Zucked. Roger McNamee
with a range of third-party vendors, including Microsoft for the operating system and Intel for the microprocessor. The first IBM PC shipped in 1981, signaling a fundamental change in the tech industry that only became obvious a couple of years later, when Microsoft’s and Intel’s other customers started to compete with IBM. Eventually, Compaq, Hewlett-Packard, Dell, and others left IBM in the dust. In the long run, though, most of the profits in the PC industry went to Microsoft and Intel, whose control of the brains and heart of the device and willingness to cooperate forced the rest of the industry into a commodity business.
ARPANET had evolved to become a backbone for regional networks of universities and the military. PCs continued the trend of smaller, cheaper computers, but it took nearly a decade after the introduction of the Apple II before technology emerged to leverage the potential of clusters of PCs. Local area networks (LANs) got their start in the late eighties as a way to share expensive laser printers. Once installed, LANs attracted developers, leading to new applications, such as electronic mail. Business productivity and engineering applications created incentives to interconnect LANs within buildings and then tie them all together over proprietary wide area networks (WANs) and then the internet. The benefits of connectivity overwhelmed the frustration of incredibly slow networks, setting the stage for steady improvement. It also created a virtuous cycle, as PC technology could be used to design and build better components, increasing the performance of new PCs that could be used to design and build even better components.
Consumers who wanted a PC in the eighties and early nineties had to buy one created to meet the needs of business. For consumers, PCs were relatively expensive and hard to use, but millions bought and learned to operate them. They put up with character-mode interfaces until Macintosh and then Windows finally delivered graphical interfaces that did not, well, totally suck. In the early nineties, consumer-centric PCs optimized for video games came to market.
The virtuous cycle of Moore’s Law for computers and Metcalfe’s Law for networks reached a new level in the late eighties, but the open internet did not take off right away. It required enhancements. The English researcher Tim Berners-Lee delivered the goods when he invented the World Wide Web in 1989 and the first web browser in 1991, but even those innovations were not enough to push the internet into the mainstream. That happened when a computer science student by the name of Marc Andreessen created the Mosaic browser in 1993. Within a year, startups like Yahoo and Amazon had come along, followed in 1995 by eBay, and the web that we now know had come to life.
By the mid-nineties, the wireless network evolved to a point that enabled widespread adoption of cell phones and alphanumeric pagers. The big applications were phone calls and email, then text messaging. The consumer era had begun. The business era had lasted nearly twenty years—from 1975 to 1995—but no business complained when it ended. Technology aimed at consumers was cheaper and somewhat easier to use, exactly what businesses preferred. It also rewarded a dimension that had not mattered to business: style. It took a few years for any vendor to get the formula right.
The World Wide Web in the mid-nineties was a beautiful thing. Idealism and utopian dreams pervaded the industry. The prevailing view was that the internet and World Wide Web would make the world more democratic, more fair, and more free. One of the web’s best features was an architecture that inherently delivered net neutrality: every site was equal. In that first generation, everything on the web revolved around pages, every one of which had the same privileges and opportunities. Unfortunately, the pioneers of the internet made omissions that would later haunt us all. The one that mattered most was the choice not to require real identity. They never imagined that anonymity would lead to problems as the web grew.
Time would expose the naïveté of the utopian view of the internet, but at the time, most participants bought into that dream. Journalist Jenna Wortham described it this way: “The web’s earliest architects and pioneers fought for their vision of freedom on the Internet at a time when it was still small forums for conversation and text-based gaming. They thought the web could be adequately governed by its users without their need to empower anyone to police it.” They ignored early signs of trouble, such as toxic interchanges on message boards and in comments sections, which they interpreted as growing pains, because the potential for good appeared to be unlimited. No company had to pay the cost of creating the internet, which in theory enabled anyone to have a website. But most people needed tools for building websites, applications servers and the like. Into the breach stepped the “open source” community, a distributed network of programmers who collaborated on projects that created the infrastructure of the internet. Andreessen came out of that community. Open source had great advantages, most notably that its products delivered excellent functionality, evolved rapidly, and were free. Unfortunately, there was one serious problem with the web and open source products: the tools were not convenient or easy to use. The volunteers of the open source community had one motivation: to build the open web. Their focus was on performance and functionality, not convenience or ease of use. That worked well for the infrastructure at the heart of the internet, but not so much for consumer-facing applications.
The World Wide Web took off in 1994, driven by the Mosaic/Netscape browser and sites like Amazon, Yahoo, and eBay. Businesses embraced the web, recognizing its potential as a better way to communicate with other businesses and consumers. This change made the World Wide Web geometrically more valuable, just as Metcalfe’s Law predicted. The web dominated culture in the late nineties, enabling a stock market bubble and ensuring near-universal adoption. The dot-com crash that began in early 2000 left deep scars, but the web continued to grow. In this second phase of the web, Google emerged as the most important player, organizing and displaying what appeared to be all the world’s information. Apple broke the code on tech style—their products were a personal statement—and rode the consumer wave to a second life. Products like the iMac and iPod, and later the iPhone and iPad, restored Apple to its former glory and then some. At this writing, Apple is one of the most valuable companies in the world. (Fortunately, Apple is also the industry leader in protecting user privacy, but I will get to that later.)
In the early years of the new millennium, a game changing model challenged the page-centric architecture of the World Wide Web. Called Web 2.0, the new architecture revolved around people. The pioneers of Web 2.0 included people like Mark Pincus, who later founded Zynga; Reid Hoffman, the founder of LinkedIn; and Sean Parker, who had cofounded the music file sharing company Napster. After Napster, Parker launched a startup called Plaxo, which put address books in the cloud. It grew by spamming every name in every address book to generate new users, an idea that would be copied widely by social media platforms that launched thereafter. In the same period, Google had a brilliant insight: it saw a way to take control of a huge slice of the open internet. No one owned open source tools, so there was no financial incentive to make them attractive for consumers. They were designed by engineers, for engineers, which could be frustrating to non-engineers.
Google saw an opportunity to exploit the frustration of consumers and some business users. Google made a list of the most important things people did on the web, including searches, browsing, and email. In those days, most users were forced to employ a mix of open source and proprietary tools from a range of vendors. Most of the products did not work together particularly well, creating a friction Google could exploit. Beginning with Gmail in 2004, Google created or acquired compelling products in maps, photos, videos, and productivity applications. Everything was free, so there were no barriers to customer adoption. Everything worked together. Every app gathered data that Google could exploit. Customers loved the Google apps. Collectively, the Google family of apps replaced a huge portion of the open World Wide Web. It was as though Google had unilaterally put a fence around half of a public park and then started commercializing it.
The steady march of technology in the half century prior to 2000 produced so much value—and so many delightful surprises—that the industry and customers began to take positive outcomes for granted. Technology optimism was not equivalent to the law of gravity, but engineers, entrepreneurs, and investors believed that everything they did made the world a better place. Most participants bought into some form of the internet utopia. What we did not realize at the time was that the limits imposed by not having enough processing power, memory, storage, and network bandwidth had acted as a governor, limiting the damage from mistakes to a relatively small number of customers. Because the industry had done