Big tech provided the world with some startling numbers this week. In the last three months Amazon’s sales have averaged over $1.2bn a day. It took the company less than four seconds to earn the $52,000 the average American makes in a year. Apple is now sitting on nearly $200bn in cash, more than this year’s expected sales of Covid 19 vaccines.
The coronavirus shook the world economy to its core but for the US tech giants it has proven a bonanza of historic proportions.
In back-to-back corporate earnings releases Google, Apple and Microsoft all reported record-breaking quarterly sales and profits. Facebook doubled its profits and reported its fastest growth in five years. In the last three months alone the US’s five largest tech companies made combined profits of over $68bn.
When a company is as dominant as Amazon is in online retail, Google in search or Facebook in social media, competition gets ever harder, he said. Their huge cash piles mean they can buy out – a favorite Facebook tactic – or copy new entrants, investors will shy away from putting cash into potential rivals, and entrepreneurs will aim to sell out to their giant rivals rather than take them on.
And alongside all that cash comes political power and the means to fight any official or government that challenges them. “We are creating a political and corporate oligarchy that is fundamentally against a healthy democracy and competition,” said Collins.
Academics have long warned that the structure of the digital economy was likely to create a “winner takes all” scenario. And there are clear signals that governments around the world are waking up to that threat. Europe in particular has challenged big tech’s dominance and its globe-spanning ability to avoid paying taxes. The US has been slow to catch up and even recently threatened tariffs on the UK and other countries that were planning to impose new taxes on US technology companies.
But the Biden administration has also made key appointments that suggest tech’s easy ride is over.
In June scholar and prominent big tech critic Lina Khan was named chair of the Federal Trade Commission (FTC), the government body that oversees antitrust law and consumer protection. During her confirmation hearings Khan said she saw a “whole range of potential risks” around the tech companies. “One that comes up across the board is that the ability to dominate one market gives companies, in some instances, the ability to expand into adjacent markets,” she said.
Well, I guess we’ll have to see if Biden appointees can regulate these companies with any effectiveness. I’ll see it before I believe it. Of course, good appointees are necessary. But they also need to empowered and it’s not as if the regulatory state is exactly in robust shape these days.