High-tech giants warned of breakdown in trust at Davos summit

Technology sector risks banking-style crisis following collapse in public trust in IT giants, Davos summit warned

Fresh from being blasted as suppliers of the command and control networks of choice for terrorists by one of Britain’s most senior spooks, US technology companies had another bucket of cold water thrown over them at Davos, the international economics summit.

Presenting his annual Trust Barometer, PR specialist Richard Edelman told delegates that technology companies, typically the most trusted sector for many years, had lost a significant amount of trust during 2014.

For a PR man he didn’t mince his words for his audience. “Many high-tech companies believe they have a god-given right to sell new products,” he said, adding: “Not so.”

He pointed out that 67% of the people who had responded to his international survey believed that innovation was driven by greed.

Gillian Tett, manager of the FT organisation in the US, backed up Edelman’s ominous message.

Famous for being one of the very few journalists to spot the impending financial crisis of 2007, Tett described Edleman’s report as “damning” and then speculated that tech sector could be in line for a huge backlash. 

“The kind of collapse of trust we see in the banking sector can be seen in technology companies too,” she warned.

Many high-tech companies believe they have a god-given right to sell new products. Not so

Richard Edelman, creator, Edelman Trust Barometer

Paul Achleitner, chairman of Deutsche Bank, one of the largest banks in the world, clearly got the message. “Never assume that because it’s common practice today, it won’t be judged unacceptable later,” he advised.

“Robber baron mentality”

One of the practices that has been contributing significantly to the mistrust is taxation, or rather the avoidance of taxation. This is a hot issue in the UK and it was Tett’s paper, the Financial Times, which led the charge over the offshore accounting practices of internet giants Microsoft, Facebook, Apple and others.

Diane Francis, editor at large for the US National Post, said “the Uber effect” was setting in. She accused technology companies of “evading taxation” while generating staggering wealth and having a “robber baron mentality”.

This doesn't quite stack up, given the phenomenal philanthropy of Bill and Melinda Gates, for example, but Kevin Rudd, the former Australian PM, chipped in somewhat delphically, telling the audience: “On the question of trust there’s a much deeper phenomenon – the sheer capacity to control effectively any of those domains in the public interest.

“The public’s general conclusion is that the world is out of control. The reality is that, on the capacity question, the ability of governments to effectively exercise regulation is structurally eroded.”

Low-cost bandwidth the answer

So what was the response to the decline in trust from high-tech’s C-suite?

Eric Schmidt, executive chairman of Google, declared: “Almost all the problems that we debate can be solved by more broadband connectivity.”

And Vittorio Colao, CEO of Vodafone Group, thought lack of harmonisation was the principal issue: “The lack of harmonisation of regulatory regimes is an impediment to increased access.”

Agreeing with Schmidt, Satya Nadella, chief executive of Microsoft US, said that to expand connectivity, which he thought was the main problem, there was a need for “low-cost bandwidth”.

Facebook CEO Sheryl Sandberg had other thoughts. She noted: “Currently more than half the internet’s content is in English and women typically receive access to smartphones later than men.”

“Reduce bandwith costs, increase access and include women for a brighter digital future,” was how Davos Forum spokesman Fon Mathuros summed it up.

Davos is a vast event with thousands of attendees. Clearly there is a disconnect between the visitors, a sense of ships passing in a dark night, neither hearing nor listening to each other, and with only the PR man and the hacks confronting the reality.

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