Assume we’re in year 2020, we can all remember a time when Google was the largest internet company in the world – the #1 ranked search engine everywhere (well, everywhere except China). In 2020, this is no longer the case, because of a continued stream of revelations about government surveillance, just about every country in the world decided to enact regulations that encouraged (if not required) services like Email, Advertising, Social networks, and IM to be served from an in-country data center.
In 2020, if you are in Russia you use the Russian social network (already happening), if you are in Germany you use the German email provider, and if you are in China you use the Chinese version of Twitter (already established). In seven years we went from these ubiquitous internet companies all having a global reach to a reality that encourages providers to confine themselves to a “state”. The transition was difficult, a number of large internet companies stocks tanked in Q3 and Q4 of 2014 for a number of reasons, but one of the driving factors was that earnings suffered greatly when large portions of the EU and Asia lost trust in anything related to US-based internet providers. Many of these companies were banking on international expansion as a source of growth. The free lunches and massive campuses in the Bay Area were built on a vision of linking the world’s populations together. Those went away when the promise of a global user base evaporated.
The period of time between 2013 and 2020 was about more than just businesses being affected by the surveillance fallout, after the surveillance scandals of 2013, people started putting up more walls to international cooperation. This wasn’t an overnight decision, but over years and years as new projects were being implemented both in the private and public sector people who had to make decisions about where to host servers, what cloud providers to use, they all tended to opt for hosting something “in-country”. It wasn’t about which cloud provider had the easiest API any more, it was about a German company hosting a Germany web site in Berlin because of pressure from German customers. All across the world, companies started to say things like, “Your data doesn’t cross any national boundaries” in marketing materials. Jurisdictional Data Security became a selling point.
Companies made a mint over compliance with a series of laws passed in the EU, but this new “local-only” approach to services resulted in the creation of isolated islands of activity. In 2020, there’s no more “Internet” really. The “Baidu-ification” of the internet influenced culture broadly as there is far less cross-cultural exchange. In 2020, K-pop is confined to Korea, Russian dash-cams of insurance fraud are confined to Russia, and Australian Reddit users no longer salute the North America users during the wee hours of the night. Nations and regions keep activity to themselves. Advertising networks (these great vacuums of data) had a much more difficult time operating across networks, and companies started aiming at a target an order-of-magnitude less than multiple-billions of users.
Without thinking about the ramifications to US-based businesses, the government just decided to start using its leverage over US-based internet companies to compel compliance with a collection of secret laws. In an effort to protect us, they ended up sapping energy from one of the only sectors of growth in the economy. They ended up ruining the global surveillance network they had so successfully established.
Back in 2013, even after the stories broke, most of the American public was still complacent. Only a tiny percentage of people were paying attention in this country, and of those that were, a sizable portion just thought, “Oh, well, we have to keep track of the terrorists.” It isn’t like the public was in the habit demanding swift action for anything really, as a nation we had decided to stop electing effective representatives years ago and both of the branches of government they had any control over were locked in an endless battle over Bread and Circus. Poll random people on the street about FISA in 2013, and they’d probably tell you it was a European soccer league.
The public was complacent, even accepting of this new reality. The Patriot Act was passed in a time of great fear and an anticipation of constant threat. Our collective complacency with surveillance and our inability to stand for core values like privacy were the competitive disadvantage that ruined Silicon Valley. In an effort to protect ourselves, we ended up doing more harm than good. Some blamed the NSA and CIA, but these people were just implementing policy enacted into law by the public’s representatives. The real source of the problem was the American public. We were complacent with surveillance.
In 2020 people say things like, “Remember when Google was a global company? They had an entire campus in Mountain View. Those were the days.” Google started having problems after 2013, they had to spend so much time at the executive level dealing with high-level negotiations with governments that they took their eye off of the local competition. Yes, America has the best capital markets in the world, the largest economy, and a strong national defense, but the loss of trust trumped all of that.