“When you live in a culture that tolerates and even promotes copying that is, in fact, what you get. When everyone copies everyone that means no one is innovating.”
Recently the Wall Street Journal published an article detailing Facebook Chief Executive and Founder, Mark Zuckerberg, directing employees to not let pride get in their way and to copy rivals in the industry. The Wall Street Journal reported that one particular employee present at this all employees meeting said that after this meeting the internal slogan within Facebook became: “Don’t be too proud to copy.”
Facebook executives have routinely said that it is common within the tech industry for companies to build upon technologies pioneered by others, which of course is true. Still, standing on the shoulders of those who come before you is very different than copying rivals and a company-wide understanding that the CEO and Founder wants you to take what others have spent time, money and energy developing. One is how the march of innovation proceeds, the other is the anatomy of infringement.
Just look at Snap for example.
Much of Snap’s IPO filings at the Securities and Exchange Commission (SEC) talked directly about patent and IP theft as a material risk. Indeed, while much of the Snap, Inc. S-1 Registration Statement filed with the SEC discusses the risk posed by the threat of patent infringement lawsuits against Snap, the statement also explained that “third parties may knowingly or unknowingly infringe our proprietary rights,” which turned out to be rather prophetic.
“If we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business may be seriously harmed,” reads another section of the Snap S-1 Registration Statement.
Conveniently for Zuckerberg, and Facebook, “efficient infringement” has become fashionable thanks to Silicon Valley spending hundreds of millions in lobbying on patents the past 20 years.
This ‘take without paying’ philosophy that is pervasive in big tech within Silicon Valley comes from a place that is hardly new to those familiar with the business of innovating. As a company grows in size they are less capable of innovating, with extremely few exceptions. And even when most large technology companies continue to innovate they are really building upon the shoulders of acquisitions – whether it be the acquisition of companies or technologies. Innovation by M&A is common for large incumbents. Facebook did try to buy Snap. But Snap said no so now Facebook just copies Snap in order to keep bumping up their user and data numbers.
As for the excuses, the Wall Street Journal explains in the aforementioned article that the Silicon Valley culture has long regarded copying as a good thing and necessary for rapid growth, first to market, first mover advantage, network effects, world domination, liquidity for early investors and Founders, etc. What complete and total garbage. When you live in a culture that tolerates and even promotes copying that is, in fact, what you get. When everyone copies everyone that means no one is innovating. Many studies and articles in recent years have highlighted how we have a net loss of startups over the past 30 years and that companies are no longer innovating. Perhaps Apple has received the brunt of this criticism as nothing really breakthrough has occurred since the untimely death of Steve Jobs and much of Apple’s activity seems to be about suing partners like Samsung for copying!
The tech elite have mortgaged their own future by lobbying in Congress and arguing in the Courts for the dismantling of the patent system. They have crushed independent inventors and made it increasingly difficult, if not impossible, for fledgling tech startups to get off the ground. That means less job creation since startups create the jobs, but it also means a lot less innovation, and with that the result will be much less to copy, which will further result in stagnant innovation.
Ironic that the giants lobbied Trump earlier this year to make sure that the United States Trade Representative chief protected their patents. Now that Trump is going after China for IP theft it will be interesting to see China point out how these same tech companies have hollowed out America. The U.S. Chamber of Commerce, hardly a fan of litigation, reported this year in its annual Global IP Index that America has dropped from #1 to #10 in terms of patents thanks to the Patent Trial and Appeal Board (PTAB) and Alice. Joe Matal, temporary leader of the USPTO, said at the recent quarterly PPAC meeting that the U.S. used to issue patents in software but now other countries are doing it. In fact, Europe is now where innovators go to obtain software patent protection, not the U.S.
Reed Hastings, a Facebook board member, has called for Peter Thiel, another Facebook board member to resign because Thiel exercised poor corporate governance judgment by backing Trump. Hastings, founder and CEO of Netflix, is betting his shareholder’s future on paying for the creation of original content, competing head to head with the likes of Disney. How can Hastings justify sitting on the Board of Facebook as a content creator when Facebook has a culture of copying? If Thiel exercised poor judgment backing Trump, what is Hastings doing by tolerating a culture of copying at Facebook?
Facebook, like other tech giants that fund the infringer lobby, dearly want Trump to protect them from China’s policies on IP, data localization, cybersecurity and antitrust. Yet their lobbying against patents in the U.S. deliveries a great political and economic gift to China. Shouldn’t Hastings take a page from the Netflix book and take Facebook out of the copying business? Or will it be Thiel? Hard to see him switching sides and embracing patents given his libertarian roots and statements against patents.
Perhaps an entrepreneurial activist shareholder will be able to profit from the hypocrisy and cognitive dissonance of these billionaires.