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Welcome to Axios Trends, our quarterly lookahead for politics, business, tech and more.

  • The trend: Powerful forces are putting pressure on tech giants, old and new, as they face their greatest challenges since the dot-com bubble burst 20 years ago.
  • I'd love to hear what you think — just reply to this email, or write mike@axios.com.
  • Smart Brevity count: 1,189 words, a 4½-minute read.
1 big thing: A storm gathers around Big Tech

Illustration: Sarah Grillo/Axios

The backlash against Big Tech is on track to escalate around the world in 2020 and with more concrete consequences, write Axios managing editor Scott Rosenberg and editor-in-chief Nicholas Johnston.

In Washington, regulators and lawmakers are finally getting the details they've wanted about the full power of tech companies — and how to fight back.

  • In state capitals, attorneys general and legislators are stepping in to investigate and counter anticompetitive practices.
  • On the campaign trail, liberals assail the power of Big Tech and call for breaking up Facebook and Google, while conservatives decry their power and accuse them of silencing their voices.
  • In newsrooms, investigative reporters are following more threads and leads to expose the power of tech giants and the false promises of new startups.
  • On Wall Street, investors have lost patience with money-hemorrhaging startups and loose-cannon founders.
  • Around the world, a trade breakdown is severing supply chains and nationalist forces are splintering the global internet, shaking the foundations of the tech industry's decades-long march to dominance.

The big picture: Tech giants today control vast hoardes of cash, armies of talent and troves of data, and they provide billions of customers around the world with convenient, personalized, often free services.

  • Unlike their predecessors, they might have the resources to outmaneuver and outlast government assaults.

The bottom line: Partisan political battles dominate the headlines, but this is the conflict that will shape our economy and society.

Sign up here for Ina Fried's daily tech newsletter, Login, edited by Scott.

2. The fall of unicorns

Illustration: Eniola Odetunde/Axios

Public market investors are turning a more critical eye toward "unicorn" startups, particularly those with lax governance and big losses, writes Dan Primack.

Why it matters: This comes after years of laser focus on top-line growth, and is challenging for older startups that had geared their business models to the old normal.

  • WeWork is the most obvious example, with its new co-CEOs frantically seeking to shed assets and slow expansion.
  • Postmates was supposed to have filed its IPO registration by now, but hasn't.
  • There are dozens, if not hundreds, of other mature startups caught with their income statements down.

What comes next could be familiar for anyone who's ever tried to find a plumber: More demand than supply.

  • Unicorn growth has been driven by an unprecedented number of large, later-stage venture capitalists. This includes not only the $100 billion SoftBank Vision Fund, but also hedge funds and mutual funds.
  • These "VC tourists" will thin out, putting companies in capital limbo.
  • Some startups will get ghosted by their "founder-friendly" VCs.
  • The result could be a wave of rescue rounds, in which share prices are crammed down, or outright fire-sales.

The bottom line: For companies with reasonable controls and paths to profitability, all systems remain go. We are, after all, still in the longest-ever bull market for public equities.

  • But for unicorns that never looked beyond the trough, it could be slaughter season.

Sign up here for Dan's daily newsletter, Pro Rata, and listen to his podcast.

Bonus: The biggest of Big Tech
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Data: Yahoo. Chart: Naema Ahmed/Axios
3. States add to Big Tech's headaches

Illustration: Aïda Amer/Axios

Already facing antitrust and privacy enforcement actions from governments around the globe, major tech companies are now grappling with a slew of new potential threats from individual states, writes Kim Hart.

Why it matters: Local governments are more nimble and have higher levels of public trust than Congress, so they have more latitude to get laws passed quickly.

  • That's a problem for tech companies that are trying to shore up public trust while also fighting back an array of regulatory assaults.

The big picture: State attorneys general have been particularly active under the Trump administration, acting unilaterally to go their own way in some cases, and uniting to fight Washington in others.

  • Aggressive state AGs with an interest in tech often move into higher profile political roles — such as former Missouri AG Josh Hawley, who's now a Republican senator and a vocal critic of Big Tech.
  • There's also former California AG Kamala Harris, a presidential candidate who, as a senator, has been tough on data privacy and election security.

At the state level, populist movements on the right and the left may converge on some tech-related issues, such as perceived partisan bias and business market dominance.

  • Cities and states are also showing an appetite for intervening in the gig economy, which is expected to have ripple effects far beyond firms like Uber, Lyft and Doordash.

Sign up for Kim's Axios Cities newsletter here.

4. Media goes all-in on tech coverage

Illustration: Aïda Amer/Axios

Media investigations of Big Tech are ushering in a new era of oversight into the industry, writes Sara Fischer.

News outlets around the globe are expanding their tech coverage, adding new teams, reporters and areas of focus to the beat.

  • More hiring: CNN, the Washington Post, the Financial Times and the New York Times continue to expand their tech reporting teams to cover tech policy, not just gadgets and games.

Between the lines: Media companies are increasing their investments in tech coverage as a way to fill an expected void in interest in politics after President Trump departs office, and as a way to make up for years of rosy, consumer-focused coverage.

Sign up for Sara's Axios Media Trends newsletter here.

5. The consumer compromise

Illustration: Sarah Grillo/Axios

A decade after consumers opened their lives to Big Tech, they're beginning to realize that a phone in every pocket and a screen in every face comes with consequences, writes Erica Pandey.

What's happening: With every breach of privacy and misuse of data, consumers' optimistic view of Big Tech platforms as forces for good is turning cynical. Users are becoming increasingly aware of the data and privacy they give up in exchange for free services.

The big picture: Trust in tech giants is falling — fast.

  • Per a Harris Poll survey earlier this year, Facebook's reputation rank among the world's 100 most visible companies fell from 51 in 2018 to 94 in 2019.
  • Google fell from 28 to 41; Apple, from 29 to 32. Both Apple and Google were in the top 5 most trusted companies as recently as 2012.
  • Amazon remains the exception. The behemoth has remained at 1 or 2 for several years.

What to watch: California is leading the charge to protect consumers' privacy with a new law that kicks in Jan. 1. The legislation will give state residents the right to know what personal data is being collected — and ask companies to delete it.

  • Look for this law to become a national blueprint for regulating Big Tech.

To read more from Erica, sign up for the Axios Future newsletter by her and Kaveh Waddell.

6. Yes, but ...

Illustration: Aïda Amer/Axios

Consumers aren't abandoning these platforms and products, writes Felix Salmon.

  • Tech giants like Google, Facebook and Amazon provide incredibly valuable services at negligible or zero cost. No wonder consumers flock to them.
  • Only one major tech company — Uber — has ever been damaged by consumers turning against it. There were no costs involved in switching to its almost identical competitor, Lyft.

Social networks take years to build and are almost impossible to replicate. Meanwhile, Google, Amazon, Apple and even Microsoft are building out ecosystems that have no real rivals.

  • Consumers love these companies' products, and even if they didn't, they have nowhere else to turn.

Our thought bubble: It's precisely because the tech giants have such an iron grip on consumers that they need effective government regulation.

Sign up for Felix's weekly newsletter, Edge.

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