private information for profit and tilted the playing field against everyone else. And in the process, they have hurt small business and stifled innovation.”
You might think that is a patently ridiculous comment – after all, there are thousands of small businesses that would not exist without Amazon – but it is becoming a key part of many Democratic candidates’ thinking. Quite where that leaves Silicon Valley – where to support Trump in 2016 was tantamount to writing a resignation letter – is anyone’s guess.
Meanwhile in Europe…
…There is a simple question. Will the EU treat the tech giants as a cash cow?
We all know that the leading tech companies have not paid a lot of money in tax. Last year Facebook’s sales in the UK were £1.3bn. After receiving a tax credit, the tax bill it paid was just £7.4m. In an attempt to put this right Philip Hammond has already announced moves to introduce a Digital Services Tax, while in Europe Pierre Muscovici, head of tax for the European Commission, has spoken of a Europe-wide tax on the tech giants raising £4.4bn a year. And last year Google was fined £3.8bn the EU over what it described as anti-trust violations.
And let us go out where we came in. In his Spring Statement, Philip Hammond made a passing reference to asking the Competition and Markets Authority to look at ‘advertising online and protecting the consumers.’ We have a current crop of politicians who – when they can decide on anything – have three basic responses to every subject. Tax it, ban it or regulate it. Our current Chancellor may not ban the tech giants, but he will certainly be muttering the words of the old Meatloaf song: ‘Two out of three ain’t bad…’
You are going to use Facebook over the weekend. You may well buy something off Amazon, watch a boxset on Netflix and the world will stop turning if you do not search on Google or message someone on your iPhone. But there are plenty of straws in the wind – from cyber-criminals to politicians and bureaucrats, not to mention the coming threat from China – to suggest that one day it may be ‘FAANGs for the memory…’