Like Bill Gates before him, Mark Zuckerberg is having a ‘Pearl Harbor’ moment. John Naughton

The great thing about history is that it often repeats itself – though not necessarily as Marx envisioned. Here’s a story about the tech industry that illustrates this point.

The first act begins in the spring of 1993, when Marc Andreessen and Eric Bina released the first graphical browser for the emerging World Wide Web. They called it Mosaic and it was a smashing success because that was what enabled laymen to understand what this internet thing is for. In 1994, Andreessen and Jim Clark founded a company that would eventually become Netscape and in October of that year released a new, improved browser called Netscape Navigator, which had 75% of the nascent browser market in three months. In August 1995, Netscape went public in a frenzied IPO that started the first Internet boom.

As their company flourished, Andreessen and co began to think of an even brighter possibility. If web browsers were indeed the future, he argued, and since a PC’s operating system (OS) was effectively a life-support system for a browser, it required a complex and expensive OS such as Microsoft’s MS-DOS. Was?

At this point, Microsoft co-founder and CEO Bill Gates woke up. Microsoft’s core assets were its world-leading OS and the Office software suite that ran on it. Accordingly, on 26 May 1995, they issued what became known as the “Pearl Harbor” memo to all employees regarding the “Internet tidal wave” and how Netscape’s growing dominance represented an existential threat to Microsoft. “A scary prospect being discussed by Internet fans,” he wrote, “should they be lumped together and made much less expensive than a PC that is powerful enough for web browsing.” Their conclusion: Microsoft needed a penny turn to counter the threat: “We need to move all of our Internet value to Windows 95 as soon as we possibly can with a prime goal of getting OEMs.” can [ie PC manufacturers] Shipping our browser preinstalled.”

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The clear aim was to destroy Netscape by giving all PC owners a free Microsoft browser and it was successful. But it also nearly destroyed Microsoft, as it launched an antitrust suit that went within a hair’s breadth of disbanding the company.

For task two of our cautionary tale, we need to move on to the present. Meta (née Facebook) has enjoyed the same global dominance in the social networking space as Microsoft once had in the PC market. But now it looks like it could face very serious problems, if not an existential threat.

The biggest of these is probably TikTok, the Chinese-owned, video-hosting platform that young users are stamping on Instagram. But the list of other headaches is also intimidating. They include: the fact that Apple’s decision to enable iPhone users to turn off tracking has reduced Meta’s ability to profit from them; Meta’s market cap fell from $1.1tn to $450bn (£375bn) in 10 months; Quarterly profits declined for the second consecutive quarter; similar revenue; the ballooning cost of Zuckerberg’s crackpot bet on the Metaverse project (the hardware division that apparently lost $3 billion last quarter); growing interest from regulators and governments in META’s business practices; Persistent bad odor from Facebook’s persistent problems with privacy, toxic content and misinformation; And, to top it all off, there’s a global recession coming that is (okay) seeing the company’s CEO.

There are signs that some of these problems are starting to bite. For example, Meta has dramatically reduced its hiring of engineers from 10,000 per year to 6,000. And it’s making terrible changes to core products. Instagram is changing from a photo platform to one that privileges short-form videos – just like TikTok. Older people who increasingly seem to constitute Facebook’s core users are now offered two options for their News Feed: a “Discovery” tab that provides an algorithmically curated feed of items from around the world, another Chronological list of posts of his friends. Less dramatic (but perhaps more revealing) are small changes in perks enjoyed by employees: no more free laundry or dry-cleaning services, for example. Or the fact that the starting time for the free dinner has been changed from 6 PM to 6:30 PM!

But perhaps Zuckerberg has reached his “Pearl Harbor” moment, the fact that he called on meta executives from around the world earlier this month at an increasingly held meeting in San Francisco. Before he arrived, he had to read a sermon from his boss. But unlike the 5,584-word memo used by Bill Gates to wake up his colleagues, Zuckerberg’s executives had to sweat their way through a 122-page slide deck on “operating with increased intensity.” That’s almost enough to make someone feel sorry for them. almost.

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