While most businesses across the globe have been struggling to survive, the so-called ‘Big Five’ of Apple, Amazon, Microsoft, Alphabet (parent company of Google) and Facebook have seen record sales and profits since 2020.
Eye-watering gains of 62% rise in shares for Amazon and news of “the best quarter ever” for Apple are difficult to stomach, and this has prompted increased political scrutiny and the threat of heightened regulation. Alongside this, consumers are starting to get frustrated with these greedy tech titans and looking to the market for alternative platforms and technologies. But can anyone ever really compete with the Big Five? And as consumers would we actually cope without them?
What’s your a digital routine?
Jane wakes up with a sore back from a bad sleep. Once she’s up, opens her Microsoft laptop and checks her emails, she Googles back ache before going on Amazon to buy a new neck pillow. Once the pillow arrives she will probably take a cool picture of said pillow on her Apple iPhone post it on Facebook,
Jane, like many consumers have become habitual with a digital routine. This digital routine drives the success of the Big Five tech businesses. Each technology or platform feeds the other and we feed off each of them equally.
The sad reality is that life would be pretty difficult without the Big Five, we have become so accustomed to their existence we are almost dependent on them. A New York Times reporter recalls her attempt to avoid interacting with the companies, “I tried to live without the Tech Giants, It was Impossible”.
As a collective, the Big Five have unrivaled dominance. This is not solely due to their financial positions, nor is it just because of their status or longevity. They work together to cement their position in the market. Firstly they use horizontal integration; as each of them expands their reach they are gradually expanding across all markets ensuring they own news outlets, food and retail, even more recently healthcare.
The Big Five also use interdependence strategies, in that they need each other to develop, for example Netflix has to run on Amazons Wed Service Platform.
Another huge win for the Big Five is that they have an unrivaled access to consumer data. From Facebook profiles to google searches to what you choose purchase between these tech companies they know more about you than your own family!
Eliminating the competition
We know that with size comes power. Collectively, the Big Five have acquired more than 730 companies in the past few years, this is their way of eliminating the competition.
The world is full of innovative entrepreneurs with big dreams, incredible start up ventures. The truth is that the Big Five can tempt those startup employees with crazy salaries and “selling them the dream”. Furthermore if the Big Five deem the startup as a threat or see it’s potential they will acquire the business therefore fundamentally taking ownership.
The Big Five also have the power to change alogrithms, which could not only wipe out other companies that are reliant on certain tech platforms. But can also alter what we as consumers see and manipulating the choices we make without us even realising.
Can anyone dethrone the Big Five?
To compete with the Big Five, realistically a business would need to be a trillion-dollar business… so it is quite niche! However there are some businesses that are making waves in tech:
- TSMC, founded in Taiwan. TSMC is the largest contract chip-maker in the world. The Financial Times called described as “possibly the most important company in the world that few people have heard”. The business is currently producing a chip that could be up to 70% faster and more power efficient than existing chips and will be used in smartphones and supercomputers.
- Tencent one of China’s biggest Tech businesses was on track to be a trillion dollar business but faced some set backs in 2020. Tencent, the social media and gaming giant has struggled with pressure from the Chinese government. However it should not be ruled out, the business is overcoming challenges and investing with many gaming titans!
- Alibaba has always been pitted against Amazon as as the king of E-commerce. Currently ranking 8th in a ranking of the world’s biggest public companies they need credit where it’s due. Unlike Amazon Alibaba does not have their own warehouses. While they are an extremely profitable business they are facing challenged Alibaba looks profitable, the company is facing strong barriers in finding new customers and adapting to new economies.
- Baidu, a search engine focused on the Chinese market. Very similar to Google as a platform and uses the same systems but while Google remains the lead in global internet searches, Baidu is the go to search engine in China. Just like Google, Baidu is expanding and now covers search products, social products, location-based products, music products, PC client software, mobile products, games and more. Baidu is also expanding into AI and looking to transform the transportation, so watch this space!
- Duck, Duck Go – is a fast growing privacy-preserving search engine. Unlike Google, Duck Duck Go will generate the same results irrespective of who is making the search. The platform also will never store or collects personal data on its users or take a record of the searches people perform. While financially it lags a way behind the “trillion dollar business” club; it does stand apart with its unrivalled usability. There is no doubt as awareness grows of the importance of data privacy, space will open up for platform just like this.
So where does this leave us now? The most likely challenges to the big tech companies will come from policymakers in the two biggest markets: the US and the EU. The good news is that there are changes coming, and a better outcome than breaking up these businesses would be for them to step up and embrace responsibility. The Big Five have pledged to reduce their emissions to net zero by 2050. Microsoft has committed to become carbon neutral by 2030, Google claims to have already achieved their target of fully offsetting its emissions since 2007.
Plenty of businesses are pushing their way through the ranks that are certainly putting the pressure on the Big Five. Millions of consumers are also getting fed up, threatening to delete their social accounts, only shops small and shy away from these greedy tech titans. The problem is that default is king, and many users will never bother to change their habits. But perhaps companies that can offer simpler devices, or privacy-preserving platforms,can finally sway tech-weary consumers and pave the way for a smaller innovative business. Watch this space, a change is coming.