Like Bill Gates before him, Mark Zuckerberg is having a “Pearl Harbour” moment

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The beauty of history is that it often repeats itself – but not necessarily in the way Marx envisioned. Here’s a story about the tech industry that illustrates the point.

The first act begins in the spring of 1993, when Marc Andreessen and Eric Bina released the first graphical browser for the emerging World Wide Web. They called it Mosaic and it was a runaway success because it was the thing that made it possible for ordinary people to understand what this internet thing was. In 1994, Andreessen and Jim Clark created a company that eventually became Netscape and in October of that year released a new, improved browser called Netscape Navigator, which in three months had 75% of the nascent browser market. In August 1995, Netscape went public in a wild IPO that sparked the first Internet boom.

As their company flourished, Andreessen and co began to ponder an even brighter perspective. If web browsers really were the future, they reasoned, and since the operating system (OS) of a PC was effectively just a web browser’s life support system, who needed a complex and expensive operating system like Microsoft’s MS-DOS?

At this point, Bill Gates, Microsoft’s co-founder and CEO, woke up. For Microsoft’s core assets were its world-dominant OS and the Office software suite that ran on it. Consequently, on May 26, 1995, he issued what became known as his “Pearl Harbor” memo to all employees about the “Internet tidal wave” and how Netscape’s growing dominance of it represented an existential threat to Microsoft. “A scary possibility being discussed by internet fans,” he wrote, “is whether they should get together and make something far less expensive than a PC powerful enough for web surfing.” His conclusion: Microsoft had to turn a dime to meet the threat: “We need to move all of our Internet value … into Windows 95 itself as soon as we possibly can with a primary goal of getting OEMs [ie PC manufacturers] sends our browser pre-installed.”

The clear goal was to destroy Netscape by giving all PC owners a free Microsoft browser built in, and it succeeded. But it also almost destroyed Microsoft, because it triggered an antitrust case that came within a hair’s breadth of breaking up the company.

Instagram is changing from a photo platform to one that privileges short-form videos – just like TikTok

For Act Two of our cautionary tale, we must fast-forward to the present. Meta (neé Facebook) has had the same kind of global dominance in social networking that Microsoft once had in the PC market. But now it seems to have dawned that it may be facing, if not an existential threat, then very serious problems.

Of these, the biggest is probably TikTok, the Chinese-owned video hosting platform to which young users stamp from Instagram. But the list of other headaches is also terrifying. They include: the fact that Apple’s decision to allow iPhone users to turn off tracking has reduced Meta’s ability to profit from them; the plunge in Meta’s market value from $1.1bn to $450bn (£375bn) in 10 months; quarterly earnings are down for the second consecutive quarter; income likewise; the enormous cost of Zuckerberg’s crackpot venture into the metaverse project (where the hardware division apparently lost $3 billion last quarter); increasing interest from regulators and authorities in Meta’s business practices; the lingering stench of Facebook’s incessant problems with privacy, toxic content and misinformation; and to top it all off, there’s a global recession looming that (rightly) preoccupies the company’s CEO.

There are signs that some of these problems are beginning to bite. Meta, for example, has reduced the recruitment of engineers dramatically – down from 10,000 a year to 6,000. And it has made frantic changes to core products. Instagram is changing from a photo platform to one that privileges short-form videos – just like TikTok. The older people who increasingly seem to make up Facebook’s core users are now offered two options for their news feeds: one a “discovery” tab that provides an algorithmically curated feed of items from around the world, the other a chronological list of posts by their friends. Less dramatic (but perhaps more telling) are small changes to the benefits that employees enjoy: no more free laundry or dry cleaning services, for example. Or the fact that the start time for free dinners has been moved back from 18.00 to 18.30!

But perhaps the most tantalizing clue that Zuckerberg has reached his “Pearl Harbor” moment is the fact that he summoned Meta executives from around the world to a hastily organized meeting in San Francisco earlier this month. Before appearing, they were required to read a discourse from the chief. But unlike the 5,584-word memo that Bill Gates used to rouse his colleagues, Zuckerberg’s executives had to sweat through a 122-page slideshow about “operating with heightened intensity.” It’s almost enough to make one feel sorry for them. Almost.

What I have read

Bad laws
If you tend to assume that lawyers are always wealthy professionals, a post by Joanna Hardy-Susskind on the Law and Politics blog might give you pause. It certainly had that effect on me.

Hook on, connect
Moderation or Death, Christopher Hitchens’ magisterial 1998 review of Michael Ignatieff’s biography of Isaiah Berlin, is at London Review of Books the website.

Permanent pandemic
Endemic Covid-19 looks pretty brutal is a sobering one New York Times play by David Wallace-Wells.

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