A growing number of multibillion-dollar internet companies are driving the transformation of industries and our techno-social practices and norms.
Billion dollar companies
Have you ever heard of GAFA? Google, Apple, Facebook, Amazon. More recently, with the rise of Netflix you may have noticed discussion of FAANG? Chances are that you will use a product or service from one or more of these companies today. They are arguably the most influential conglomerates shaping internet landscape. They have been formidable powers in creating new tech products, services and experiences that garnish huge volumes of users, and in doing so they have transformed industries and our techno-social practices and norms.
FAANG along with a growing number of emerging multibillion-dollar internet companies provide services we love, those we didn’t know we need and some we’d probably prefer not to use anymore but are locked-in. They generate revenues and capital worth at the scale of moderately wealthy countries. Together just Google, Apple, Facebook and Amazon have reached a market capitalization of $2.8 trillion, equivalent to the GDP of France. In addition, the user numbers for these corporations constitutes a notable proportion of the world’s total populations living in advanced economies.
The data visualization above shows ten of the biggest internet centric companies in the world. Considering the trend for software products to be cloud based, software companies are now integral to the internet ecosystem. This is why Microsoft and Apple are included for consideration. One should also note that the visualization seeks to identify key players in the internet business landscape, and communicate their (mass) economic scale and social footprints. Numbers were ascertained for the 2018 financial year and January 2019 market valuations. They are approximate and constantly in flux. For instance in 2018 Apple reached a trillion dollar valuation, which by the end of the year had decreased due to reduced iPhone demand.
Bigger and bigger
Name any of the internet mega corporations represented above and you could confidently assume they are aspiring for continued growth in their numbers, preferably exponential. The standard approach through increased monetization, new product creation and market expansion goes alongside vertical and horizontal integrations. Examples include Google’s purchase of artificial intelligence startup DeepMind or Facebook’s purchase of WhatsApp and Instagram or Apple’s purchase of Shazam.
Commentators warn that the size and power of these companies are concern for democracy and to functioning markets. They question the legality of these already huge companies growing bigger in light of anti-monopoly laws, as well as the ethics of business strategies they undertake. Practices contended include copyright infringement e.g. Google books, or Apple iPhone, lack of transparency in terms of use conditions and supply chain sources, offering products at a loss to stifle competition and undertaking product testing on people without notice or consent. Tax minimization or evasion is common practice (which admittedly is not limited to tech companies). With GAFA in mind, France and Germany recently agreed on a potential EU wide tax on tech giants, specifically targeting advertising revenue.
Whether we agree or not on the status of these companies as monopolies, they are impacting the nature of competition in the industries that they function. They also signal to emerging startups possibilities for business development success, including acceptable standards for the treatment of suppliers and product users. Scale is working well for their economics, however they need to pay greater attention to their roles in creating or exacerbating social, environmental and political challenges to ensure they are sustainable businesses operating under viable conditions in the long-term.
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