How to interpret the current GAFAM crisis?

Layoffs, new economic models, technological warfare: how to interpret the current GAFAM crisis? After the exponential growth of their activities during the Covid-19 pandemic, the giants of the digital economy are losing momentum, their stock markets are falling (Nasdaq is down 30% in a year), it is turning into waves. massive layoffs.

Online activity exploded during the health crisis, boosted by telecommuting and e-commerce, but that boom appears to be over. After Meta 1, Twitter and Amazon, it’s now Google’s turn. The Mountain View company recently announced 12,000 job cuts — more than 6% of its global workforce.

Sundar Pichai, CEO of Alphabet (Google’s parent company), attributes the massive layoff plan to changing economic conditions compared to the accompanying waves of investment. “periods of growthgreat performance » 2.

The crisis and rapid inflation are affecting revenues from the digital advertising market, which is central to the business model of some big companies like Google and Facebook. This would explain the fact that Apple, which currently focuses more on the hardware market (tablets, phones, etc.), has not announced any layoff plans. Some investments, such as Mr. Zuckerberg’s investments in the metaverse, are too risky, while other companies, such as Twitter, are looking for new viable business models.

The bursting of the bubble in the 2000s

The economic slowdown in tech follows a golden age of more than two decades in which Silicon Valley players seemed untouchable. After the bubble burst in the early 2000s, digital companies experienced a period of growth that coincided with the launch of the “web 2.0” label. Popularized by Tim O’Reilly in 2003, it has accompanied the launch of a number of commercial platforms based on the user-generated content model. Of course, the participatory dimension has been inherent in civil Internet technology since its inception and therefore did not wait for “web 2.0”. On the other hand, the term allowed web players to associate their sites with the idea of ​​creating a community and therefore encourage internet users to engage in content production for “social” media, masking the economic issues behind it. data exploitation.

However, the far west in the use of personal data is causing more and more concern among Internet users, especially after the explosion of scandals such as Cambridge Analytica or Edward Snowden’s revelations. This has also prompted international institutions such as the European Commission to draft texts that are very problematic in their application and liberal spirit, but which attempt to legislate in terms of content moderation and competition regulation 3.

A redefinition of economic models?

If the current crisis is not of the same nature as at the turn of the century, what may be at stake is a redefinition of the economic models of some of the big platforms that are going through a period today, as it was then. from the link.. The specialized press is interested in the strategic choice of layoffs at Google: a large part of the dismissed employees seems to be part of the open source software team, while the teams working on AI (artificial intelligence) will not have 4. We also witnessed it. Elon Musk’s acquisition of Twitter has raised new questions about whether to tackle the “free” model, as well as Mark Zuckerberg’s massive investments in the metaverse, which account for a third of the Meta group’s total investments. Derived from the combination of the words “meta” and “universe”, this concept aims to create a physical virtual reality by combining augmented reality and virtual spaces and representing both video games, social networks, e-commerce and immersive 3D worlds. . In these spaces, it is possible to perform a whole series of actions in daily life, go to events, attend meetings, buy clothes with cryptocurrencies, another sector that was particularly affected by the stock market crash.

For some economic actors, the metaverse will constitute the future of the Internet, but for others, the bet is too risky. The Metaverse may represent a further step towards the ever-increasing penetration of the commodity world into all areas of human activity.

In any case, the vitality of the metaverse is currently uncertain, and this instability is causing some investors to lose faith in the digital sector and turn to sectors that are considered more stable.

Monopolies, data control and new digital overlays

Therefore, there are several factors that can explain the wave of cuts in the digital sector, both related to the economic crisis, the redefinition of the commercial strategies of certain GAFAMs, and the reconstruction of inter-imperialist conflicts promoted by the war. in Ukraine. This situation is really at the beginning of a sort of tech war between the US and China, where the two countries are trying to work towards refocusing their strategic sectors.

In addition, it is a highly financialized sector. Companies like Twitter or Instagram are based on what thinkers of cognitive capitalism call “intangible capital”, because this type of capital is based on the processes of formation of collective intelligence (embodied in work, not capital). Therefore, its value is fictitious because it does not correspond to real capital replication, but is determined by fluctuations in the stock market. Cognitive capitalism is therefore interpreted as such “The process of reconstruction in which capital attempts to parasitically absorb the collective conditions of knowledge production and subjugate it to its own logic, stifling the emancipatory potential of the common intellect embedded in society.” 5.

Since the early 2000s, the Silicon Valley doctrine has been based on a new application of the Schumpeterian concept of “creative destruction”, where innovation rents are appropriated (provided by a patent system, strict ownership of rights and low taxation). ) helps ensure gains during conversion periods 6.

Unfortunately, the transformation proposed by GAFAM is characterized by increased control and commodification of communication spheres, the creation of new enclosures and new rents, as well as the deterioration of the conditions for critical debate in the public sphere.

1 – Meta is the parent company of Facebook, Instagram and WhatsApp.

2 – lemonde.fr, January 20, 2023.

3 – The Digital Services Act (DSA) aims to regulate illegal content and advertising and the Digital Markets Act (DMA) concerns the regulation of competition between GAFAM, defined as gatekeepers (those who control access to services and markets).

4 – Google has many open source projects, i.e. software development with open, accessible and modifiable source codes, designed to encourage innovation and collaboration within developer communities: https://www.theregister…

5 – A. Negri and C. Vercellone (2008), “Capital/labour relations in cognitive capitalism”, The majority32, 39-50: https://doi.org/10.3917/….

6 – J. Durand (2020), Techno-feudalism, a critique of the digital economy, Discovery p. 40-41.