Here’s your big idea for today, and indeed for the rest of 2018: is Donald Trump about to put a bullet in the tech bull market and trigger an all-out war for free speech at the same time?
There are a lot of moving parts in that sentence, so let me take a step back and explain.
According to reports over the weekend, Trump has an executive order on his desk which would open anti-trust proceedings against Google, Facebook and as yet unnamed other social media companies.
If reports are to be believed, it’s awaiting his signature. Let’s assume for a second he’s going to sign it. What would it mean – and why would he want to do it?
Let’s look at the issue from a purely market driven perspective first, before we get into the more inflammatory stuff. The US stockmarket is currently in the longest bull market of all time. Much of that bull market has been driven by low interest rates and “stimulus”. But the primary beneficiaries of all that state largess – the companies dragging the markets higher – have been technology and social media firms.
Therefore an attack on those firms from the US government could be an attack on the bull market itself. If Big Tech suffers a fall from grace, the wider market could fall. Unless a new sector emerges to drive the growth (something which could happen, but is sadly outside the scope of today’s letter).
So make no mistake: if you’re long the market, and long Big Tech, it’s worth keeping an eye on the noises coming out of the Oval Office. Trump has proved himself willing to take risks and make good on his threats more than once during his presidency. Don’t discount the idea that this is the opening salvo in a war between Washington and Silicon Valley.
There’s also the uncomfortable fact that the last big tech bull market – the dotcom boom in the late 90s – was dogged, and partially ended, by an anti-trust suit against one of its key players, Microsoft. There were clearly contributing factors to the bust. But the state taking a key player to court didn’t help. There’s a historical symmetry you should at least consider, even if you discount it as a factor.
Which brings me to the more important dimension of the story. Would an anti-trust suit against Facebook and Google morph quickly into a battle for free speech, free expression and the governance of the internet itself?
I think there’s a risk it is. It might be a tail risk. But its consequences would be catastrophic for society.
That’s because there’s a strong chance Trump has it in for Big Tech because he believes those firms have too heavy an influence on what you might loosely call “the public conversation”. Trump believes that influence takes the form of a liberal bias, and the marginalisation of conservative voices.
As he put it himself on Twitter in August:
Social Media is totally discriminating against Republican/Conservative voices. Speaking loudly and clearly for the Trump Administration, we won’t let that happen. They are closing down the opinions of many people on the RIGHT, while at the same time doing nothing to others.
In other words, Trump believes social media are biasing people’s access to information and competing views.
That may be true. I know, for instance, that both Google and Facebook “de-platformed” Southbank Investment Research, publisher of Capital & Conflict, for its analysis. That’s perhaps a story for another day (you can see the research that’s so explosive it was banned by following this link).
It’s an interesting debate. It’s perhaps come about as the original promise of the internet (decentralisation of power) has morphed into increasing centralisation with a handful of companies controlling or biasing our access to information.
On that level Google and Facebook are just like any other news or media companies: they’re the medium through which we experience the world; they can mediate our access to information and ideas. Of course, they’re private companies and so are within their rights to do business however they see fit. It’s just those decisions can now change how people think, what they know and what “version” of the world they experience.
That’s the festering sore where politics and media come together. It’s the point Trump enters the debate.
If the reports are to be believed, Trump wants to bring anti-competitive proceedings against social media companies. One leaked version of the order I found online put it like this:
“Because of their critical role in American society, it is essential that American citizens are protected from anti-competitive acts by dominant online platforms.”
Think about what’s happening here for a second. The order is dressed in the language of anti-competitive business practices – using your dominant market position to crush competing businesses. But it’s not really about dominating the commercial market. What the order is really targeting is the marketplace for ideas. It’s not competing businesses that are losing out, but competing viewpoints, ideas and perspectives.
When you look at it like that, you come to understand that we’re edging towards a battle for which views are marginalised and which are accepted. I’m trying to figure out exactly how that battle will play out between the media and the government. Watch this space.
The risk is that, rather than a total free market for ideas, where you’re able to access competing views, weigh them yourself and come to a conclusion based on your own experience, we increasingly live in a world where other people make those decisions for us.
I can tell you that Southbank Investment Research’s mission is to seek out those valuable ideas that have been marginalised (like this one) and share them directly with you for you to draw your own conclusions. But I doubt we’re strong enough to compete against the powerful interests in government and the media who seek to censor, suppress and marginalise anything that doesn’t fit within a narrow worldview.
We’ll keep our eye on the Trump anti-trust situation. But keep this in mind when weighing the debate: freedom of speech and a flourishing market for competing ideas are a critical part of a free society because they protect our freedom to think for ourselves. That’s what any attack on free speech actually is: an attack on free thought and expression. It’s a battle for your very mind. Forget that at your peril!
Publisher, Southbank Investment Research