Financial Express

The problem of being Big: Big Tech will run out of ways to keep up its scintillating growth and profits

With developments such as generative AI, Big Tech may be at a point of inflection. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] Tech has never been bigger. Alphabet, Amazon, Apple, Meta and Microsoft, put together, are almost a third of the S&P 500 market capitalisation. Last year, their total capital spending was $360 billion. That alone is more than the GDP of Pakistan. With developments such as generative AI, Big Tech may be at a point of inflection. For the incumbents, their bigness may become their biggest challenge in staying ahead. To be sure, ‘big’ in the case of tech is truly awesome. Be it revenue, profitability, consumer contact, community, ubiquitousness, Google’s holding company—Alphabet—would qualify as the all-time, most successful combination of brand, business and technology in the history of the world. But what if big were to prove an eventual challenge? Google search, the Android mobile operating system, the Chrome browser, Google Play Store for apps, Workspace productivity tools and YouTube each has more than 2 billion users per month. Add Google Maps, Translate, Google mail and more. The Economist reported that “humans collectively spend 22 billion hours a day on Alphabet’s platforms.” What does Google sell and who are the buyers? It sells attention and engagement to advertisers. Revenues have grown at an average annual rate of 28% since its IPO in 2004 and almost 80% of inflows are for online ads. Never sliding back in any quarter, Alphabet has generated $460 billion of cash. Its share price has risen 50-fold, making it the world’s fourth-most-valuable company. Isn’t this enough, one would ask. Not quite. Alphabet’s ‘bread and butter’ digital-ads business is maturing. Data is the new oil, attention the oil wells, and the internet its refinery. With a base of $300 billion in annual revenues, new oil wells are not throwing up the gushers and growth is a challenge. Enough has been said about the end of third-party cookies and resulting impact, but given what’s at stake, there isn’t clarity—forget consensus—on available new means to reach, target and engage. It will impact measurements of effectiveness and its consequential monetisation. It seems bizarre, given the context of Alphabet’s awe-inspiring success, that now its investors want cost efficiency and capital discipline. Insider Intelligence expects the annual increase in global digital ads sales to stay within 10% or less in the next few years, down from a rate of 20% or so in the past decade. Hence, the anxiety is legitimate. For a total pie of about $700 billion, further share gain on part of Google will invite scrutiny from regulators. Sundar Pichai may be no Rockefeller, but there are enough concerns in the US concerning its search monopoly such as its arrangement with Apple and others, whereby it pays a reported $10 billion a year to be the default search engine. This may be one area which ironically brings the liberals and the conservatives together as each suspects such scrutiny is manipulated by ‘the other’. Action has ensued. Although search remains immensely lucrative, with operating margins of nearly 50%, its pathways are mutating. Now direct video search on YouTube, TikTok, Instagram counts high up among the options. The flip side is that video doesn’t monetise in equally profitable ways. As chatbots and other “generative” AIs have seen burgeoning presence, based on the appeal of a likeness to human-generated content, Pichai’s insistence that Alphabet is an “AI-native” company may ring true. That said, will its scale matter? Alphabet shares trade at a lower price relative to earnings than Apple or Microsoft, and not much higher than the S&P 500 index of big American firms. This is a tell-tale data point. Apple transformed itself from a desktop brand to a mobile-phone powerhouse. Microsoft matured from a desktop OS player to a cloud-computing ace. Investors and analysts may have demolished Mark Zuckerberg’s bet on the metaverse, but let us remember that Apple and Microsoft spent years in the cold too. Specifically on the metaverse, Gartner is still hopeful. According to its analysis, the metaverse is still in its early stages of development, but it is rapidly gaining traction. Gartner predicts that by end 2023, it will reach a tipping point where it will become a mainstream platform for social interaction, commerce, and entertainment. The year 2022 may have been Big Tech’s annus horribilis, but the firms are back in the circus. Artificial intelligence (AI) going mainstream will boost the fortunes of Big Tech and challenge them at the same time. These giants—Alphabet, Amazon, Apple, Meta and Microsoft—have been growing revenues and profits in double-digits for 10 years and counting. That is unprecedented in the history of business of that size. But that may also be the undoing. Big Tech will run out of ways to keep up its scintillating growth and profits. This is the reason that at the first signs of slowdown, the markets punished these giants severely. Except Apple, each one has had multiple rounds of layoffs. The count is as high as 70,000 workers altogether. Ambition will lead to tech cannibalism. All the big players operate in overlapping areas such as cloud computing, advertising, gadgets, new services. Of course, like the traditional big corporations with sputtering growths, new-age tech giants may also look to purchase growth. Microsoft cut a $69-billion deal to buy growth via the acquisition of Activision, which has revenues of $8 billion per annum. Margins will be strained. Growth will stall. Upstarts will bring new technologies to market. Then, Big Tech will start to shrink till incumbents give way to new players or effectively reinvent themselves. This all may seem fantastical and highly unlikely now, but will come within half a decade. The future arrives in stealthy ways, especially to topple the ‘Big’. Shubhranshu Singh, Vice president, marketing (domestic & international business), Tata Motors. Views are personal.   Link: https://www.financialexpress.com//opinion/the-problem-of-being-big-big-tech-will-run-out-of-ways-to-keep-up-its-scintillating-growth-and-profits/3248792/lite/

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AI shadow on IPR

AI companies are covered by a “fair use” doctrine for content generation—they reap without sowing [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] It is well-appreciated that a new technology can deeply impact the world in permanent ways. In this case, the pace and trajectory will be like that of a crazy ball. (IE) By Shubhranshu Singh ChatGPT has caused huge excitement and great anxiety. It will change the way we engage with the internet. Searching for information and processing it have been disrupted. It will upend the model that runs the tech marketplace today and change its underlying economics. Many of today’s leaders will be pauperised whereas parvenu operators will grow into giants in record time. It is well-appreciated that a new technology can deeply impact the world in permanent ways. In this case, the pace and trajectory will be like that of a crazy ball. The shifts will be even more significant on the second and third bounces. Cloud computing companies, social platforms, search engines, e-commerce giants, and many more will have to find ways to change and survive. The now-commercialised AI systems could disrupt $100 billion in cloud spending, $500 billion in digital advertising, and $5.4 trillion in e-commerce sales, per IDC, a market research firm, and GroupM, a media agency. Google makes almost $200 billion on display ads, the most on the planet. Now, this search audience may go away. What should do a website or publisher do if the relationship is not reciprocal? If chatbots lift information but send few visitors, how does that adverse equation get compensated? How can AI companies be prevented from taking content without hampering search rankings? Microsoft, Amazon, and Google are rushing to be the engine behind the AI chatbots. Google introduced its chatbot, Bard, last month. Microsoft, through its acquisition of OpenAI lab, may pioneer sale of technology to others who look to have a play in the space. The origin and authorship of content—words, sounds, images, concepts, ideas—is now suspicious. The very concept of ‘original’ is questionable. Where does the content you get from a chatbot come from? Is it ‘fair trade’ in the digital sense? Getty Images has taken Stability AI, the start-up behind the art generator tool Stable Diffusion, to court. It has thrown open the question or copying and originality. AI companies have the cover of the “fair use” doctrine for content generation—they reap without sowing. AI-generated images from Stable Diffusion are impossible to tell apart stylistically from the original artist. AI works out patterns, styles, and relationships by examining billions of images on the internet. AI text-to-image generators such as Stable Diffusion, Midjourney, and DALL-E exploded onto the scene this year and, within months, have become widely-used. Stable Diffusion alone has more than 10 million daily users. These AI products are built on collections of images known as data sets, from which a detailed map of their contents, the model, is formed by finding the connections among images and between images and words. Images and text are linked in the data set, so the model learns how to associate words with images. It can then make a new image based on the words you type in. Stability AI recently raised $101 million from investors, and is now valued at well over $1 billion. The data set for Stable Diffusion is called LAION 5b and was built by collecting around 6 billion images from the internet in a practice called data scraping. LAION was able to scour what seems like the entire internet because it deems itself a non-profit organisation engaging in academic research. While it was funded at least in part by Stability AI, the company that created Stable Diffusion is technically a separate entity. Stability AI then used its non-profit research arm to create AI generators first via Stable Diffusion and then commercialised it in a new model called DreamStudio. AI generators were built on the backs of copyrighted work, and through a legal loophole, they were able to produce copies with varying levels of sophistication. Artists posting new art feed an ever-hungry engine that becomes more and more like them. Since origination is de novo, the copyright doesn’t quite come into play. Its not a copy, it’s a stylistic inspiration. Emad Mostaque, the founder of the Stable Diffusion image generator, was a fund manager before he turned into a tech disruptor. He claims it is one of the ultimate tools for freedom of expression. The defenders say AI is an extension of the human usage of tools, only faster, better. It isn’t a tool that makes things by itself, rather, it is the intention of the end user. Thus, there’s nothing that you can make with Stable Diffusion that you can’t make with Photoshop—it’s just become a bit easier. An algorithm can make cannon fodder of a lifetime worth of work. These algorithms are learning like a human brain, only billions of times faster, more powerful and untiring. This is the future of content. Will it be man with a multiplier or man vs monster? The writer is vice president, marketing-domestic & international business, Tata Motors Views are personal   Link: https://www.financialexpress.com/opinion/ai-shadow-on-ipr/3047562/?utm_source=Whatsapp

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Living in the brand: the cult and beyond

In the good old world, a shirt had a label on the inside of the collar hidden from view, behind the neck. Then, one day, the brand mark moved to the front on the chest. The person who did this was an unsung genius. It changed a mere manufacturer’s mark to a symbol of the wearer’s identity. It legitimized fashion, belongingness and declarative association. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] The brand tribe was born and the cult had been conceived. This is an apt summary of the subject of cultural authority .Marketers as cultural engineers organizing how people think and feel and what they do. Omnipresent encounters with sophisticated marketing platforms seduce consumers to participate in a system where meaning emerge through brands. Crucially, consumer culture is then organized around submission to the cultural authority of marketers. The ‘Brand as basis for meaning in life’ is the ideological glue that holds the brand tribe together, expands markets, rationalizes consumption and makes advanced capitalist society possible. Look at the world around you and think of admired brands. Those deemed to be larger than life and deeper in terms of associative memory. Nike, Jack Daniels, Red Bull,Dove, Disney, Apple, Starbucks, Harley Davidson, Lego, Levis, Patagonia, Google, Facebook, Amazon and many others are all representatives of this tribalism and cult enlistment. Their consumers allow themselves to be co-opted into the brand idea – sports enthrallment, pride of origin, extreme thrill,  body positive feminism,  fantasia , rebellious creativity, community, macho outlaw exploration, wondrous creativity, wild west, adventurous environmentalism, endless information,  socialization respectively in case of these listed examples. Coolness is a very fragile and vulnerable concept in branding. In comparison, belongingness is rock solid . We live in an attention scarce world. The steep cost of attracting attention is taken care of at one go when a consumer joins the tribe. Marketers have fully woken up to the siren call that market share is not followership and brand recognition is not loyalty. Consumers evolve from acceptors, adorers,  advocates to fanatics and evangelists. This evolution from initiation to submergence is deliberate and engineered. What seems a volitional at first and then crystalizing to a community is, in fact, deeply motivated. Cult-ism celebrates irrational loyalty. It allows for a lock in of share of market. It gives accessible lifetime consumer value. Read, higher profits. A broad purpose, ritualism , vocal and visible branding, semiotics of a covenant and a celebrated history or mythology of the brand are all parts of building the brand cult. Deconstructing cult brand phenomenon will reveal very important lessons that can save consumerism, democracy, capitalism and even our planet. All of these are in jeopardy thanks to the mortal combat between irrational, radical anti – corporatism and irresponsible, insistent corporate marketing. Let me now focus on why it is deviant and dangerous for brands to own ideas without caveat.  This is because the idea is the cementing force in society . The idea itself is the platform on which social movement occurs.  The basis for ‘birds of a feather flocking together’ is adherence to a larger organizing idea. The moment that ‘idea’ becomes the patented property of a brand , our civilization, as we know it,  is in trouble. A few corporations get to decide what is aspirational, what is to be rejected. What is worthy of being cause celebre’ and what it taboo. Look at it from the brand owner’s perspective – Once you are in the ideas business, it is no longer embarrassing to favour symbolism over substance.  Once the consumer has accepted the faith, all encounters deepen the immersion into the community of believers. The brand cult is expected to create impressionable minds loaded with memetic influences. Like concentric circles around the core, more recent converts are even more energetic and interact forcefully with the world outside.  As their relationship deepens, the inbound and insular incentives get more compelling. This ‘logged in’ population is living in the brand. Let me now move to the world of Facebook, Google, Amazon . Much has already been written about their size, scale, scope and foreknowledge of data to merit repeating. I am focused only on the unprecedented cult-ism propagated by these brands and businesses. Modern living ,it seems, is inconceivable without Google, Facebook, Whasapp, Instagram, Amazon, You tube and several others owned by these behemoths. A quick view at the web of ownerships and acquisitions made in the past decade will reveal the colossus at work. Facebook is free to use and operates beyond geography and language. It knows what you ate at an outing with friends. It knows which aunt you adore and which ex –girlfriend tugs at your heart till date. What is sells is the attention of users, to advertisers.  And the knowledge of who you are, your favourite aunt and ex, included!! The cult Facebook promotes is a manicured and coiffured one. It has a world on display like showcase at a patisserie. Exhibition and admiration are the norm. The real world with its warts and bad hair days can be edited out ruthlessly. Friends are available for free. No moral obligations are mandated. It is compelling. To not be on Facebook is amounting to a call for psychiatric therapy. Near monopolies (Facebook, Google, Amazon) , Duopolies (Apple, Microsoft) and Oligopolies enmeshed in cross ownership of Silicon Valley geeks who found El Dorado  are now a threat to how humans curate and create. In the US, Google has close to 80% of search advertising. Facebook has close to 50% of total online display advertising share. These kinds of shares haven’t been witnessed since the gilded age of the late 19th century. Why this has happened is because of a huge consumer buy in and the biggest ever ramp up in history of business scale. In the reconstructed world, Google is the purveyor of information and influence , Amazon is the marketplace and Facebook is the town square and social club rolled into one.  This world has rolled Learning, libraries, educational

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Recasting caste: 2019 polls will change caste-politics paradigm

Nationalist, socialist, communist or opportunist, every colour of political wisdom defers to the primacy of caste. Gorakhpur and Phulpur are the latest stars of the galaxy where caste seems to be at the very centre. However, caste is not a marketable commodity beyond the boundaries of a state. The dynamic of legislative and parliamentary systems are quite different. Caste has never become able to grow into anything larger, even to the extent of a common interest caste grouping. A marketer building political momentum for the coming elections will indeed use caste as a persuasion lever. It shall serve to build affiliation. It will build distinction along lines of people like us versus them. But, what more will it deliver and how can it be countered ? The general elections of 2019 will be decisive and historic. It will decide for more than five years of political outcomes. Political marketers will have a critical role to play. Their role will be key in decoding, and then reshaping, the public stand for or against caste. In 2019, two meta-identities shall be in mortal combat, namely caste identity wearing some ideology as a badge versus ideology camouflaging caste-savvy tactics. Consider the history of caste-driven political formations. What sense of appeal made them emerge and get entrenched? From 1952 to 1969, the ‘Congress system’, as the eminent political scientist, professor Rajni Kothari, termed it, allowed every large identity group in India to find representation within it. Per its claim of being a movement first and a party later, the Congress allowed traditional elites to provide leadership backed by backward, dalit and minority participation and electoral support. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] More and more, as the Congress degraded into a neo-feudal formation, and then, under the later Indira Gandhi regime, became confirmed in its authoritarianism, the regional leaders of backward communities found their space cramped and vassalage trampled upon. First, with Chaudhary Charan Singh’s experiment of the Sanyukt Vidhayak Dal, the marketable space for non-Congress politics expanded, but that took on very traditional forms. Though the support was entirely rural and backward-communities driven, there was no review of form or substance. New caste overlords ran the earlier system. From UP, it spread to Bihar. These were, naturally, the most likely domains. The South had an entirely native, backward-communities, anti-Brahmin narrative, and was insulated from these developments in the Hindi-speaking region. The very phrase ‘backward community’ was first used in the Madras Presidency in 1870. It took more than a hundred years to travel to the Hindi heartland campaign-speak. When Indira Gandhi broke the Congress establishment from within and concentrated power, backward caste groups led by regional satraps felt sidelined and hence saw survival in strengthening the politics of caste identity. Caste emerged as a political voice from the decay of the Old Congress. Can it be subsumed back into the main body of politics with the emergence of the new BJP ? By the time of the first ‘post-Indira’ election in 1984, every major state in India had seen its amorphous opposition to the Congress crystallise .They had respectively been able to seize power once and form the state government. In each case, it was due to full support of one or two major caste groups—Vokkaligas, Lingayats, Yadavs, Jats, Patels, Kamma, Kapu, etc. In 1977—and don’t forget that was 41 years ago—the very first non-Congress government came to power at the Centre. Backward-community ascendency had found a throne. In 1989, the earth shook in political terms, with the end of single-party majority rule and the start of the coalition ‘era’. Vishwanath Pratap Singh—in my opinion, a vastly underrated politician, political marketer and tactician, mostly neglected in our historical assessments—through an executive order of the Cabinet, gave 27% reservations to OBCs as recommended by the BP Mandal Commission. A meteorite had hit the political status-quo in North India. Almost overnight, ‘OBC’ became a political descriptor and the Congress could never, to this day, resurrect itself in the cow belt. State-level caste leaders got a chance and a readymade following, from whence came the likes of Mulayam Singh Yadav, Lalu Prasad, and Nitish Kumar. Therefore, conversely, we establish that any politics in North India that avoids appeal to caste must be a voice of consolidation, revival and progress. It should be addressing the youth. It should equate degradation and stagnation to caste and parochial politics. Economic momentum breaks caste. Prosperity serves all.  The BJP must market young and qualified backward caste candidates and then spell out the contrarian stand. It must be able to create conviction that caste never mutates to a pan-India identity. Even a Lalu and Mulayam can’t cross into UP and Bihar, respectively, despite their Yadav constituency being abundant. Who gets represented best when SP address its prospective voters? Akhilesh-followers, believers in Lohiaite socialist programmes, Yadavs pursuing caste clout? Anti-BJP forces? What is the terra firma for the landing of these calls to action? Does caste repair erosion caused by poor governance? Therefore, if caste cannot pole-vault across state boundaries, and caste icons can aspire legitimately to only the CM’s position, surely a Charan Singh and Deve Gowda couldn’t claim backward leadership to be the cause of their reaching the very highest office. We then arrive at a fundamental marketing truism—variants dilute a mother-brand and weaken it. Yet, standalone brands must extend and build a range or repertoire. Will the BJP have the marketing finesse and boldness of execution to bring these contradictions to light ? Caste politics of the SP, BSP, RLD, RJD, JD(S), etc, will become less defined by known gridlines and appeal to larger common class interests. The BJP will likely accommodate and showcase more castes—Yadav, Maratha, Gurjar, Jat, Koeri, Kurmi, Patel, Vokkaligga, Kapu, etc—in its leadership, with an appeal to unison and national progress. Somewhere, the two battle formations will cross over, and India will change forever with the vote of 2019.

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Rule by leveraging new coalitions

Those who aspire to rule by leveraging new coalitions of larger groupings must take marketing much more seriously Democracy with universal suffrage, regular elections and presence of numerous political parties has flourished in India. It has deep roots and growing mass participation, as evidenced by one of the highest voting percentage levels in the world. [siteorigin_widget class=”SiteOrigin_Widget_Image_Widget”][/siteorigin_widget] Democracy with universal suffrage, regular elections and presence of numerous political parties has flourished in India. It has deep roots and growing mass participation, as evidenced by one of the highest voting percentage levels in the world. Marginal farmers, disadvantaged rural population, women, dalits, minorities are known for vigorous participation at every level of the democratic process. Yet it may be argued that they still reduce to commoditised votes in the hands of traditional competing elites who thus perpetuate their power and protect turf. Genuine democracy, where subaltern groups advance and flourish, remains a utopia. This, despite the fact that the very same high participation groups—dalits, backward castes, tribals and minorities—are the brute majority of poor Indians. This mobilisation and activity yields them little and they continue to be deluded and exploited by elite political formations. They are forever looking to choose the lesser evil with their vote. My position is that these political groups are unable to leverage their numerical majority to achieve and retain power because they lack marketing resources and brand-building fire power. It is this handicap that disallows a larger identity to crystallise and renders them unable to become contenders with a pan-India appeal. They lack the means to promote themselves across India. These groups are at a perpetual disadvantage as they do not have any national political platform that is branded, evocative and vote accretive. Two recent exceptions, both short-lived—the BSP in UP and the Lalu phenomenon in Bihar—serve to illustrate how explosive potential matures into a stunted reality because of marketing atrophy, inconsistent and incoherent branding, and poor, tired and clichéd messaging. The brand simply fails to live up to voter expectations. In India, the peasant castes comprising 75% of population and 65% of workforce are surviving on 11% of national income. This is the reason why Jats, Gurjars, Marathas, Kapus, among others, resort to violence and agitations to secure reservations in ever shrinking government jobs. India’s much-celebrated democracy only amounts to periodic elections where votes decide who comes to power. It does not mean our democracy is ingrained in a spiritual sense. Democracy hasn’t made us a less polarised, more equitable or less caste-ridden society. Our feudal ethos remains unchanged. Further, legislative and parliamentary sovereignty is compromised by the personality cults across various political formations. Our executive machinery, in states as at the Centre, has become Presidential whereas our polity is Parliamentary but in form, not in spirit. India will miss its chance at world leadership and under deliver on its vast potential unless the majority of its people are in the vanguard of its federal polity with a singular political identity. I look upon the grand Indian political drama only from a marketer’s eyes. We live in an India where it is easier than ever to reach people but harder than ever before to engage them. Every kind of disruption imaginable to a stable marketing mix is active, be it technological or demographic. India is the youngest country on the planet and on its way to being the most populous—40 crore Indians were born in this new millennium. Each year they will join the voting population. Naturally, the tools, means and modalities of creating and consuming content will, I believe, permanently and irreversibly change our society and polity within a decade. Those who aspire to rule by leveraging new coalitions of larger groupings must take marketing communication far more seriously than merely crafting slogans and limericks. Its role has to be seen in light of its fullest purpose, namely that of creating and managing a web of associations—overt and subliminal—and being sharply focused on the most important tasks. The period since the drumbeat for the 2014 general elections started has been a time of unprecedented brand building in Indian politics. Never before were conventional admen-style campaigns attempted at such a scale and outlay. A whole new generation of regional and national leaders emerged. Core ideologies spawned credible as well as dubious variants. Many stalwarts rode into the sunset. But not even one political formation of suvarna non-dwij communities or dalits has expanded its footprint or increased its share of power in the last decade. This failing will become more of an existential threat as both the BJP and Congress look to co-opt these groups and claim their natural leadership within their organisations. Amalgamation and rapid scaling up of marketing outreach to all prospects—those available and aspiring—is therefore a matter of survival. A clear vision and sense of purpose needs to be articulated, which may lead to a conscious welding together of like-placed communities beyond caste and kinship structures due to a commonality of interest. This cooperation, compromise, accommodation and bargaining within the constituent groups must be dynamic and ongoing. It will ensure fracture-free momentum. Authentic consistency is the spine of any marketing programme. Beyond that, symbolism and ritualism build a higher level of affiliation. Acquiring social capital in the political and cultural fields is difficult because the dwijs dominate the administration, media and policy-making institutions. The suvarnas non-dwij, dalits, OBCs, minorities and tribals have a negligible presence there. Hence their own creation of cultural symbolism should be given wide currency within the groupings. “Jiskee jitnee sankhyaa bharee, uskee utnee bhageedari” (higher the number, bigger the representation) was a demand of Bahujan politics that resonated with many. Alas! This will happen only when superlative marketing achieves a level of response that dwarfs the response to “Acche din.”

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