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Techs Year In Review 2016 With Trump In The Wings

The image was startling, but a look into what could be tech's immediate future.

After being ostracized by the tech industry for most of the election year, there sat venture capitalist Peter Thiel, beaming, to the left of President-elect Donald Trump at the Trump Tower Tech summit in mid-December.

Around him was a ring of glum-faced and pensive tech titans, including Apple's Tim Cook, Amazon's Jeff Bezos, Alphabet CEO Larry Page and Facebook COO Sheryl Sandberg.

Silicon Valley's billionaire leaders had disavowed Trump during the campaign, throwing their weight behind rival Hillary Clinton. Only Thiel stumped for the real-estate mogul, and after the tech industry had turned on him for that and his role in Gawker's failure, he was luxuriating in the I-told-you-so moment.

The display of power portends a roiling year or two in tech. Trump railed against Amazon and Apple in tweets about corporate taxes and cyber security; now, he's likely to shape those issues as well as immigration reform, job creation, trade with China, deregulation and more, as he vowed during a bruising campaign.

"Tech is unusual in that the industry does not depend on government regulation or transfer payments, the way that banking, pharma, defense, agriculture and energy do," says Roger McNamee, founding partner of venture-capital firm Elevation Partners. "All tech needs is policy stability and access to global markets. Trump prides himself on being unpredictable."

The stunning development offered a fitting cap to what was a topsy-turvy year for tech, which generated $3.5 trillion in domestic economic output and accounted for more than 15 million people, or 8.4% of total U.S. employment, according to the Computer Technology Association.

In the year that was, there were winners and losers among companies and technologies; new faces emerged while others faded; and driverless cars and drones became more visible in our streets and sky.

Apple's revenue and iPhone sales subsided while Snapchat threatened established Internet leaders on its way to what is likely to be a blockbuster IPO. Yahoo seemed to nail down a protracted sale of itself, while Twitter's struggles made it a persistent source of takeover speculation. In the background, tech's legacy companies entered into a series of cloud and data deals aimed at growth and relevancy.

Uber expanded its growing empire into self-driving cars — not without a trademark dust-up with government authorities — and Amazon soared with drones and our spending habits.

But there were growing problems for Facebook, grappling with a fake news fiasco that turned away some users, and at some of the many units at sprawling Google-owner Alphabet, from Nest to Fiber.

High-profile meltdowns

Perhaps no subject loomed over tech — and perhaps the world — than cyber security.

Whether computer breaches that compromised the personal information of millions of consumers to a targeted hack by Russian operatives that conceivably tilted the U.S. presidential election, the very nature of conflict transformed this year, says McNamee.

And with the advent of the Internet of Things, the battlefield could extend to our homes, warn security experts. In October, malicious software that lets hackers take over home devices like DVRs helped cause a massive Internet outage along the East Coast.

"One of the biggest trends is the world waking up and realizing that connected IoT devices need security," says Talal Shamoon, CEO of computer security company Intertrust.

Samsung's stumble with the self-igniting Galaxy Note 7 was an epic meltdown of quality control, distribution and marketing. Though it didn't dislodge the South Korean electronics giant as the pre-eminent smartphone seller globally, it undercut customer trust and raised questions on how the company will bounce back.

Speaking of hacks and meltdowns, Yahoo disclosed it had been the victim of two mega-hacks that compromised more than 1.5 billion accounts and put its $4.8 billion deal with Verizon in jeopardy.

Amid grousing from Verizon General Counsel Craig Silliman, who said breaches could "impact" the value of Yahoo, Yahoo’s reputation is likely to take a big hit, says Nir Kossovsky, CEO of Steel City Re, which insures companies against the financial impact of breaches and other damaging disclosures.

Our friends, the bots

The hit TV show Westworld, about a futuristic park run by robotic "hosts," foresaw a society increasingly intertwined, and dependent, on artificial intelligence, bots and automation. Sound familiar?

Artificial intelligence is officially a craze — Facebook, Apple, Google and Microsoft are among those with aggressive plans. Virtual reality became more of a reality.

Drones are popping up in all shapes and sizes — 7-Eleven has been regularly delivering goods to consumers in Reno. Amazon, meanwhile, made its first drone delivery in the United Kingdom this month and Google X delivered burritos at Virginia Tech in September.

Self-driving cars took to the streets in Michigan, Pennsylvania, Arizona and California. Fully autonomous cars won’t be available for a few years, but a Morgan Stanley study estimates they will lead to productivity gains of $507 billion annually as consumers spend less time commuting and more time in meetings, writing reports and other business tasks.

Bots were ubiquitous, especially in the spread of fake news.

"Autonomous technology and AI became mainstream in 2016 with self-driving Teslas and new virtual assistants like the Amazon Echo," says Matthew Howard, managing partner at Norwest Venture Partners. "While we now have a clearer picture of where this technology is headed, we’re still only in the first inning (for the second coming of) AI."

There was nothing fake, however, over fears on what AI and increased automation will do to the workforce. This is sure to draw the attention of Trump, who lambasted Apple for exporting jobs overseas and discussed jobs creation in the two-hour tech summit this month.

Automation will have a profound impact on jobs across all Fortune 500 companies — not just Silicon Valley, says Box CEO Aaron Levie. "Tech is at the bleeding edge of the sphere on so many issues," he says. "It will be extremely interesting to see" how Trump's roundtable shakes out.

The Trump effect

Speaking of the 45th president, his focus on immigration reform will undoubtedly pinch H-1B visas and heighten the urgency for increased STEM education, which was discussed at December's summit. What is unclear is how it might play into tech's stuttering attempts to become less homogenous by hiring more of the women and minorities who buy its products but have little role in their design.

There are 500,000 computing jobs open in the U.S., with an expected 20% growth rate over the next decade — yet only 55,000 bachelor degrees in computer science were doled out in 2014, according to Code.org and the Bureau of Labor Statistics.

"It's more important than ever," says Dennis Yang, CEO of Udemy, an online learning marketplace with more than 14 million students in 190 countries. "Independent of what the administration does, let's be real: Jobs increasingly will be adversely affected by automation. Tech will create jobs, but they will be super high-end, most likely for the building and programming of robots."

Tech's impasse with the Trump administration over job creation seems inevitable, but there may be hope. In his meeting with the reluctant CEOs, Trump vowed to keep the channels of communication open and meet quarterly.

2017 and beyond will tell.

Courtesy of USAToday

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