The 'Evil' Behind Big Tech

He's chief market strategist at Starvesant Capital Management, Global investment strategist at Dafoux Redmount, and also with us is CNN Global economic analyst Rona faru Har. She is also author of the book Don't Be Evil, Hence the Evil, How Big Tech Be Traded, its founding principles and all of us. They're both in our Bloomberg Interactive Broker Studio. Nice to have you both with us, UM, Jason and I talked about this all all the time. First of all, talk

to us a little bit about the premise for your book. Yeah, well, Um, you know I cover the markets and you just look at the numbers and you see that basically about eight of corporate value is living in ten percent of firms, and they're the firms that have the most data, the most intellectual property. So this is part of a massive shift that's really the industrial revolution of our time. So the economic story is there. The political story, I mean,

we've been living this now for two years. The fact that the model of a Google or Facebook in particular is highly targeted advertising. It's about targeting us down to the individual. But that split society. I mean, it comes with side effects. It comes with a lot of great value, but it comes with side effects. Then there's the brain science, the social issues, and you know, to be honest, I got into this topic in some ways for a personal reason.

I came home one day, I was looking at a credit card bill and there were all these tiny charges dollar ninety three dollars. I thought, my god, I've been hacked, and then I realized, my ten year old son has my passwords. Turns out he had racked up nine dollars in a supposedly free online soccer game that was tracking him and selling him in app purchases. And I thought, you know, as a mother, I was horrified, But as a as a business journalist, I thought, I want to

know everything about this. Yeah, so Thenny come on in here, because as ron is so wisely noted at the top, I mean, this is a business story front and center. And for investors, what's not to love about tech? I mean, Carol just went through the numbers at the close of how well these big tech stocks have done. Investors have made a ton of money here. Fair missing out too

if you don't chip on the on the investment training here. Sure, absolutely, I think I think the listeners investors should know that there is an investment paradigm here, uh, that they need to dig a little bit deeper into and understand. Ronna talks about it with the the targeted ads and the revenue streams that are coming from from this surveillance capitalism system that is going on. Uh. And it's interesting when Rona mentions about that she was hacked, she thought she

might have been hacked. And as I begin to explore this area thanks to Rona, that I realized that, yeah, we're being hacked, but we're not being hacked in the manner of you know, you would ordinarily think about it that the drill down into our behavior. So you really need to understand that it on on a whole range of level. Well, we talked about the business we cover this week about Google and the generals at Google. Right.

You know, for a long time, Silicon Valley wars a badge of honor, kind of Washington hating them, and now all of a sudden that their middle age. A lot of these big tech companies, especially something like a Google, you know, they want to be involved in those big government contracts and they're doing so, but they've got a lot of their employees not happy about it. This whole idea of you know, not doing evil like this was something that they held as part of their corporate culture

and now things are changing. Yeah, and it was always baked into the business model, Frank, I mean, evil was part of the business model. If you think that from day one, I mean you go back to the very first paper that Larry Page and Serge Brand, founders of Google, wrote. Um. It had a section at the bottom that said, if you monetize a big search engine with targeted advertising, the interests of the users and those of the advertisers are

going to come into conflict at some point. And so they actually advocated for an open search engine, maybe something in the academic sphere. But um, you know, it's interesting that he's making a fascinating point because this disruption is not just about the four or five Silicon Valley giants. It's coming to every business model. So one of the things that I find so fascinating you just look at

the insurance industry. For example, you can now have sensors in your house, in your car that will give you a discount if you know, if you're taking care of your plumbing um or you're stopping quickly, but you might get a black mark if your kid is smoking weed in the bedroom. What does that do? That disrupts the entire insurance business model of pulled rit think about that. That's coming to every industry. The the implications are really profound. And so we've only got about a minute left in

this first segment. We're gonna keep you around for another what's the biggest surprise to you writing this book? What jumped out? You know, in some ways the fact that it was always there, It was hiding in plain site. You know that that paper And frankly, this goes to my point. I mean, one of the side and one of the social side effects of this high speed media landscape that we're in is that people don't read as much.

And I gotta think that nobody read the initial paper because we kind of would have known where we were going to be. And we want to continue our conversation still with us as Vinne Catalino, Chief market strategist of It stuff Isn't Capital Management Global investment strategist to Faux Red Mount and also still with us as ron book is Don't be Evil, how big Tech betrayed its founding

principles and all of us. This is great for your stocking stuffers this holiday season because big stock that's okay, there's like this is like a must read because it does um it's the story or it is and it impact no matter what industry you said before the break. You know, one of the things we need to get into is China's role in all of this. Tell us a little bit about that, where you see how that plays in right well, this is the story, the the

economy story right now, tech trade wars. This is really about China and the US going different ways in terms of how the Internet is going to be governed, in terms of strategic technologies, I keep hearing from a lot of Chinese investors that they believe they're going to have their own ecosystem. They've already got their own big tech players Ali Baba, Tencent, But I do all those, but that they are going to actually have their their own

supply chains, their own consumer brands. I mean, a company like show Me is already doing better in some in some areas than Apple in China. So this is a big split coming, and it's really interesting. It's provoking some fascinating,

um uh, strange bedfellows in the US. You know, you see a company like Google saying, well, you know, maybe we should be a national champion here, um, you know, teaming up with the Defense Department, uh, thinking about how to kind of ring fence the the ecosystem in the US. Same again with Amazon, they've tried to ring fence government purchasing.

My worry is the overall ecosystem, though. I worry that you're going to end up with a scenario where four or five big players have the entire pie, and that

doesn't work. We've got to make room for other other companies. Really, so four or five players sort of connes that there would be a monopoly Yeah, and yet we seem to need a new definition for monopoly, right, because monopoly pertains to price increases generally as a rule in an industrial economy, but in this kind of surveillance, capitalistic information economy, that's

really not the case. Yeah, and you know that the point about price is so profound because you're absolutely right that the whole Chicago school, you know, as long as prices are going down, everything's fine, doesn't fit when you're you're not doing a transaction in dollars, You're doing it in data. It's a barter transaction. So that's not a that that's a very opaque market. And that's why you have this asymmetry and this kind of superstar effect with

an Amazon or Google. They've got all the information. You don't have any information. So I think we are going to need some regulatory shifts to deal with that. So as you sort of finished reporting and writing this, and as you go out and talk to people, I mean, as we've been saying, we're not just saying because you're I mean, it is the story of our time. It's incredibly timely. Are you more optimistic less optimistic? Have you changed your own sort of behavior or your thoughts about

this through the process. Well, I absolutely have. I mean I've done a digital detox. It was kind of actually by force that I Um, last Christmas, I dropped my cell phone on Christmas Eve was a company issued phone, and I couldn't get a replacement, and it was like, you know, going off cigarettes or something. For forty eight hours, I was twitchy. I kept reaching in my pocket. So, um,

I do that regularly now. And I've actually cut down the amount of times that I check email, which, by the way, it takes you five minutes to reset every time you interrupt. So your productivity, I mean, that's a whole another topic. Lost product The productivity conundrum probably has

something to do with technology and the effects of these firsts. No, I think it's a really good point, and you see more and more advice saying, you know, check your emails certainly you know a certain amount of time times to day, not constantly letting it kind of interrupt your workflow. I do wonder though, in terms of regulatory oversight, where it's all headache. Well, there's there's two big schools of thought. I mean, one is that, look, we can work within

the existing system and just make some small tweaks. The other thought, and this is more of how the Europeans are going, is we're going to need a really profound reshaping. I mean, the Europeans are talking about public data banks, you know, where you would be the public sector would own this this data. But on the other hand, you've got California coming in saying, hey, maybe we need a digital Sovereign Wealth Fund, because at the end of the day, if data is the new oil, you have to make

sure that that value can be shared. Well you can. I just need something run a set earlier in regards to uh, the capture of information and the and the and to a patient of what is about to occur and you know, dropping the phone, things of that sort. One of the concerns that's been expressed has been whether or not the machine learning will have accomplished so much that it knows what you're going to do and anticipation

of and therefore it isn't you have free will you don't? Yeah, it really does come down to that, It really has. It has a definitely Yeah that's correct as a matrix feel to it. For sure. It's a whole other level like, yeah, I think I think we just go back and think we just went into the matrix. All right. Thank you both so much. We really really appreciate it. Rana Fuhar. The book is Don't Be Evil, how Big Tech portrayed its founding principles and all of us. Uh. It is

a must read. It's incredibly thought provoking. It will spur conversations, probably spur some different behavior as well. Has given us a lot to think about our thanks as well to any Catalina cheap market strategies, first Ice Capital Management and of course global investment strategies over at defaut Red Mount