Now, even some tech firms acknowledge tech's downside

For months, the whispers had been growing louder in tech circles: Influential tech companies are using techniques to grab so much of people’s attention that it bordered on fostering addiction.

The charges came from high-profile former employees and venture capitalists, who said the companies were doing it on purpose.

This week, those concerns spread to the investment world and ensnared another high-tech titan, as a prominent hedge fund and a major pension fund joined in an open call for Apple to offer parents tools to limit their children’s use of iPhones and other devices.

All this represents a marked shift among powerbrokers for the high-tech industry, where large firms like Apple and Google have generally been held in high regard among investors, even those concerned with corporations’ social impact. The reason may be, in part, that the ubiquity of apps and smartphones is only now – and slowly – being met with a focus on negative side-effects.

The rising discussion also lays bare a fundamental tension in the tech industry: Profits are often linked to keeping consumers glued to their screens, despite evidence that the devices come with risks as well as benefits. The recent outcry may be an early sign of pressure on tech firms to align their business models closer to what’s valuable to consumers – shifts that some companies, including the pioneering social-media giant Facebook, already appear to be making.

“This makes sense for both kids and for Apple shareholders,” says Charles Penner, a partner at the activist hedge fund Jana Partners, which wrote the open letter Saturday along with the California State Teachers’ Retirement System (CalSTRS). “Apple can enhance its brand by proving to parents that it takes kids’ safety seriously.”

Challenging the attention economy

The safety concerns are many, of course, including inappropriate content and online scams or predators, but one of the most basic is the sheer amount of an individual’s time the devices can absorb.

“What the research suggests is that being on your phone up to about two hours a day is fine for happiness and mental health and well-being,” says San Diego State University psychologist Jean Twenge, author of “iGen: Why Today’s Super-Connected Kids Are Growing Up Less Rebellious, More Tolerant, Less Happy – and Completely Unprepared for Adulthood” and a co-author of the shareholder letter.

But when that daily screen time is exceeded, risk factors for suicide rise sharply, according to her research. The average American teenager spends more than 4 and a half hours a day using a smartphone, not counting texting and talking.

And it’s not just kids who are getting hooked. In 2017 the marketing firm Flurry found that the time the average American spent each day on a mobile device has crossed the five-hour mark. Between 2015 and 2017, adult media consumption jumped 97 minutes per day, virtually all of it due to an increase in smartphone use, according to Nielsen, a global measurement and data analytics company based in New York.

“There’s a ton of great stuff happening on these platforms,” Scott Galloway, a vocal critic of the big companies’ business practices and New York University marketing professor, told a New York conference in November. “But until about three months ago, that is literally all we talked about. We have to have an adult conversation about both the upsides and the downsides. And I feel for the first time, we’re having an adult conversation.”

Some of the sharpest criticism has come from former executives of and investors in the firms themselves.

In November, Sean Parker, the creator of Napster and the first president of Facebook, told Axios that the social network was deliberately designed with the aim of “exploiting a vulnerability in human psychology” to  ”consume as much of your time and conscious attention as possible.”

Mr. Parker’s remarks were echoed by Facebook-engineer-turned-venture-capitalist Chamath Palihapitiya, who in an expletive-laden talk at Stanford Graduate School of Business in November expressed  ”tremendous guilt” at helping to create “short-term, dopamine-driven feedback loops” that are “destroying how society works.” Roger McNamee, an investor in Facebook and Google wrote in USA Today in August that he is “terrified“ by the damage done by these companies, which he says borrow techniques from the gambling industry.

Even the creator of Facebook’s “like” button – Silicon Valley programmer Justin Rosenstein – now rues the feature. He uses an iPhone that has been disabled from downloading any apps.

Time for a new business model?

Getting these companies to change is hard, when their entire business model depends on getting millions of users to stay on their platforms for as long as possible. That is why Jana Partners and CalSTRS, who between them control about $2 billion in Apple stock, have focused on Apple, whose iPhone is a huge conduit to the potentially addictive apps.

“Apple’s business model is not dependent on users spending more time on the device,” says Dr. Twenge. “I do think this is an opportunity for Apple to lead the way, and it should be a win-win for them because parents might be more willing to buy phones for their teens and their kids if they’re safer.”

In a statement responding to the investors’ letter, Apple pointed out that its devices already have parental controls. The company also plans “even more robust” controls, according to its statement. “Apple has always looked out for kids, and we work hard to create powerful products that inspire, entertain and educate children while also helping parents protect them online.”

In a blog post Thursday, Facebook CEO Mark Zuckerberg announced a major change to the company's news feed. In light of psychological research, some carried out by Facebook, that shows that users tend to be happier when connecting with friends than passively consuming posts, Mr. Zuckerberg says that the news feed will place a bigger emphasis on posts from friends and family, while downplaying content from news media and other businesses.

The move could hurt profits, he wrote. “By making these changes, I expect the time people spend on Facebook and some measures of engagement will go down. But I also expect the time you do spend on Facebook will be more valuable.” 

The pressure on the tech industry comes as watchdog groups have already been trying to help consumers find healthier behaviors. One movement called Time Well Spent offers a range of consumer tips, such as minimizing the number of automatic notifications.

It’s not clear if the criticism of tech-firm “attention mining” has yet made a dent in the industry’s reputation among investors, even socially responsible ones.

“I don’t see it right now as an issue in the investment world,” says Shawn Lesser, co-founder of Big Path Capital, an impact-investing firm. Technologies “are tools.... It depends on how you use them.”