Sorry to burst your tech bubble: all that glitters is not silicon
Facebook compares itself to the printing press, but that does not mean it doesn’t deserve the backlash and scepticism
A few months ago, when face-to-face meetings were still common, I asked a prominent Silicon Valley investor if he ever wondered whether the valuations of the biggest companies in the industry were too high. He leaned back in his chair and told me to look up a 20-year graph of Microsoft’s stock price. When the dotcom bubble burst in 2000, Microsoft’s shares crashed catastrophically, falling by two thirds, but today they are more than three times higher than they were at their peak.
The investor’s point was that on a long-enough time horizon, tech sceptics are wrong. Being cynical may be easy, but being optimistic is profitable. Funnily enough, the investor did not mention IBM (shares are still 12% below their dotcom bubble peak two decades ago), Cisco (40% below), or Nokia (92%), not to mention the dozens of start-ups that simply went bust in the bubble. But history has little memory of losers – after all, they are no longer around to remind us.
I think of this conversation whenever Facebook compares Mark Zuckerberg to Johannes Gutenberg. When the social network’s impact on society is questioned, as is increasingly becoming the case, it likes to compare itself to the printing press or some other once-feared development. In a research paper earlier this year, it argued that “since the invention of the printing press, developments in communications technology have always been met with calls for state action”. One objective of this argument is to paint the company as neutral, a blank canvas that reflects its users. In response to an advertisers’ boycott last week, Nick Clegg, Facebook’s chief lobbyist in the UK, deployed a version of the same analogy, saying Facebook holds “a mirror up to society”...