Meet the plucky firms that are beating big tech
BIG TECH keeps getting bigger. So far this year the combined market value of America’s five digital behemoths—Alphabet, Amazon, Apple, Meta and Microsoft—has soared by half, to around $9trn. That is almost a quarter of the total for the S&P 500, an index of America’s largest companies (which has risen by just 17% in the period). The five account for almost 60% of sales, profits and spending on research and development of all the technology firms in the index. They are widely expected to be the main winners from the artificial-intelligence (AI) revolution.
Governments view this dominance with increasing trepidation. On September 12th America’s Department of Justice began a courtroom showdown with Google and its corporate parent, Alphabet, in the biggest antitrust case in two decades, accusing it of abusing its internet-search monopoly. This month an eU law labelled the big five as digital “gatekeepers”, which bars them from bundling certain services and discriminating against third parties on their platforms, among other things. The tech giants have grown so gigantic, the world’s trustbusters argue, that they suck all the oxygen out of the technology ecosystem, driving challengers to extinction or, at best, making it hard for anyone else to prosper. Just ask Snap, Spotify or Zoom.
Like natural ecosystems, though, commercial ones present opportunities for newcomers. To keep growing at the blistering rates their investors expect, the big five pay most attention to markets vast enough to make a meaningful difference to their revenues, which collectively touched $1.5trn last year. That means they ignore certain areas that are smaller but potentially still lucrative. The ingenious companies that identify such niches and are able to exploit them don’t just get by, but thrive in the shadow of the giants.
2023-09-12 13:19:30
Article from www.economist.com
