Top news stories of 2017: booms, boneheads, a bubble and a backlash
It was a year of extremes for the technology industry. Many stocks hit record highs, and new technologies ranging from cryptocurrencies and blockchain to cloud computing and artificial intelligence exploded. At the same time, tech companies have had to own up not only to bad behavior passed off as entrepreneurial fervor, but also the societal impact such as job loss and concentrated wealth caused by what they call disruptive innovations. These, in no particular order, are some of the top highs and lows of 2017:
Bitcoin bubbles
After starting the year priced at just under $1,000 apiece, bitcoin topped $19,000 by mid-December, making digital millionaires out of the true believers. And those believers have expanded from libertarians and drug dealers to everyday investors and hedge funds. But skeptics are raising the notion that it could be a bubble, especially as split-offs such as Bitcoin Cash and alternatives such as Ethereum and Litecoin gain in popularity. Indeed, in the 24-hour period into Friday, bitcoin’s price plunged by almost 35 percent. That price volatility has made bitcoin a dubious medium of exchange — which was its original purpose, after all — because who wants to buy a $50 Yoda action figure from Overstock.com with bitcoin that might be worth $1,000 a year later?
The FCC dumps net neutrality
The Federal Communications Commission voted to repeal so-called net neutrality rules, rolling back a regulatory regime that barred internet service providers from blocking or throttling speeds on content and websites. AT&T Corp. and Comcast Corp. said they don’t plan to do anything of the sort, despite some high-profile examples in recent years where they appeared to do just that. And FCC Chairman Ajit Pai insisted the end of what might be the most heated tech policy argument that nobody really understood will spur ISPs to invest more to expand broadband choices. But the move by the Republican-controlled FCC raised fears among everyone from tech giants such as Google LLC and Netflix Inc. to smaller sites and services that the gloriously messy, wide-open internet will quickly turn into cable TV.
Tech companies, and tech culture, confront a backlash
The long-running narrative of tech companies as visionaries just looking to make the world better ended in 2017. Between rampant sexual misconduct and harassment (see below), cutthroat tactics crossing into illegal activity (see further below), fake news on social media widening the political divide and worries that digital disruption is just another name for slashing jobs, tech firms are under unprecedented attack. Underlying the backlash is the rapidly growing power of the major tech giants known as FAANG: Facebook Inc., Amazon.com Inc., Apple Inc., Netflix and Google owner Alphabet Inc. And they’re only getting stronger: Their stocks are up a collective 50 percent this year, more than double the S&P 500 Index, which suggests they have little economic incentive to change things much. For better or worse, regulators and lawmakers may do it for them.
Women in tech fight back
Later, brogrammers. Sparked in part by Uber engineer Susan Fowler’s harrowing account of sexual harassment at Uber Technologies Inc. in early 2017, many women in tech — and well beyond, in politics and entertainment — ended their silence and exposed bad behavior by specific men. The movement has taken down Uber Chief Executive Travis Kalanick, Amazon Studios chief Roy Price, investor Shervin Pishevar and others, leading to promises at many companies that things will finally change. Indeed, Microsoft’s recent move to end mandatory arbitration in harassment cases was one example. But no one’s holding their breath — except for other men behaving badly, wondering when they’ll get outed too.
Uber keeps crashing but somehow drives on
Never considered the most upstanding company, the ride-hailing giant seemed to run into one self-inflicted accident after another this year. CEO Kalanick was forced out by a conflicted board for harassment and a host of other overly aggressive competitive tactics ranging from software it used to evade regulators to more software used to try to steal drivers from rival Lyft Inc. Another executive is charged by Google’s Waymo self-driving car unit with stealing trade secrets. And in a big blow late in the year, the European Union ruled Uber is a transportation company subject to relevant laws. But even though its valuation has fallen amid continuing big losses and smaller rival Lyft Inc. possibly stealing away some business, the company managed to keep growing under new CEO Dara Khosrowshahi.
Initial coin offerings cash in
Who needs IPOs? Initial coin offerings, or ICOs, have cumulatively raised some $4 billion, most of it this year. As a result, they’ve become not only an alternative to crowdfunding sites such as Kickstarter, but also traditional venture capital firms and initial public offerings. But some of those ICOs have run into problems such as the theft by hackers, and others appear to be near-scams based on dubious legal grounds, thanks to a mostly unregulated environment. But regulators from the United States to China are starting to impose new rules and even threaten crackdowns. A reckoning seems certain in 2018.
Equifax’s very bad summer
Equifax Inc. provided a perfect case study of how not to handle a data breach — and the prime example of how cyberattacks continue to wreak more havoc every year. Attackers exploited a flaw in the big credit reporting agency’s open-source Apache Struts 2 framework and downloaded 143 million consumer records. That was in May. It wasn’t until July that Equifax reported the intrusion, by which time some executives had sold stock in the company, though there has been no proof of insider trading. Equifax responded by offering customers free credit reports for one year, but automatically opted them into a paid service after that, making the move appear to be self-serving. Worse, the company did so through a website on a separate domain that also turned out to be vulnerable to attack. Then it erroneously used its Twitter account to direct customers to a fake site for further information. Class-action suits piled up, the Federal Trade Commission launched an investigation and Equifax CEO Richard Smith was forced to step down.
Amazon doubles down on its dominance
Amazon.com Inc. not only gobbled up Whole Foods Market Inc., but it announced plans for a second headquarters where it will employ 50,000 people, setting off a frenzy of competition among more than 200 bidding cities. Meanwhile, its cloud infrastructure operation continued to roll toward $18 billion in annual revenue, while moving into new areas such as databases and artificial intelligence that threaten virtually every traditional software company. In short, the company cemented its status as the business world’s most fearsome and unpredictable force. One result: Founder and CEO Jeff Bezos briefly passed Bill Gates as the world’s richest man.
Microsoft’s comeback accelerates as enterprises embrace cloud computing
Nearly four years after taking over as Microsoft Corp.’s CEO, Satya Nadella’s success at turning the software ocean liner around became abundantly apparent in 2017. With profits and revenue up strongly and its shares at an all-time high, the company’s market cap shot past $600 billion for the first time since the peak of the dot-com boom in 2000. The biggest reason: its big bet on cloud computing, which even the most staid of large enterprises now view as the future of information technology. Microsoft’s Azure cloud revenue nearly doubled in its latest quarter, and overall cloud revenue including applications as a service is now at a $20 billion run rate. It’s an example of how cloud computing, which is threatening to make so many legacy information technology providers irrelevant, is also cracking open vast new opportunities for traditional companies willing to plunge in.
With Paul Gillin, Duncan Riley, James Farrell, Eric David and Kyt Dotson
Image: jniittymaa0/Pixabay
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