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Facebook and Apple in the age of Technopoly

|Includes:Apple Inc. (AAPL), GOOG

The state of technology, information, and invention, is the subject of a book by Neil Postman, published in 1993, called Technopoly. Although arriving ahead of the popular Internet and info-tech advances that came with the worldwide web and digital communication, the book seems even today current if not prescient. The author takes us through centuries of innovation – from the ancients to the medievals to the renaissance inventors and the industrial revolution, then finally to the modern era – and shows how more than a matter of discovery and science the evolution has been in our attitude towards technological progress. While in the earliest days of tools and tool-making, technology was absolutely subservient to the core values of its civilization, this characteristic progressively changed to a point where, today, technology is the core value, is civilization.

Right or wrong in this judgment, Professor Postman goes on to make an even more important observation, which has to do with the price that we must pay for technical advancement: this price, in a technopoly, is something we no longer inquire about, because innovation has become a dominant strain in the technopolistic world we inhabit. Thus, Professor Postman argues, the benefit of technology and innovation in such an environment becomes self-contained, self-defined, satisfactory through innovation’s mere existence. In other words – using the example of information technology – the availability of information becomes the ultimate value, rather than its utility or quality. And in order to procure this cherished asset, we are willing to pay in ways that are often not monetary, though possibly worse.

These reflections may come to mind as we read about the privacy scandal in which Facebook finds itself once again embroiled. That the company should try to use any means at its disposal to monetize the personal data it has amassed is only natural. What is more interesting, perhaps bizarre, is that 500 million users – who happily share their preferences, opinions, contact lists, locations, and really anything at all – don’t care. And Facebook’s is not the only breach, as we continue to google (a legitimate verb in our vocabulary), knowing that Google’s algorithms scrub and store our habits for commercial use. We don’t mind paying such prices, because in exchange for our nonchalance we are granted access, knowledge, and ultimately, entertainment. We get free stuff that puts us in the flow.

Another notable lesson, however, of Professor Portman’s Technopoly – continuing to translate his message from the early 1990s into present-day context – is that our perspective has evolved and our relationship with technology changed. Our attitude towards invention and the transmission of information has not been static over time, and there is no reason to believe that our current disposition, as described, will be permanent. At some point in the future, and maybe that point is not as distant as may be supposed, the popular voice will begin to ask for better bargains, as it were. Realizing that all the free stuff is not in actuality free, realizing that the marginal value of the millionth app is far less than the first, we may begin to think that the price no longer merits to be paid.

Should this occur – which is to say, should the novelty of unlimited information and gadgetry wear off in our technopoly – the qualities that we will perhaps come to prize most will be the same qualities that we have prized throughout the ages: security, beauty, reliability. If so, the present-day enterprise that seems best positioned to then stand out… is Apple. And the assets that Apple should thus be guarding most closely – in anticipation of the hypothetical outcome described – are its design, its quality control, and its closed system. This is no trivial matter: Among the trio of Google, Facebook, and Apple, the latter is the only one that has not built its business model on advertising, and is the only one for whom the paying customer is the consumer.

With all this as backdrop – security, quality, reliability, consumer behavior and disposition in a technopoly that will certainly evolve – what Apple might do with its $51 billion in cash, a topic that was commented upon recently, becomes increasingly central. The acquisition of Facebook springs to mind.

As long as Facebook’s long-term allegiance is with advertisers, its popular appeal will be capped. As long as Apple’s market position is dependent on a continuing stream of new hardware, it cannot consider itself “locked in” to the same degree that a network effect would provide. Whichever competitor can solve the privacy issue and at the same time leverage a network effect in the Internet age, will become a permanent force in the age of Technopoly. With Apple’s quality and beautiful design, this force may even be the catalyst for transition into a new era. 

Disclosure: No positions.
Stocks: AAPL, GOOG