Public Enemy 2.0: Are Tech Executives Becoming the Next Bankers?

Tech has long enjoyed a luminous brand halo. Its products are beloved and have happily come to dominate the way we live and work. New product offerings receive media treatment previously reserved for the coming of the Messiah. Devotees wait on long lines to grab the latest iteration of whatever device is available. Some people even tattoo themselves with product brands.

But recent stories have caused observers to wonder whether that halo is becoming a mite tarnished.

The reason for this concern is that recent stories about tech have tended to be heavily weighted towards smarmy tax dodges, employee abuse scandals and the diverging fortunes of wealthy founder/executives with those of an increasingly contract labor force.

Some scoff at the comparison with bankers, but six or seven years ago finance was considered the ultimate career opportunity. Bankers then, like techies now, said publicly that they were 'doing God's work.' And they considered their compensation a just reward, not the sign of a system rigged to favor the already entitled.

As incomes have stagnated for the vast majority in developed western economies, dissatisfaction can be aimed at companies to often associated with that inequality and those who lead them. Similarly, a paucity of new products and the rising cost of those already on the market - or their seemingly numberless and sometimes indistinguishable iterative successors - has somewhat lessened the iconic aura the industry has enjoyed. That many tech companies are now moving into finance via mobile 'wallet' features only heightens the comparison and the irony.

The danger is that the premium tech has enjoyed in terms of pricing, relatively lax regulation and competition may suffer if the industry and its leaders take their success for granted. JL

Andrew Hill comments in the Financial Times:

Technology executives could shrug off the first gentle jabs at their superiority, as financiers did in the years before the credit crunch bit in 2007-08. But they would do better to act now.

About a year ago I was in San Francisco’s Pacific Heights, gazing down at the Golden Gate Bridge from one of Larry Ellison’s many spectacular homes. The Oracle chief executive wasn’t there – he had lent the house out for a reception. In any case, he would be the last person to apologise for enjoying the fruits of his success. But the view from technology executives’ balconies is getting stormier. After banks and bankers, could they be next to feel the sting of a populist backlash?
It sounds unlikely. For the tablet-toting, smartphone-stroking, Amazon-and-Googling masses – you and me, in other words – to attack companies that provide the products and services we love would be a case of biting the data feed they hand us.
But consider these rumbles: politicians on both sides of the Atlantic attack Apple, Google and Amazon for their tax arrangements; commentators take Silicon Valley’s wealthy to task for the growing economic inequality in northern California; activists worry about ill-protected privacy, dirt-cheap labour and energy-inefficient server farms; antitrust regulators circle closer. Like banking, technology is ubiquitous and its benefits often taken for granted. Executives and engineers are highly paid and unafraid to reinvest their wealth in real estate, cars and luxury goods. Forget Wall Street – “after decades in which [the US] has become less and less equal, Silicon Valley is one of the most unequal places in America”, wrote George Packer in a withering recent analysis in The New Yorker. Like big banks, tech companies are protected by a bubble of their own making – literally in the case of Amazon, which is planning a trio of biospheres for its new Seattle headquarters – and their representatives often exude a sense of entitlement and an overconfidence that technology can solve the world’s problems.
Technology companies do have some clear advantages over banks. They start with what Laurence Evans, who oversees Edelman’s annual Global Trust Barometer, calls a brand “halo”. Technology regularly tops the list of the most trusted industries and has done since the survey started 13 years ago. Even before the financial crisis, banks never rose above the middle of the ranking. Users have an intimate involvement with their iPhones and Samsung Galaxys they will never have with their current accounts or mutual funds. Crucially, technology companies do not stand accused of bringing down the global economy.
One Silicon Valley entrepreneur I contacted last week said it was “a stretch” even to imagine a backlash. I’m not so sure.

Instead of doing as the banks did – closing ranks and deploying battalions of lobbyists to crush dissent – their first priority should be to ensure their products continue to serve customers’ needs. The challenge from new competitors and innovations is a big incentive for technology companies, unlike the banking oligopolies, to go on improving. But still, the temptation to take users for granted, or exploit them – say, for their personal information – is high.
So they must also share their wealth and react early to any perception of excess. Some founder-billionaires, having sweated to build a technology business, may justifiably claim they have no obligation to direct their earnings to good causes. (Others, such as Mr Ellison himself, have made pledges to give away much of their wealth to charity.) But the populist wave of anger at banks and bankers was, and is, fuelled in part by envy. It makes sense not to aggravate that.
Technology executives should keep listening, and keep talking. Tim Cook may not have satisfied critics when he was grilled by the US Congress last week about Apple’s tax affairs but he was a model of calm and reasonableness.
Finally, stay clean. The risk is that technology titans’ undoubted success will breed complacency, which begets arrogance, and can lead to actual wrongdoing. Big Tech has huge advantages over High Finance when it comes to defending its reputation. So its leaders should adopt a new slogan, borrowed from Yahoo chief executive Marissa Mayer’s declaration to fans of Tumblr, the blogging platform her company has just bought: “We promise not to screw it up.”