I live in Camden Town, in London, close to Regent’s Canal, down which I can walk in ten minutes to King’s Cross. The area around this great railway station used to be squalid and dilapidated but a couple of decades ago renovations began that would turn it into what was briefly dubbed “the Knowledge District”. The British Museum, in Bloomsbury, was close so it moved its famous library to a new building at King’s Cross. Soon followed King’s Place, an avant-garde glass pile containing concert halls, art galleries and the Guardian newspaper. Then came the Francis Crick Institute, a giant spiky armadillo of a building housing Europe’s premier biochemistry labs, and one of the runners in the COVID-19 vaccine race.
Last of all, big tech arrived. Google – sorry, Alphabet – started its new European HQ, which is almost finished as I write, a vast edifice the size of a city block with a whole park on its roof. Facebook – sorry, Meta – pitched in with its own block-sized building, only just open, in that area between the canal and York Way that seems to sprout a new mini-skyscraper every time I walk though its Manhattan-lite main street. DeepMind has a smart office there, as does a Tasmanian craft brewery that dispenses £6 pints from shining steel vats behind its football-pitch-sized bar.
Ten years ago I might have imagined this as a preview of a hi-tech future, but the last year has rapidly clouded any such vision, with mass layoffs and financial concerns. In early autumn, Meta’s share price crashed and the firm is now laying off 11,000 employees; Elon Musk followed up his deranged take-over of Twitter by laying off another 4,000; most cryptocurrencies have been progressively crashing in value. So, what’s happening?
Tech giants are out of touch with the real economy
A recent UK survey investigated public perceptions of various digital product categories. The overwhelming majority (94%) approve of – and use – live streaming, a figure that drops to 63% for instant messaging and 52% for text-to-speech and voice recognition (52%). But approval drops off a cliff for emerging technologies such as the Internet of Things (IoT), with only 16% approval. A staggering 84% had either never heard of or were bored by the metaverse concept, too, rising to 89% for the nebulous Web3, the cocktail of technologies Zuckerberg has bet his company on.
Behind the iPhones, Oculus Rifts and Alexa smart speakers, there remains a real-world, material economy that makes real things using real people who have real jobs, wages and pensions. The vast wealth that builds these opulent offices comes at a cost to this real world. The smartest minds are deployed to avoid paying the taxes that contribute to its upkeep. Amazon displaces high street shops, Google and Twitter displace local newspapers, Uber displaces taxi drivers, Airbnb displaces hotels, and so on and on. Newness and convenience have so far protected them from public wrath, but the metaverse suddenly becomes a revealing metaphor for the way the owners of these tech giants have detached themselves from the real economy. They can live in a fantasy world where colonising Mars, or the pursuit of physical immortality, can seem like good ways to spend money. Unfortunately for those fantasies, the real world is where silicon chips are made.
For Silicon Valley, reality has come to bite
Along came the COVID-19 pandemic, Putin’s invasion of Ukraine and a semi-collapse of global supply chains. The USA once had a symbiotic relationship with China in which cheap Chinese labour made cheaper products for the USA, while modernising the Chinese economy and reducing poverty.
That relationship is turning sour, which unfortunately leaves most of the world’s semiconductor fabrication plants within China’s geographic sphere of influence. President Biden hastily tried to shut the stable door by decreeing the building of more fabs in the continental US, with companies such as Intel also committing to ramp up output, but that will take a lot of time and money. A Chinese invasion of Taiwan would be a third whammy, leaving the US tech industry in real trouble.
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Don’t get me wrong. I’m not denying the enormous achievements of the digital giants. The internet, the search engine, the smartphone, video streaming and even cryptocurrencies have changed the world already. Although in many cases basic technologies were paid for by state agencies – universities and military research – no state could ever have achieved the astonishing global infrastructures that sprang out of Silicon Valley.
I’m also not suggesting that merely taxing tech giants more heavily would magically solve our looming economic problems. A massive change of mindset is required to induce cooperation between states and digital giants to deploy this semi-miraculous infrastructure for solving problems on this planet, rather than on Mars or the metaverse. If that doesn’t happen soon, those shiny new office blocks in King’s Cross might end up being renamed the Museum Of Globalisation.
