Time to Break Up the Big Four
Back in July, in this space, I warned about the dangers of the emerging tech monopolies, principally the weaponizing of Amazon via its ownership of the Washington Post.
In the background, but very much part of the conversation, is Amazon's engorgement on the The Washington Post company, a once-honored (Watergate!) news organization that Amazon boss Jeff Bezos essentially bought for parts -- the main part being the still-influential newspaper in the Imperial City of Washington, D.C. This isn't so much of a financial investment as a form of protection money -- although Bezos had the chutzpah recently to whine about the deleterious effect of Google and Facebook on print's advertising base, and to make a pitch to the U.S. government for anti-trust protection.
Needless to say, a lot of readers begged to differ, citing the big, big savings and ease of shopping Amazon provides. At the same time, however, Amazon is keeping tabs on you, monitoring your purchases, pushing other products on you and, in the form of the hideous Alexa, listening in on you while you sleep. Throw in the electronic snooping of Facebook, Google and your iPhone, and we're heading for an Orwellian nightmare the shape of which is just now becoming apparent, even on the Left:
SILICON VALLEY’S TAX-AVOIDING, JOB-KILLING, SOUL-SUCKING MACHINE
Four companies dominate our daily lives unlike any other in human history: Amazon, Apple, Facebook, and Google. We love our nifty phones and just-a-click-away services, but these behemoths enjoy unfettered economic domination and hoard riches on a scale not seen since the monopolies of the gilded age. The only logical conclusion? We must bust up big tech.
The sum of two decades of experience with, and study of, these companies leads me to a singular conclusion: It’s time to break up big tech.
Over the past decade, Amazon, Apple, Facebook, and Google—or, as I call them, “the Four”—have aggregated more economic value and influence than nearly any other commercial entity in history. Together, they have a market capitalization of $2.8 trillion (the GDP of France), a staggering 24 percent share of the S&P 500 Top 50, close to the value of every stock traded on the Nasdaq in 2001.
How big are they? Consider that Amazon, with a market cap of $591 billion, is worth more to the stock market than Walmart, Costco, T. J. Maxx, Target, Ross, Best Buy, Ulta, Kohl’s, Nordstrom, Macy’s, Bed Bath & Beyond, Saks/Lord & Taylor, Dillard’s, JCPenney, and Sears combined.
Meanwhile, Facebook and Google (now known as Alphabet) are together worth $1.3 trillion. You could merge the world’s top five advertising agencies (WPP, Omnicom, Publicis, IPG, and Dentsu) with five major media companies (Disney, Time Warner, 21st Century Fox, CBS, and Viacom) and still need to add five major communications companies (AT&T, Verizon, Comcast, Charter, and Dish) to get only 90 percent of what Google and Facebook are worth together.
And what of Apple? With a market cap of nearly $900 billion, Apple is the most valuable public company. Even more remarkable is that the company registers profit margins of 32 percent, closer to luxury brands Hermès (35 percent) and Ferrari (29 percent) than peers in electronics. In 2016, Apple brought in $46 billion in profits, a haul larger than that of any other American company, including JPMorgan Chase, Johnson & Johnson, and Wells Fargo. What’s more, Apple’s profits were greater than the revenues of either Coca- Cola or Facebook. This quarter, it will clock nearly twice the profits that Amazon has produced in its history.