During WWII, the beginning of the end for the Axis powers were American convoys traveling across the North Atlantic. The most industrious people in history were converting washing machine factories, out of range of the Luftwaffe, to war-machine factories. In the seventies and eighties the Japanese and Germans shuttered automobile factories across the Midwest with excellence. In the forties, they inspired their conversion with tyranny. Within weeks, Ford was making bombers, Chrysler — tanks.
However, waiting to cauterize the flow of arsenals across the Atlantic were German U-boats, referred to as “wolfpacks.” There’s a reason they weren’t called “lone wolves,” as key to their success and survival was coordination and communication. The success of U-boats largely mimics the drivers of our success as a species. (The previous sentence has scant relevance here, but made me feel smart writing it.)
The communication between boats had to be secure, only legible to the sender and intended recipient. If intercepted, the contents were indecipherable — encrypted. The German Enigma machine had to be decrypted. And in the mother of all misplaced credit, Polish mathematician Marian Rejewski (not Turing) cracked the enigma, and soon our factories reverted to belching out cars inferior to those produced by the defeated.
This week, the word encrypted has again had its time in the sun. Mark Zuckerberg has discovered privacy and decided to meld his three dragons (Messenger, WhatsApp, and Instagram) into the megalodon of secure communications.
What’s going on here? First off, what’s not going on:
Zuck doesn’t give a sh*t about your privacy. Never has, never will. When Rohingya Muslims are attacked and a woman’s right to choose is at risk because of a Supreme Court stacked by an illegitimate president, elected by Russians who weaponized the big blue button, it’s clear Zuck is pretty f*cking far from a town called Privacy.
Let’s pause here for a second. This week, someone I work with was brought to tears because she believed I had let her down. That night I couldn’t sleep and was so rattled the next day that I felt like I might pass out. Zuckerberg and Sandberg have done such staggering damage to so many people, yet still take the stage, in front of millions, to boast: “We’re proud of the progress we’ve made.” There’s a certain strength to being that f*cked up and not being a chocolate mess. #squadgoals
However, America’s second most famous broken sociopath is also a business genius. Zuck realizes, despite the word becoming synonymous with Jesus, innovation is not the key to creating shareholder value, but benchmarking (consultant-speak for stealing) is.
Most true innovators end up like Nokia, Motorola, and Xerox. The media has looked West, to Snap, to identify where Zuck continues to steal. And “ephemeral” messaging is a killer app. However, to find the real inspiration here, one needs to look East. WeChat is Zuckerberg’s inspiration. The messaging / commerce / payment / ride-hailing / Veg-O-Matic app has developed multiple revenue streams (vs. just advertising for FB) and isn’t sticky, it’s velcro. WeChat is the closest thing to Zuck’s dream of controlling the operating system of the lives of a third of the planet.
In addition, Zuckerberg can continue to shrug his shoulders when people are pulled out of cars and hanged, as he can’t be held responsible for content Facebook can’t see — the messages are encrypted. The firm’s announcement about the development of a Facebook coin is no accident: it will rest on the mother of all encrypted platforms and will address one of the great frictions in our economy (payments) at unrivaled scale.
If the idea of Mark Zuckerberg having more power than Jerome Powell or any central bank makes you uneasy, trust your instincts. Finally, Zuck is desperately trying to make it impossible to separate his firm by conjoining his triplets so he can beg doctors not to kill his babies by operating.
But it’s worse than that. I had the opportunity to visit the Kigali Genocide Memorial. In 1994, almost a million people were brutally murdered in 100 days. The memorial not only articulates what happened in Rwanda, but pays tribute to many other genocides. It appears, as a species, we’re pretty good at the whole genocide thing, as they keep on happening.
Genocides in last 100 years:
Bosnia and Herzegovina
Central to any genocide is the perpetrators taking control of the media and communications. Are we really comfortable with a firm that isn’t regulated, that’s run by a college dropout with no empathy or sense of accountability, who can’t be removed from office, controlling one central command center for the “private” communications of 2.7 billion people?
The lack of DOJ/FTC scrutiny here is simply outrageous. As the mother of all telcos and banks takes shape, House and Senate Democrats and attorneys general from New York, Florida, California, and Tennessee are examining, with an eye to blocking, another coupling: Sprint and T-Mobile.
The merger would create a third player to AT&T and Verizon. “T-Sprint” would boast 127 million customers. Ok, if this warrants scrutiny, what if AT&T / Verizon / Vodafone / NTT / Telefonica / Orange / Deutsche Telekom announced they were merging? Might we decide a tie-up of 2.7 billion people warrants scrutiny? The melding of Facebook apps is the largest consolidation of potential influence in history. The merger of two second-tier telcos is a pin drop vs. the sonic boom of the Facebook Inc. app tie-up, yet we seem to be deaf to it. DOJ/FTC, where the heck are you?
And She Was
Senator Elizabeth Warren outlined her thoughts on the breakup of big tech yesterday. It’s the most cogent argument to date from any presidential candidate (low bar), and it cements her position as the intellectual leader of the Democratic Party. Democrats would be wise to rally around the breakup of big tech, vs. the aspirational, verging on insane, Green New Deal. Oxygenating the economy with capitalism and competition is the gangster move that removes a (real) gangster from the Oval Office, vs. spending $32 trillion on universal healthcare.
Life is so rich,