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.
It didn’t start that way. As the pandemic raged across America last April Amazon’s founder, Jeff Bezos, warned of “the hardest time we’ve ever faced” and said shareholders should “take a seat”. The company planned to spend $4bn or more in the next three months on coronavirus-related expenses – wiping out its entire profits for the quarter.
Shareholders needn’t have worried. On Thursday the company announced a $7.8bn profit after sales that topped $100bn for the third quarter in a row.
Money has poured in as Covid-19 supercharged the shift to online working, shopping and automation. There are signs of trouble ahead for the tech leaders but critics worry if the trend continues we will enter a “Blade Runner future” where our entire lives are controlled by a handful of super-rich, super-powerful corporations directed by a generation of plutocrats with wealth unseen in human history.
This week the combined fortune of the richest seven billionaires, all big tech titans, passed $1tn for the first time, according to the Institute of Policy Studies’ (IPS) Inequality tracking project.
“We are looking at a Blade Runner future, a world where a handful of companies will dominate all economic activity,” said Chuck Collins, senior scholar at IPS. “This is not just bad for the economy, it’s bad for consumers, for communities, for competition. There is real harm here,” he said.
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.
The Biden administration also recently added the antitrust expert Tim Wu, a Columbia University professor, to its national economic council. Wu has long warned that the dominance of a handful of giant tech companies threatens to stifle competition and return the US to an economy unseen since the Gilded Age of the late 1800s when “robber barons” controlled vast swaths of US industry.
“Extreme economic concentration yields gross inequality and material suffering,” Wu wrote in his 2018 book, The Curse of Bigness: Antitrust in the New Gilded Age.
Other threats loom. The Teamsters, one of the US’s largest and most politically powerful unions, is funding efforts to get Amazon workers unionized after the company crushed earlier attempts to organize its staff. The FTC and state attorneys general across the US have active investigations into the big tech companies.
On top of that Washington is no longer as tech-friendly – at least in public – as it once was.
Even some of tech’s biggest winners seem worried. Ten years ago Marc Andreessen, co-founder of Netscape, the once-dominant web browser, and a king-making investor who has backed companies including Facebook, Twitter and Skype, wrote – largely positively – that “software is eating the world”.
“Over the next 10 years, the battles between incumbents and software-powered insurgents will be epic. Joseph Schumpeter, the economist who coined the term ‘creative destruction,’ would be proud,” he wrote.
Now Andreessen doesn’t sound so sure. “The dreams came true; it all worked. And now we’re the dog that caught the bus. What do we do with this damned bus?” he told Substack writer Noah Smith this month.
“We went from being pirates to being the navy. People may love pirates when they’re young and small and scrappy, but nobody likes a navy that acts like a pirate. And today’s technology industry can come across a lot like a navy that acts like a pirate.”