This article can be read in German here.
Let’s have a look at the following list of common points of criticism, alleged weaknesses, (pr) scandals and public missteps that many of today’s leading internet and IT giants are well familiar with from the various parts of their life cycle.
- “One trick pony” – a business and revenue model based on only one pillar, which eventually will collapse.
- Costly “moonshots” – experimental projects completely unrelated to the current business model which won’t be contributing to the company result for a long time.
- Overpriced, highly speculative acquisitions of companies that maybe one day might become a threat or revenue source.
- Lack of profitability
- Massive overvaluation.
- Burning of investor money.
- Unethical predatory competition.
- Unfair exploitation of a leading market position / tendencies to become monopolies.
- Violations of data protection and privacy needs of users/customers.
- Lack of innovation regarding upcoming products.
- Introduction of features and changes which, at least initially, are not welcomed by the users/customers and are not in their interests.
- Blatant copying of functions or ideas from rivals.
- Negative impact of certain functions or products on the general well-being and happiness of users.
- Prevention of interoperability with other services and data portability through limitations of developer APIs.
- Creation of “walled gardens”.
- Changing user needs that will lead to people leaving a service in huge numbers.
- Participation in governmental surveillance programs which undermine the trust of users/customers.
- Editorial censorship based on questionable moral principles.
- Data leaks and security issues.
- Systematic violations of existing laws.
- Interference with Presidential elections.
That’s already quite a long list, and it’s likely not even complete. A few of these points are usually very quickly (and rightly) debunked. Many however are justified. Considering the sheer amount of apparent issues, one would have to assume that continued growth and prosperity would be impossible. As everyone is aware of, that’s not the case. On the contrary. Aside from struggling Twitter, there seems to be nothing that could stop Facebook (including WhatsApp and Instagram), Google, Amazon, Uber, Airbnb and Snapchat from expanding and from gaining ever bigger market shares in the increasing number of fields. The same probably would have to be said about the Chinese juggernauts such as Alibaba, Tencent (WeChat) and Baidu, even though their still prevailing focus on the (gigantic) local Chinese market requires a separate consideration. Even Twitter, despite what is already an infamously long period of perceived crisis, has still enough cash in the bank and managed to penetrate various key sectors of global public life, politics and media. So while radical changes to the product seem inevitable (I really really hope so!), Twitter (the company) won’t just suddenly go away either. What would Donald Trump be without it?
Considering this, it is time to make peace with the thought of today’s tech titans being indeed too big to fail. Not on a scale of thousand years of course, but for the foreseeable future. Decades, probably. No matter what they do, no matter the scale of their blunders, no matter how often and to what extend they upset customers, observers and regulators – they are unstoppable. Unless external events lead to an abrupt and total crash of the internet economy, these companies will be with us and keep impacting and shaping our lives for a very long time. That’s especially valid for Google, Facebook and Amazon. I’m not including Microsoft and Apple here since their legacy of hardware business still puts them into another category with different market dynamics at play. However, their business models are currently being adjusted to increasingly embrace digital services and the cloud. So the direction is similar.
What makes these companies so unbelievably strong and seemingly invincible to external pressure and criticism is how pervasive they have become in pretty much everyone’s essential aspects of daily personal and business life. Furthermore, incredibly large amounts of cash, the high desirability of their stocks and general optimism about future growth potential due to constant conquering of new markets means that any company which only slightly looks like an opportunity or a potential threat can simply be bought. The law of increasing returns, dubbed by Fast Company “The most important economic theory in tech”, plays its part too. And last but not least and possibly most importantly, most people and organizations simply are structurally and psychologically dependent on the offerings of the tech behemoths. Sometimes even addicted.
Of course no company is totally immune against the Innovator’s Dilemma, which refers to a state in which powerful, large companies stop innovating. Ben Thompson, well-known for his sharp and thoughtful analyses, points out that the technology industry risks looking and acting like the incumbents, increasingly focusing on keeping things exactly as they are and building products for themselves. I hope he is right. Currently, I’m not optimistic about that. As long as software continues “to eat the world” (which it certainly does) and today’s giants keep leveraging their network effects, their software and big data competence as well as their piles of cash, powered by a sheer army of the smartest talents on this planet, I have a hard time seeing Facebook, Google or Amazon being kicked off of their throne. Maybe one, yeah. But not all.
Nowadays I am wondering whether the concentration of a few global, vertically integrated tech companies might rewrite the laws that since the emergence of the modern economies dictated the rise and fall of businesses. This thought worries me. I sincerely hope it is wrong.
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