Twenty years ago last Sunday, a social media platform called Facebook was founded in Cambridge, Massachusetts. It started out as a way for preppy Harvard students to connect with one another, but it went a long way fast. By 2008, it had become the engine of Barak Obama’s bid for the White House. By 2011, it was igniting revolution across North Africa and the Middle East in what became known as the Arab Spring. President Hosni Mubarak of Egypt was toppled, and the Islamists very nearly claimed Egypt…Meanwhile, in sleepy parts of Europe and North America, 50-somethings reconnected with long lost school friends with whom they exchanged pictures of pugs and cute cats…
Then came the Brexit referendum vitriol, unleashed by David Cameron – the man who is the UK Secretary of State for Foreign Affairs today. The referendum campaign was the first major vote fought out on social media. Conspiracy theories abounded. The world would never be the same again. Later, during the pandemic, a sub-section of social media devotees were convinced that kindly old Bill Gates was determined to inject us all with syringes of microchips disguised as Covid vaccine…
For all its astonishing ubiquity, a few years ago some of us were saying that social media had peaked, observing that Facebook was losing regular users. Post-pandemic, in 2023, Facebook’s parent sacked 21,000 employees. Mark Zuckerberg’s project of launching the metaverse (virtual reality for all) appeared to have stalled. It looked like the company was on the way down. Well, we were wrong.
Meta, which commands the three great social media platforms Facebook, WhatsApp and Instagram, is now in the ascendant, whether we like it or not. Around 40 percent of the population of Planet Earth use one or more of these platforms regularly and that world-wide reach is driving Meta’s share price to new record highs. (About three billion people are on Facebook and roughly two billion – overwhelmingly the same people – use WhatsApp and Instagram).
In just one trading day last week Meta’s stock surged by 22 percent after the company announced that it will pay dividends for the first time. Meta proposes to pay a quarterly dividend of 50 cents a share and to conduct a share buyback programme to the tune of $40 billion. The company’s shares are up by around 35 percent since the beginning of this year (from $346 to $470 yesterday). It now has a market capitalisation of 1.2 trillion.
On Wednesday last week (31 January), Meta’s CEO and founder Mark Zuckerberg appeared before a Congressional hearing on Capitol Hill in Washington. The bone of contention was the allegedly deleterious effect of social media on the mental health of the young and impressionable. Even Senator Lindsey Graham, who pontificated at length, could not blame the increasing prevalence of childhood depression and ADHD solely on Meta – since there are clearly other players, most prominently TikTok, which commands the fascination of the young who are now inseparable from their smartphones. (Question: How come kids who can’t concentrate can spend so long glued to their tiny screens? I really would like to know).
Mr Zuckerberg turned to the assembled grieving parents in the gallery and apologised with lachrymose intensity in a performative gesture that is now de rigueur on both sides of the Atlantic.
According to Bloomberg’s Billionaire Index, this latest share spurt has made the Meta founder and CEO the fourth richest man in the world with a net worth of $170 billion – well ahead of Microsoft founder Bill Gates, who is worth $145 billion. Tesla and SpaceX founder Elon Musk is still the richest man in the world, but his net worth has taken a battering thus far this year as Tesla shares have slumped.
Meta, Amazon and Apple all posted their results on Thursday last week (01 February). Microsoft, Tesla and (Google’s parent) Alphabet have also reported in recent weeks. Nvidia’s figures will be released later this month. Meta posted a 25 percent jump in revenues to over $40 billion in Q4 2023. Until recently, Big Tech has been regarded as a young, immature sector and therefore was not expected to pay dividends. That said, Microsoft, Apple and Nvidia have been paying dividends for some years.
Amazon’s annual sales for 2023 amounted to a stunning $451 billion, further to a Christmas splurge. That compares with $403 billion in 2022. Apple’s shares, in contrast, have been more subdued, although it remains the world’s largest corporation.
For all the stellar earnings data, jobs are being cut across the tech sector. Further to its $69 billion (£54 billion) acquisition last October of the UK computer games developer Activision Blizzard, which makes the bestselling Call of Duty game, Microsoft plans to cut jobs in its gaming division. Out of 22,000 people working on gaming, Microsoft will make about 1,900 redundant. The cuts will largely affect Activision staff as well as those working on Microsoft’s Xbox console and ZeniMax which develops the Fallout video games series. Last year the company cut more than 10,000 jobs. There are widespread redundancies across the tech sector generally. Google is laying off 1,000 staff at its online auction site. Amazon’s gaming subsidiary Twitch is also cutting jobs.
Call of Duty is one of the most lucrative computer games ever. In addition, Activision developed World of Warcraft and the mobile app Candy Crush. The main competitor to Microsoft’s gaming prowess is Japan’s Sony which makes the PlayStation games console.
Bots Behaving Badly
Some of Donald Trump’s conservative backers have been accused of having an “anti-tech” bias. Many American conservatives believe that Big Tech exhibits a left-wing bias and that it is Big Tech that has facilitated the “Great Awokening” – a cultural catastrophe that they aim to reverse. Mr Trump is now the presumptive Republican presidential nominee – as will be confirmed on “Super Tuesday” (05 March). Further, we can expect that Mr Trump will claim that social media exhibits a bias against him as the presidential campaign accelerates in the late summer and early autumn of this year.
The irony is that it is by means of social media that conservative opinion has coalesced to conclude that the litany of court cases against Mr Trump are a conspiracy of the deep state against an American patriot. It is therefore probable that Mr Trump will climb aboard the bandwagon of AI regulation.
Some conservative commentators, including former presidential candidate Vivek Ramaswamy, are peddling the notion that singer-songwriter Taylor Swift is the secret mastermind behind Joe Biden’s re-election campaign. Thousands of articles are written about Ms Swift every day – she is currently the most visible showbiz celebrity. A recent Newsweek poll found that almost a fifth of respondents were likely to vote for a candidate endorsed by Ms Swift who endorsed Joe Biden in 2020. Furthermore, Ms Swift claims that the 2019 deal to buy her back-catalogue was partially funded by the Soros family. George Soros, along with Bill Gates, is considered an arch-globalist bogeyman by certain conspiracy theorists.
It was therefore of more than just celebrity interest when Ms Swift herself became the victim of deeply distasteful deep-fake images which were circulated on social media last month. Deep-fakes are artificially generated images or videos that depict a person often in compromising situations. A report by Mashable, the entertainment portal, last year found that 98 per cent of all deep-fake videos online are pornographic in nature and that 99 percent of deep-fake targets are women.
Yesterday (08 February), deep-fake images posted on X (the portal formerly known as Twitter and owned by Elon Musk) appeared to show Ms Swift endorsing Donald Trump in his campaign to regain the White House. X briefly blocked searches for “Taylor Swift” after the incident. Some of the latest deep-fake videos have content labels warning that the media is inauthentic, but many share and re-posts did not initially carry such labels.
In the year when 64 countries go to the polls, elections are increasingly being fought as much in cyberspace as on the hustings. That makes the emergence of deep-fake videos a problem for democracy.
Last week, the US Federal Trade Commission (FTC) announced that it will open an inquiry into multibillion-dollar investments by tech giants into smaller AI startups. Amazon, Google, and Microsoft have made investments in AI nurseries such as Anthropic and OpenAI. While they have not bought those entities outright, that has not stopped federal antitrust regulators from taking an interest.
The FTC is looking into Microsoft’s $13 billion investment in OpenAI, the company that ignited the AI boom with the release of its chatbot ChatGPT in November 2022. The agency is also probing two separate investments into Anthropic, which makes the AI-powered chatbot Claude – $4 billion by Amazon and $2 billion by Google.
Gigabytes And Chips
Manufacturers of microprocessors (chips) are surging given the insatiable demand for hardware that powers artificial intelligence. AMD and NVIDIA have doubled and tripled their stock prices over the last year. Both of these make high-powered graphics chips required to run generative AI algorithms. Suppliers to these manufacturers, such as the chip fabrication company Taiwan Semiconductor (TSMC) and the server manufacturer Supermicro, are also thriving.
And yet Intel and Texas Instruments reported disappointing quarterly earnings last week, which unsettled stocks across the sector. What is going on is that investors are obsessed with AI and regard “conventional” chip manufacturers as old hat. 2023 was actually a negative year for computers and smartphones, while demand for chips from automotive and other industrial manufacturers is declining. At the height of the pandemic, readers will recall, there was a dearth of chips – but no more.
Amazon, Google and Meta, which rely on AMD and NVIDIA chips to power their own AI infrastructure, are investing billions to build their own chip manufacturing facilities. Watch this space. And let’s not forget the Brits. Yesterday, shares in Cambridge-based chip designer ARM surged by about 11 percent following the release of favourable earnings figures.
Copyright Is Key
The Copyright Office, which is part of the Library of Congress is now centre stage for the future regulation of generative AI. The New York Times reports that tech companies are keen to meet Shira Perlmutter, who is head of the Copyright Office. Music and news industry representatives and artists have also requested meetings.
Copyright is key to the future of generative AI. Artists, writers, record labels, and news organizations have all sued AI companies, including Anthropic, Meta, Microsoft, and OpenAI, claiming they have broken federal copyright law by training their models on copyrighted works which replicate their content.
The Copyright Office is set to release three reports shortly which will set out its position on this fractious issue. The New York Times says this will be “hugely consequential”. The question is how lawmakers and courts will handle the question of how intellectual property law conflicts with the omnivorous knowledge-gathering of the global AI machine.
Listed companies cited in this article which merit analysis:
- Meta (NASDAQ:META)
- Microsoft (NASDAQ:MSFT)
- Nvidia (NASDAQ:NVDA)
- Amazon (NASDAQ:AMZN)
- Sony Corp. (TYO:6758)
- Alphabet (Google) (NASDAQ:GOOG)
- AMD (NASDAQ:AMD)
- TSMC (NYSE:TSM)
- Super Micro Computer Inc. (NASDAQ:SMCI)
- Tesla (NASDAQ:TSLA)
- Intel Corp. (NASDAQ:INTC)
- Texas Instruments (NASDAQ:TXN)