The New Web

January 17, 2022

Vs. the Old

Web
TECHNOLOGY

Meet Web3, which could replace the Big Tech powers, or be co-opted by them

If you’ve spent any time around the tech industry

recently, you’ve probably heard the good news about
Web3, the presumed next chapter in internet history.
The so-called Web 2.0 era, which was dominated by
a handful of social media platforms, is over. Web3
28 boosters say that instead of relying on Facebook—
now rebranded Meta Platforms Inc. to avoid any of
the bad vibes associated with social media—we’ll
soon be communicating using decentralized services
that will make the current fears of censorship by tech
monopolies passé.
THE YEAR AHEAD

Web3 applications are based on c­ ryptocurrencies,

Another Facebook election
Hot Seat: Fidji Simo
Bloomberg Businessweek
or digital tokens that are tracked on blockchains.
These tokens are distributed to an app’s early investors
and users, and can also be bought and sold on crypto­
currency exchanges. In ­theory at least, they’ll appre-
ciate as an app takes off. Venture capitalists invested
$30 billion in crypto projects last year, according to
research company PitchBook. Much of that went into
30 Web3 startups such as Sky Mavis, developer of Axie
31 Infinity, a b
­ lockchain-based video game; BitClout, a

The Intel era wanes 32 decentralized social network whose founder is known
Time for vat meat 32
by the pseudonym “­diamondhands”; and OpenSea,
Big infrastructure bucks 33
Edited by  Joshua Brustein and
a marketplace for nonfungible tokens, the digital col-
Max Chafkin lectors’ items known as NFTs.

To believers—like Marc Andreessen,
wh o s e ve n t u re c a p i t a l f i r m ,
Andreessen Horowitz, recently raised
$2.2  billion for a new crypto fund—
Web3 offers the chance to participate
in a vast utopian project while simul-
taneously getting in on a financial
boom. (Bloomberg LP, which owns
Bloomberg Businessweek, has invested
in Andreessen Horowitz.) Detractors
see the movement as a branding exer-
cise designed by tech investors to pre-
serve the mania for cryptocurrency
tokens. They point out that many of
the big Web3 investors are the same
people who backed Web 2.0. “It’s ulti-
mately a centralized entity with a dif-
ferent label,” tweeted Jack Dorsey, a
Twitter Inc. co-founder and chief exec-
utive officer of Block Inc., which, until
its recent blockchain-themed rebrand-
ing, was known as Square.
Andreessen responded to Dorsey’s
critique by blocking him on Twitter.
When Kelsey Hightower, a princi-
pal engineer at Google’s cloud com-
puting division, tweeted that Web3
Illustration by Angela Stempel
was just taking existing products and
“rub[bing] some cryptocurrency on it,”
an engineer at the crypto trading plat-
form Coinbase replied: “Google’s days
are numbered. We are coming for you.
Tick tock.”
Hightower says he was taken
aback. “This whole ‘I’m at war with
your employer, and you’re going to
be a casualty of this war’—that’s new,”
he says.
On the other hand, successful geeks
arguing bitterly about web architecture
is as much an aspect of Silicon Valley’s
culture as the hackathon or the fleece
vest. “People are very religious about
their beliefs,” says Li Jin, a co-founder
of the Web3 investment firm Variant.
For Jin, a web economy in which art-
ists and musicians sell NFTs directly
to fans would allow them to reclaim
power from Facebook, YouTube, and
other companies. She believes today’s
social media and Web3 will ultimately
coexist, but the idea that a fully real-
ized Web3 will simply replace it ratch-
ets up emotions on both sides, she
January 17, 2022
TECHNOLOGY
29
says. “We’re reaching a boiling point
in terms of popular sentiment against
technology incumbents and social
media platforms.”
The irony is that today’s incum-
bents mostly got their start trying to
THE YEAR AHEAD
do exactly what Web3 promises now:
to disrupt a previous generation of
gatekeepers in tech and media. Last
fall the entrepreneur and investor
Reid Hoffman described the “wild
idealism” of the early Web  2.0 era,
during which he started the profes-
sional social network LinkedIn. “The
reigning ethos was to minimize rules,
institutional hierarchies and gatekeep-
ing of any kind while enabling decen-
tralized networks and peer-to-peer
interaction,” he wrote in an essay for
a Knight Foundation conference on
internet history.
Bloomberg Businessweek
Web  2.0 did usher in an era of
decentralization, creating tools that
made it easy for anyone—in theory at
least—to reach an enormous audience
online. But the companies running the
social networks also collected huge
 January 17, 2022
stores of personal data, which they
milked for massive financial returns. In
2016, Microsoft Corp. bought LinkedIn
for $26  billion. Meta is worth more
than $900 billion.
To Hoffman, this was the natural
maturation phase that came after the
revolution. “You have this pattern,
where you get a decentralized plat-
form and then recentralize key fea-
tures that work better technologically,
or as businesses, or as infrastructure,”
he says. While Hoffman says he sup-
TECHNOLOGY
ports Web3, he predicts the same thing
will happen. “Everyone says this will
be decentralized forever. Well, no.”
In certain key areas, the shift
Hoffman predicts is already happen-
ing. OpenSea, the NFT marketplace,
recently stepped in when a New York
art gallery owner, Todd Kramer, com-
plained that a collection of 16 NFTs,
mostly cartoon images of bored pri-
mates, had been stolen in a hack.
OpenSea froze the NFTs, making them
effectively worthless. Although this
might seem like a sensible safeguard,
some users complained it was a viola-
30 tion of the promise of Web3, which is
that no centralized entity should be
able to restrict how individuals use
the digital assets they possess. By this
logic, OpenSea’s ability to stop some-
one from selling a stolen NFT is the
same as Facebook getting to decide
when something counts as misinforma-
tion. Allie Mack, an OpenSea spokes-
THE YEAR AHEAD
woman, said that the NFTs remain on
the blockchain and that the
company was simply enforc-
ing the rules of its platform
“to ensure the safety of our
customers and the growth of
the broader NFT space.”
The crypto world’s reputation as
a crazy new financial arena where
masses of random traders are get-
ting rich may also be overstated. A
recent study for the National Bureau
of Economic Research showed that
the top 1,000 Bitcoin holders con-
trolled about 15% of all the cur-
Bloomberg Businessweek
rency in circulation as of the end of
2020. And Chainalysis, a blockchain
research firm, recently found that
most NFT profits go to the traders
who have access to so-called whitelists,
which allow them to buy the new
tokens before they’re offered on the
open market.
Moreover, it isn’t clear that ­regular
people will be as excited about the dis-
ruptive power of Web3 as tech inves-
tors are. The currency of the social
media era was attention, which
encouraged everyone, for better or
worse, to go about their lives as if
they were celebrities. In Web3 every-
one is a day trader. Some gamers are
already expressing hostility to NFTs in
video games because they just want
to have fun, not manage a portfolio,
and companies such as the crowd-
funding service Kickstarter PBC have
gotten blowback for signaling interest
in Web3.
Tim O’Reilly, the investor and
entrepreneur who coined the term
“Web 2.0,” wrote an essay in December
titled “Why it’s too early to get excited
about Web3.” So far the predominant
way to participate in Web3 is to bet on
various tokens; the social networks of
the future are still mostly hypothetical.
The history of technology, according to
O’Reilly, is a repeated pattern where
people get overly excited about some-
thing, creating a bubble that eventually
pops, sometimes leaving something
useful behind. “I love the idealism of
the Web3 vision,” he wrote, “but we’ve
been there before.” �Joshua Brustein,
with Mark Bergen  � paigns at the good government group
Uh-Oh, a
Election Year
The political fight online in 2021 may
not have seemed calm, but 2022’s going
to be worse
2022 had barely dawned when
Facebook and Twitter waded into
their first big political controversy of
the year. On Jan 2., Twitter Inc. perma-
nently suspended the personal account
of Georgia Representative Marjorie
Taylor Greene, citing the Republican’s
continued use of the account to spread
misleading health information about
Covid‑19 in violation of the platform’s
rules. The next day, Meta Platforms Inc.
followed with a 24-hour suspension of
her Facebook account.
The move inspired predictable con-
demnation from Republican politicians.
“Welcome to the Woketopia,” tweeted
Florida Representative Matt Gaetz; Ohio
Senate candidate J.D. Vance tweeted
a screenshot of Greene’s suspended
account, along with a message: “These
companies need to be crushed.”
2022 is likely to be a year full of social
media companies making content mod-
eration decisions that politicians don’t
like. Elections create an incentive for
overheated or misleading claims, and all
435 seats in the House are up for grabs,
as well as 34 of the 100 Senate seats.
“Campaigns are using election disinfor-
mation in really novel ways, and we’re
going to see more of that in 2022,” says
Jesse Littlewood, vice president for cam-
Common Cause.
This puts the companies in an awk-
ward situation. Greene may be violat-
ing their policies, but she’s also a sitting
public official run-
ning for reelection. At
a time when most can-
didates rely on social
media to communicate
with voters, such a ban is effectively a
decision to keep someone from being a
full participant in electoral politics.
Republicans consistently accuse
Twitter and Facebook of abusing their
power, but Littlewood and other crit-
ics say social media companies allow
too much content designed to under-
mine voters’ faith in the integrity of
ILLUSTRATION BY OLIVIA FIELDS
the electoral system to spread on
their platforms.
In February 2020, Facebook employ-
ees outlined the ways its products could
be used to discourage voting, ­according
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