Silicon Valley: Wish Machine

They know what we want. Never before has an economic sector been so driven by the desires of its customers like the digital industry. That is not bad in general, after all Google & co. have not produced new calamities like napalm or thalidomide.

Is it starting again? Facebook was stirring up tension this week when company shares hit a value of 138 million euros on the stock exchange. Is this the new Internet bubble? In March 2000, overvaluations of new industries shattered the whole economy. Was it because too many investors believed in digital quackery? Facebook’s reputation has declined recently. In May 2012, its stock market launch was the biggest flop in the history of tech companies. And it became more common for young people to leave the industry in droves. The digital economy is less about products than the future – of the people, not of the markets.

No economic sector has ever been driven as much by popular wishes and desires as the digital industry. Despite all the reservations people have about the overly powerful Silicon Valley, one has to concede that the engineers along the California coast have until now seldom worked against the public interest. They have not produced napalm, cigarettes or thalidomide, to name only a few product development debacles in the 20th century. More than anything else, Silicon Valley produces entertainment value for users. The tech companies depend on more than just popular taste, as does Hollywood’s fossilized industry with its dream machine. Silicon Valley is a wish machine, and for them, the highest possible art is to show people what they wish for before they know it themselves. It’s not that difficult. In principle, the digital customer is like a 5-year-old child: he has friends, and questions, and happily puts a pretty toy in his pocket. That is the exact business model of the three biggest digital companies – Facebook, Google, and Apple.

The Internet that People Have Always Wanted

To understand how this wish machine functions, it helps to take a short look at the evolution of information technology. Until the 1970s, computer science concentrated on its core area: mathematics. It was about constructing faster, more efficient, and more complex computers. Then came the home computer and the Internet – and everything changed. Institutions such as the Media Lab at the Massachusetts Institute of Technology and the Xerox Palo Alto Research Center engaged themselves less and less with machines, and more and more with people. From that point on, the computer was supposed to be subordinate not only to scientists and engineers, but to everyone.

What followed was an evolution that many people felt was a revolution. First, the home computer arrived with multiple functions that could be run by clicking a mouse on cute icons. Then the Internet arrived, combining world knowledge, trade and communication. The smartphone liberated the Internet from the desk’s shackles. In each step, technology responded to popular wishes and wants. And that was just the beginning.

Since the beginning of 2000, Facebook, Google, and Apple have worked to figure out what our wishes are. Some people find it scary. It is widely known that digital profiles are extremely precise Insurance companies can calculate when we are sick long before we know it ourselves. Banks can determine when we are broke. Intelligence agencies can establish when and where we have committed crimes.

In addition to the insurance companies, banks and intelligence agencies, the digital industry can give the public exactly what it wants. The people who lead the digital companies are not inherently evil, but rather they are “the best and the brightest,” as Americans call their most clever tech leaders, people who as a general rule come from the top universities. Facebook’s Mark Zuckerberg and Microsoft’s Bill Gates studied at Harvard, Google’s Sergey Brin and Larry Page at Stanford, Amazon’s Jeff Bezos at Princeton. However, none of them ever finished college. (Steve Jobs departed after one semester). Their most important capital was the ability to fulfill the most ambitious popular demands at any price. Of course you must also acknowledge they each possessed particularly strong predatory instincts which they used to flatten the competition.

It seems like the public’s biggest wish is for the computer itself to disappear and just leave the good things behind. Facebook’s comeback is a good example. One reason for the stock market flop was the fact that companies are held to the highest level of transparency when it undertakes an initial public offering in America. Accordingly, in its prospectus, Facebook was required to acknowledge that users have abandoned traditional Internet devices in favor of mobile devices, on which Facebook was unfortunately still too cumbersome for users, and too ineffective for advertisers.

Facebook reacted quickly. It bought up the most successful mobile applications like WhatsApp and Instagram and redesigned its own application. Since then, instead of getting the flow of images and news from Facebook on your smartphone, you are presented with a sequence of clean tiles, some of which are paid. Most users are not disturbed by these ads. Facebook knows you and your friends so well that it can pick the ads precisely to accommodate your preferences.

It will take a great deal of vision for these companies to succeed. The next phase of the digital evolution is already foreseeable. Young users are leaving Internet browsers in ever-growing numbers and instead operate with apps. If one trusts the instincts of Silicon Valley investors, then mobile devices are only a further bridge-technology on the way to “wearables,” devices that will be worn on the body and minimally operated with one’s hands. The data glasses from Google were the first, clumsy attempt.

The next transformative advance will be the so-called “Internet of Things.” Electronic networking leader Cisco Systems calculates that by the year 2020, 50 billion devices will be connected to the Internet. Most importantly, each of these devices will be able to recognize and satisfy an individual’s desires. It will be the Internet that people have always wanted.

The person who is bothered by the fact that the wish machine knows him so well is, it turns out, also at the mercy of his wishes.