This week: as Instagram tries to become more like TikTok, small businesses protest.
Sandra Peter (Sydney Business Insights) and Kai Riemer (Digital Futures Research Group) meet once a week to put their own spin on news that is impacting the future of business in The Future, This Week.
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Kai So, have you signed the petition yet?
Sandra The Instagram petition?
Kai "MAKE INSTAGRAM INSTAGRAM AGAIN
Sandra (and stop trying to be tiktok i just want to see cute photos of my friends.)
Kai I think that's what we're going to talk about.
Sandra Yeah, let's do this.
Kai Let's do this.
Intro From The University of Sydney Business School, this is Sydney Business Insights, an initiative that explores the future of business. And you're listening to The Future, This Week, where Sandra Peter and Kai Riemer sit down every week to rethink trends in technology and business.
Kai Okay, before we come to the Insta, we have to mention a few short stories.
Sandra Some of them really do fit our weird and...
Kai Wonderful, yeah.
Sandra Weird and wonderful theme. Like the 1 million square feet of LA's roads, which are being covered with solar reflective paint. This seems to be a really cool initiative coming out of the US. And the idea is to cover roads and playgrounds and parking lots and basketball courts with reflective paint to try to lower the temperature in cities. And we all know cities can get really, really hot, we have a lot of concrete, a lot of pavement that absorbs heat, and hence the temperature in the cities is always much higher than in the countryside. So the idea behind this project in LA was to paint roads and playgrounds with a paint that has special additives that reflect infrared light rather than absorbing it. Which means less heat, which means cooler temperatures in summer. And it's really quite cool. Most of it is grey, but they do actually have colourful paints, and they're commissioning murals and all sorts of interesting designs. And for now, the data is not in yet because they've just done this, but the team behind this has noted that there's almost a 15 degree Celsius, that's about 30 degrees Fahrenheit difference between pavement that is treated with the reflective paint versus just normal pavement.
Kai And that's really interesting, because in LA, since 2016, there's a mandate to have bright coloured roofs for the same reason, to reduce the heat island effect of cities, where citizens must choose from six colours from white, off-white, greenish-tan, but not black or graphite, which was used on many roofs before for the same kind of reason. And so they've extended this to roads and streets now apparently.
Sandra There have been a few interesting artificial intelligence stories in the news. A team at MIT looking at using artificial intelligence to analyse X-rays and CT scans was able to train a deep learning algorithm to actually identify the race of patients without anything other than the scans as input data. That is being able to analyse images, X-ray, CT scans, and being able to tell whether a person is black or white, or of Asian descent.
Kai This is a really interesting story because it highlights two characteristics of these deep learning algorithms. One is they can sometimes pick up patterns that are invisible to humans. So the team was really surprised that you could actually infer race from just the scans, because the human experts that were looking at those are still puzzled by how the AI quite reliably does this because we do not know which features in those images actually contribute to that, and that's the second characteristic.
Sandra Blackbox algorithms. The team at MIT tried to forensic this. So they looked at differences in things like bone density, or the resolution of the images or things that have to do with anatomy to try to figure out what the algorithm is picking up. And they have expressed quite a bit of concern, because the researchers were unable to tell what the algorithms might be using as a proxy. And obviously, these findings are, you know, on the one hand, quite interesting, because it just shows the power of AI and machine learning algorithms and doing new novel things, finding patterns in the data. On the other hand, they raise concerns as we lose, for instance, the ability to identify data, right?
Kai Yeah, it points to potential hidden biases in data when race can be identified by algorithms and potentially make their way into decisions in ways that are imperceptible to humans, right. So you've got the lack of explainability, but also potentially, that inherent bias.
Sandra Yeah. So what this points to is really a need to rethink how we design, how we develop, how we deploy, how we evaluate these algorithms. Again, a lot of that work we do here at the University of Sydney as well, the two of us have been teaching the AI fluency sprint, there's another one coming up in October. But these stories just point both to the power of these algorithms, but also to the huge need to be thinking quite thoroughly about how we implement them in our organisations.
Kai And to educate the wider public about how these algorithms work and what the challenges are. But there's another story that is really significant, and that has to do with net zero, sustainability, creating a greener planet, and it comes again from China.
Sandra China is coming out on top in the EV race. It took China less than a decade to get to the top of the EV market. But for the first time, BYD, and we did a couple of episodes on BYD in the past.
Kai Buses, right?
Sandra Yeah, they are known mostly for buses, and we'll put links in the shownotes. But BYD, this is China's largest carmaker, it's based in Shenzhen and it's backed among others by Berkshire Hathaway. It outsold Tesla for the first time in the first half of this year, that's 640,000 vehicles compared to 560 that Tesla sold in the first half of the year.
Kai And the company is massive, right? It's got a market cap that is bigger than Ford and GM 's market cap combined. It is growing fast. And it is a key pillar in China's relentless strategy to move towards renewables and to make its economy carbon neutral.
Sandra And it comes at an interesting time because this week as well, we had in California state regulators voting on a proposal to ban the sale of petrol cars by 2035. So EVs are front of mind all around. But that's not our big story for this week.
Kai No, the big story that has made headlines is again, a social media story, and it's got again to do with one of the big tech giants, in this case, Meta and its beloved, or much-hated product, Instagram.
Sandra And there's really an interesting business angle to the story beyond the kind of social hype, it's done the rounds this week, on all the late-night comedy shows, on all the news shows, probably in your own Instagram feed if you're on Instagram.
Kai The Kardashians have gotten involved, that's how serious this topic got, at least on Instagram.
Sandra So what's happened?
Kai Instagram is making changes that brings it closer in look and feel and in how it works to TikTok.
Sandra Meaning that Instagram is now preferencing videos over the traditional format that Instagram had, which was pictures, but more importantly, that it's now going to use an algorithm.
Kai To insert recommended posts, recommended content, into people's news feeds.
Sandra So first thing we need to discuss here is why are they doing this? Because people's first question is, 'why, why change how Instagram works? Why move to video, when you have a platform that is traditionally focused on something else? Why do this, given the outrage?'. And there's a very simple business case for why that's happening.
Kai One quick look at how Facebook's, or Meta's, share price has progressed this year and how user numbers on TikTok have progressed will give you an early indication of where the problem is. Meta is losing ground. Meta has, for the first time in quite a long while, a veritable competitor in the social media space. And that is of course TikTok. And while the growth in user numbers in TikTok is impressive, and certainly one reason, it is likely another stat that has Meta up in arms.
Sandra And that has to do with time spent on these platforms. We know more time spent on this platform equals more revenue for companies like Meta and TikTok. And people are spending a lot more time on TikTok. And again, we'll share the links in the shownotes, we have pretty good numbers out of the global digital report that Simon Kemp puts out, every year he looks at 230 countries and what people do, how people use the internet. The numbers for TikTok are staggering. On average globally, people spend about 19.6 hours a month, that is almost a full day a month on TikTok. And for countries like Australia, and the US, and the UK, those numbers are even higher. So in Australia we spend over 23 hours on TikTok, in the US people spent over 25 hours on TikTok, and in the UK people spend over 27 hours a month on TikTok. Those are huge numbers compared to Instagram.
Kai So for Instagram globally, it's 11.2, contrasting with the 19.6. But that drops off in those key markets, UK, US, Australia, to around eight hours per day in each of those.
Sandra So on average, eight hours a day versus 24 hours on these markets.
Kai So more than three times the time spent on TikTok than Instagram.
Sandra And there's another interesting stat out of Simon's research. And Simon, of course, is a friend of the program, he's been on a few times. But an interesting observation this year for him was that two thirds of the total world population should be online by this time next year. That means that it's fairly safe to assume that we're now kind of very close, or indeed have reached, this like inflection point in digital growth. So it's not likely that any of the social media platforms will just pick up new users as they come online. So this battle is now more important than ever.
Kai And TikTok is capturing key demographic, which is young people who are very engaged on the platform. And it does that by offering video content.
Sandra And this is where people might say, 'oh, you know, Instagram's always changed their business model. And they've always tried to copy other companies that have been popular in the market, there was the Snapchat era', and so on, they've made quite a few changes over the years. But there's something different this time around.
Kai Yeah, previously, 2016/17, they brought out Stories, which copied the Snapchat ephemeral content, and they layered that on top. And actually successfully, because they outpaced Snapchat in the wake of that. And it's widely regarded that Snapchat's growth was stunted by that move of Instagram introducing similar features. But something is different now. And Instagram has been struggling with TikTok for quite a while. They introduced Reels, which is the video content already in 2020. And that was at a time when it looked like TikTok might be outlawed in the US by the Trump administration. But that obviously hasn't happened. So unlike with the Snapchat episode, TikTok continues to grow. While Instagram hasn't quite been successful with its video content. So the latest change goes further.
Sandra Yeah, it goes straight to the heart of how Instagram works. And the algorithm will now decide what you're seeing in your feed. So rather than preferencing people you follow on Instagram, influencers or, you know, shops, friends, that you follow on Instagram, the preference will be given not only to videos, but to content that they think will engage you over content that you necessarily subscribe to.
Kai And that presents quite a change for Instagram as a platform. We know that in Twitter, and in Facebook, algorithms have for quite a while played a big role in filling people's news feeds. TikTok is at its very core based on algorithmic distribution of content. But Instagram was one of those platforms that was still based on the idea of the social graph, where you get to see in your feed the content of the people you're actually following. And that is at stake now. That is what Meta wants to fundamentally change.
Sandra And to be fair, it would follow what Meta is already doing with Facebook. We actually do research on this. It's a phenomenon called 'algorithmic audiencing', and again, we'll put links in the shownotes. But this idea of the algorithm deciding who gets to see what content rather than preferencing, a person's social network or their explicit preferences.
Kai And we've discussed this in the context of free speech, again, we put the link in the shownotes. But the idea that when I say something, I'm not just speaking to my followers anymore, but whoever the algorithm decides should hear my message, be that a larger audience or a smaller audience. So really the algorithm organising how content is distributed on the platform.
Sandra And this is where our story for today comes in. And I realise now we've taken a fairly long break and we forgot to mention the story at the beginning of the episode.
Kai That is what we do, isn't it?
Sandra But this is where the story comes in. And our story this time is from CNN, the entertainment slash news outlet, and it's titled, "They built their businesses on Instagram. Then the platform changed". And it goes to the heart of what this change actually means, not just for Instagram as a business, but for businesses that are built on top of Instagram.
Kai So algorithmic audiencing makes it much, much harder for small businesses, for influencers, for all those who have built a profitable business on their Instagram followership to reach those followers, because now they're talking to an algorithm that then distributes content, rather than directly to their follower network.
Sandra So, CNN gives the example of a construction worker who lost her job early in the pandemic, and then decided to try selling vintage furniture and vintage housewares on Instagram. And they talk about the fact that her little shop took off during the pandemic, about 6000 followers who would buy vintage furniture and vintage clothing. So this 30 year old single mom living in New York was able to make her Instagram shop her full time job and sole source of income. But with the new change to the algorithm on Instagram, she realised that many of her followers and many of the people who used to buy from her, were not seeing her posts, hence, she was selling fewer and fewer things. And she realised by talking to some of these people that they were never getting to see their posts, because the algorithm now got to decide what her customers were seeing.
Kai So customers are getting all kinds of things in their feeds from people that they don't follow, 'recommended' posts that Facebook has always had, but would normally added to the bottom of someone's newsfeed, or now inserted at the top to drive engagement. And as the algorithm starts privileging video content, the beautiful pictures of vintage furniture that Kaitlin would post are now relegated as content that is less engaging. So people would only come across some of her content weeks or months after she posted it.
Sandra And this is quite interesting. So I follow a lot of shops on Instagram to see the content that they're selling. I started seeing fewer and fewer of those and seeing increasingly video content, and none of my shops really post video content. And small businesses built on Instagram are actually a really big thing everywhere around the world. Remember, Simon telling us the story of the goat herder in Iran that sells goats via Instagram. So any change to the algorithm that fundamentally disrupts the way these businesses work means a significant challenge to a number of small businesses.
Kai And of course, the platform was never built for this, it started out as just a photo sharing app where people share photos with their friends. But because a lot of content is visual, shops have very much adopted Instagram as a commerce platform, and Meta has built features into the platform to attract and support shops, you can now purchase things straight from Instagram from inside of Instagram posts. But this latest change seems to make life much, much harder for people who have built their businesses around Instagram as their main sales channel.
Sandra And this is where Instagram would come in and say, 'but hang on, now I'm putting your content in front of way more people. They don't have to follow you and I will show you know your vintage furniture or your vintage clothing or your goats to all these other people'.
Kai To which the shop owner would say 'yeah, that's well and good. But now I have to create videos for your algorithm to pick up my content and put it in front of people. Because now you're privileging video because you want to become more like TikTok.'
Sandra And that's likely to be much harder for a small business than it is for a larger, more established business.
Kai And it also doesn't really make sense in many instances. Now I have to swing my camera around this furniture, where a photo would be enough.
Sandra Yes. And I have to spend 10 seconds now looking at the video of your coffee table rather than just looking at the picture and scrolling past, hence...
Kai Which is exactly what Instagram wants, because that's where you spend more time, right? So you're basically bloating the experience to capture customers for longer to compete with TikTok.
Sandra It remains to be seen whether or not this is a good move for Instagram in the long run. It does seem that all platforms are moving towards video content, and video content does keep people more engaged. There is a chance that Instagram will be able to attract some of the content creators from other video platforms who have shied away from Instagram because it did not provide that outlet. But in the short term, it does pose a significant challenge to business models that have found a home on Instagram.
Kai Or maybe there is a space for a platform that is based around photo sharing and people might move elsewhere, shops might move to Pinterest. Or the backlash is so large that Instagram will rethink those changes.
Sandra And technically this is all we have time for today. But before we go we are talking about disruption here. Instagram disrupting themselves.
Kai And small businesses.
Sandra And small businesses. It is that time of the year, DISRUPT.SYDNEY conference is upon us Friday 16th of September. Early Bird tickets are available now. Keynotes include people like Simon Kemp, whom we've talked about in this very episode, Genevieve Bell.
Kai Who we're big fans of.
Sandra Who we're very big fans of, but also talks on artificial intelligence, blockchain, Metaverse, workshops on foresight on AI.
Kai That will be run by yours truly, the two of us will run a futures workshop.
Sandra And a special surprise, straight out of Ukraine, a digital humans demonstration by Respeecher. Come, spend the day with us, fully catered.
Kai And a special discount code for TFTW listeners in the shownotes.
Sandra That's all we have time for today.
Kai Thanks for listening.
Sandra Thanks for listening.
Outro You've been listening to The Future, This Week from The University of Sydney Business School. Sandra Peter is the Director of Sydney Business Insights and Kai Riemer is Professor of Information Technology and Organisation. Connect with us on LinkedIn, Twitter and WeChat. And follow, like ,or leave us a rating wherever you get your podcasts. If you have any weird or wonderful topics for us to discuss, send them to email@example.com.
Sandra But an interesting observation this year for him was that... please hold.
Kai Yahoo is still a thing.
Sandra Not that one.
Kai Not that one?