Big Tech

By | August 15, 2020
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Collective term for large technology companies including Google, Amazon, Facebook, Apple, and Microsoft

Big Tech,[1] or the “Tech Giants”,[2] are the largest and most dominant companies in the information technology industry, epsecially the “Big Five” American technology companies – Amazon, Apple, Google, Facebook, and Microsoft. Since the end of the 2010s, these five have been, besides Saudi Aramco, the most valuable public companies globally,[3] with each having had a maximum market capitalization ranging from around $500 billion to around $1.9 trillion USD at various points.

Some have speculated it may not be possible to live in the digital world day-to-day outside of the ecosystem created by these companies,[4] and concerns over monopolistic practices have led to antitrust investigations from the Department of Justice and Federal Trade Commission in the United States,[5][6][7] and the European Commission.[8] Commentators have questioned the impact of these companies on privacy, market power, free speech and censorship (including inappropriate content), and national security and law enforcement.[9] On the other hand, by providing cheap or even free services to consumers, they remain popular.[10]

Contents

  • 1 Membership and definitions
    • 1.1 Big Four
    • 1.2 GAFAM
    • 1.3 FAANG
  • 2 Market dominance
  • 3 Causes
    • 3.1 Globalization
    • 3.2 Oligopoly maintenance
  • 4 Antitrust investigations
    • 4.1 United States
    • 4.2 European Union
  • 5 Opposition
    • 5.1 Use of externally-generated content
  • 6 BATX and other tech companies
  • 7 Gallery
  • 8 See also
  • 9 References
  • 10 External links

Membership and definitions[edit]

The term ‘Big Tech’ is often broken down into more specific sub-groupings.[11]

Big Four[edit]

The “Big Four” includes Google, Amazon, Facebook, and Apple, commonly referred to as GAFA, ‘Gang of Four’ (after Gang of Four political faction in China), ‘Four Horsemen’ (after Four Horsemen of the Apocalypse), or simply ‘The Four’.[12][13][14][15]

Former Google CEO Eric Schmidt, author Phil Simon, and professor Scott Galloway have each grouped the GAFA companies together (Google, Amazon, Facebook, Apple), on the basis that those companies have driven major societal change via their dominance and role in online activities. This is unlike other large tech companies such as Microsoft and IBM, according to Simon and Galloway.[14][16] Eric Schmidt has excluded Microsoft from the grouping noting that “Microsoft is not driving the consumer revolution in the minds of the consumers.”[17]

GAFAM[edit]

A more inclusive grouping referred to as GAFAM or “Big Five”, defines Google, Amazon, Facebook, Apple, and Microsoft as the tech giants.[18][19][20][21] Besides Saudi Aramco, the GAFAM companies are the five most valuable public corporations in the world as measured by market capitalisation.[3] Nikos Smyrnaios justified the GAFAM grouping as an oligopoly that appears to take control of the Internet by concentrating market power, financial power and using patent rights and copyright within a context of capitalism.[22]

FAANG[edit]

In finance, ‘FAANG’ is an acronym that refers to the stocks of five prominent American technology companies: Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX); and Google (GOOG).[23][24] The term was coined by Jim Cramer, the television host of CNBC’s Mad Money, in 2013, who praised these companies for being “totally dominant in their markets”. Until 2017, FANG was limited to Facebook, Amazon, Netflix and Google.

Market dominance[edit]

an improperly-scaled graph showing the 10 largest corporations by market capitalization

Amazon is the dominant market leader in e-commerce with 50% of all online sales going through the platform; cloud computing, with nearly 32% market share, and live-streaming with Twitch owning 75.6% market share. Amazon is additionally the market leader in the area of Artificial Intelligence-based personal digital assistants and smart speakers (Amazon Echo) with 69% market share followed by Google (Google Home) at 25% market share. Apple sells high-margin smartphones and other computing devices, sharing a duopoly with Google in the field of mobile operating systems: 27% of the market share belonging to Apple (iOS) and 72% to Google (Android).[25][26] Alphabet, Facebook and Amazon have been referred to as the “Big Three” of digital advertising.[27] In addition to social networking, Facebook also dominates the functions of online image sharing (Instagram) and online messaging (WhatsApp). Google is the leader in online search (Google Search), online video sharing (YouTube) and online mapping-based navigation (Google Maps). Microsoft continues to dominate in desktop operating system market share (Microsoft Windows)[28] and in office productivity software (Microsoft Office). Microsoft is also the second biggest company in the cloud computing industry (Microsoft Azure),[29] after Amazon, and is also one of the biggest players in the video game industry (Xbox).

The tech giants have replaced the energy giants such as Exxon Mobil, BP, Gazprom, PetroChina and Royal Dutch Shell (“Big Oil”) from the first decade of the 21st century at the top of the NASDAQ stock index. They have also outpaced the traditional big media companies such as Disney, AT&T, Comcast and 21st Century Fox (“Big Media”) by a factor of 10.[30] In 2017, the five biggest American IT companies had a combined valuation of over $3.3 trillion, and made up more than 40 percent of the value of the Nasdaq 100.[25]

Causes[edit]

Smyrnaios argued in 2016 that four characteristics were key in the emergence of GAFA: the theory of media and information technology convergence, financialization, economic deregulation and globalization.[22] He argued that the promotion of technology convergence by people such as Nicholas Negroponte made it appear credible and desirable for the Internet to evolve into an oligopoly. Autoregulation and the difficulty of politicians to understand software issues made governmental intervention against monopolies ineffective. Financial deregulation led to GAFA’s big profit margins (all four except for Amazon had about 20–25 percent profit margins in 2014 according to Smyrnaios).

Globalization[edit]

According to Smyrnaios, globalization has allowed GAFAM to minimize its global taxation load and pay international workers much lower wages than would be required in the United States.[22]

Oligopoly maintenance[edit]

Smyrnaios argued in 2016 that GAFA combines six vertical levels of power, data centers, internet connectivity, computer hardware including smartphones, operating systems, Web browsers and other user-level software, and online services. He also discussed horizontal concentration of power, in which diverse services such as email, instant messaging, online searching, downloading and streaming are combined internally within any of the GAFA members.[22]

Antitrust investigations[edit]

United States[edit]

In 2019 and 2020, the Big Tech industry become center of antitrust attention from the United States Department of Justice and the United States Federal Trade Commission that included requests to provide information about prior acquisitions and potentially anticompetitive practices. Some Democratic candidates running for president proposed plans to break up Big Tech companies and regulate them as utilities. “The role of technology in the economy and in our lives grows more important every day,” said FTC Chairman Joseph Simons. “As I’ve noted in the past, it makes sense for us to closely examine technology markets to ensure consumers benefit from free and fair competition.”[31][32]

The spirit of the antitrust law is to protect consumers from the anticompetitive behavior of businesses that have either monopoly power in their market or companies that have banded together to exert cartel market behavior. Monopoly or cartel collusion creates market disadvantages for consumers. However, the antitrust law clearly distinguishes between purposeful monopolies and businesses that found themselves in a monopoly position purely as the result of business success. The purpose of the antitrust law is to stop businesses from deliberately creating monopoly power.[33]

Consumer welfare, not assumptions that large firms are automatically harmful to competition, should be the core consideration of any antitrust action. The consumer welfare standard serves as the “good reason” in antitrust enforcement as it appropriately looks at the impact on consumers and economic efficiency.[34] So far, it is not apparent that there has been a harm to consumer welfare and many technology companies continue to innovate and are bringing real benefits to consumers.[35]

Discussions of antitrust policy are often clouded by common myths about this widely misunderstood area of the law. For example, the Sherman Antitrust Act of 1890 criminalizes monopolistic business practices, specifically agreements that restraint of trade or commerce. At the same time, the Sherman Act allows organic creation of legitimately successful businesses that gain honest profits from consumers. The Act’s main function is to preserve a competitive marketplace. The Big Tech companies are large and successful companies, but success alone is not reason enough for antitrust action. A legitimate breach of antitrust law must be the cause of any action against a business. Antitrust law doesn’t condemn a firm for developing a universally popular search engine, such as Google, even if that success leads to market dominance. It’s how a monopoly is obtained or preserved that matters — not its mere existence.[36]

The correlation between alleged anticompetitive behavior and questionable online privacy practices is also far from clear. Antitrust law is narrowly tailored to protect consumers from business conduct that harms the competitive process itself. Questionable practices that relate to privacy, however, may require their own regulatory framework of online privacy laws.[36]

European Union[edit]

In June 2020, the European Union opened two new antitrust investigations into practices by Apple. The first investigation focuses on issues including whether Apple is using its dominant position in the market to stifle competition using its Apple music and book streaming services. The second investigation focuses on Apple Pay, which allows payment by Apple devices to brick and mortar vendors. Apple limits the ability of banks and other financial institutions to use the iPhones’ near field radio frequency technology.[37][38]

Fines are insufficient to deter anti-competitive practices by high tech giants, according to European Commissioner for Competition Margrethe Vestager. Commissioner Vestager explained, “fines are not doing the trick. And fines are not enough because fines are a punishment for illegal behaviour in the past. What is also in our decision is that you have to change for the future. You have to stop what you’re doing.”[39]

Opposition[edit]

Scott Galloway has criticized the companies for “avoid[ing] taxes, invad[ing] privacy, and destroy[ing] jobs”,[40] while Smyrnaios has described the group as an oligopoly, coming to dominate the online market through anti-competitive practices, ever-increasing financial power, and intellectual property law.[22] He has argued that the current situation is the result of economic deregulation, globalization, and the failure of politicians to understand and respond to developments in technology.

Smyrnaios recommended developing academic analysis of the political economy of the Internet in order to understand the methods of domination and to criticize these methods in order to encourage opposition to that domination.[22]

Use of externally-generated content[edit]

On 9 May 2019, the Parliament of France passed a law intended to force GAFA to pay for related rights (the reuse of substantial amounts of text, photos or videos), to the publishers and news agencies of the original materials. The law is aimed at implementing Article 15 of the Directive on Copyright in the Digital Single Market of the European Union.[41]

BATX and other tech companies[edit]

See also: BATX

There were also two Chinese technology companies in the top ten most valuable publicly traded companies globally at the end of the 2010s – Alibaba and Tencent. Smyrnaios argued in 2016 that the Asian giant corporations Samsung Electronics, Alibaba, Baidu and Tencent could or should be included in the definition.[22] Together, this has been referred to as “G-MAFIA + BAT”,[42] also including IBM. While a dominant presence in the mobile telephony marketplace, Samsung Electronics is presently dependent on the Android ecosystem, in which Google has major influence, hence Samsung is not included in the BAT formulation.

“BATX” is also used to refer specifically to the large internet companies in China.[43] “BATX” stands for Baidu, Alibaba, Tencent, Xiaomi, the acronym for the four biggest [44] tech firms in China. The term BATX is used to refer to the biggest tech giants in China, counter-standing by GAFA (Google, Amazon, Facebook, Apple)[45] in United States. BATX are few of first tech companies started in the 2000s in the rise of Chinese tech revolution and became widely used among Chinese netizens. Notably, in the recently years after 2015, some other tech companies like Huawei, DIDI, JD and ByteDance have also became some of the up-and-coming biggest tech giants in the industry.[46][47]

Other big technology companies on a global scale include Samsung Electronics, Intel, IBM, Cisco Systems, Tencent and Oracle. Along with Apple, Google, Facebook, and Microsoft, they completed the list of top ten technology companies in the world at the end of 2010s, according to the Forbes Global 2000 list published in 2019, an evaluation based on annual sales, profit, assets, market capitalization, and overall market valuation.[48]

Gallery[edit]

  • Aerial view of Apple Park, the corporate headquarters of Apple Inc., Cupertino, California

  • Microsoft headquarters (western side), Redmond, Washington

  • Amazon headquarters, Seattle, Washington

  • Alphabet (Google) headquarters, Mountain View, California

  • Facebook headquarters, Menlo Park, California

See also[edit]

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  • Internet portal
  • Companies portal
  • Big Three (automobile manufacturers)
  • Big Three (management consultancies)
  • Big Four accounting firms

References[edit]

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  • External links[edit]

    • How Amazon, Apple, Facebook and Google manipulate our emotions – Scott Galloway at TED


    Retrieved from “https://en.wikipedia.org/w/index.php?title=Big_Tech&oldid=972964721”

    Source: https://en.wikipedia.org/wiki/Big_Tech


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