Even tech employees want greater regulation over companies in the field.
Some 81% of tech employees and university students say they believe big technology firms need more regulation, according to a study conducted by Index Ventures and Qualtrics between May and June. The study polled some 1,275 people, a third of whom were students, another third were employees at tech companies with under 1,500 in headcount, while the other third came from large tech companies with over 5,000 employees.
The results come as big tech has come under increasingly scrutiny for their ubiquity and how they wield their influence. Social media platform Facebook took heavy heat for its role in allowing the spread of misinformation during the 2016 presidential elections. Lawmakers and tech gurus have also chimed in with varying levels of severity: Sen. Elizabeth Warren (D.-Mass.) has advocated vociferously for the break up of big tech companies, while Microsoft co-founder has opined that Big Tech companies require greater regulation.
The use of private information was the top concern among survey respondents by a slim margin: 30% said it was their main worry, while 26% cited the security of the data. Another 26% called for greater oversight into content moderation.
Within Silicon Valley itself, unease over how big tech may quash smaller tech businesses has also grown. Startups have voiced concerns taking funding from the likes of Amazon or Facebook, for fear of their product being copied by a far more cash-rich company. Epic Games’ lawsuit accusing Apple’s app store of monopolistic practices earlier this year meanwhile only highlighted the rising dissatisfaction among app developers with the platform and its fees.
The dominance of the giants in the space, the Facebooks, Amazons, and Alphabets, have also pushed founders and investors to avoid playing in the same space for fear of going head-to-head with the tech giants. In 2019, funding to enterprise technology companies, firms that focus on software and services for businesses, reaped in more funding than consumer-focused businesses for the first time in at least five years.
“There’s been a shift definitively toward enterprise and business-to-business companies and away from consumer,” says Mike Volpi, a partner at Index Ventures. “The reason is that there is a prevailing sentiment that there isn’t enough space for a competitor to come in because there’s too much strength in the incumbents—whether it is Amazon or Google—to go after that [space].”
Index created the survey after the coronavirus hit stateside, fueling worries that a protracted economic downturn could push potential founders in universities and technology companies to find more financially stable jobs rather than making a leap into startups. Simultaneously, there was a sense that the big tech companies—the Facebooks, Amazons, and Alphabets, would continue to only get larger.
While the results of the survey haven’t exactly shifted Volpi’s thesis on investing in consumer-based startups, it does show that sentiment is shifting in favor of greater regulation. And depending on what form the regulation takes, it could leave more breathing room for newer startups to shoot up.
“I have no doubt that consumer investing will come back,” Volpi says. “The question is when.”
Already some startups are riding building on the turf of the tech giants: A former Google executive founded a search engine that doesn’t profit off of user data dubbed Neeva. Clubhouse meanwhile is leading the charge in a wave of social media companies betting on interest in so-called spontaneous chat rooms.
Index Ventures conducted the study as a way to understand where potential founders and talents may seeking to build out new companies. The venture capital community after all is still a story of many dollars chasing few startups. A.I. and machine learning led the list, with 34% of respondents saying they believed it would be the most impactful technology in the next 10 years, followed by green technology (26%).
While the clean tech movement struggled following the 2008 Financial Crisis, the sector has grown more mature since, says Volpi, with electric carmakers such as Tesla now well-established, and creating an ecosystem for other startups to build out supply chain software or charging stations.