big tech superisized ambitions总结
America's tech giants are spending heroic sums in an effort to stay on top. Good Is there any limit to the ambition and hubris of big tech firms? In October Mark Zuckerberg renamed Facebook Meta and described humankind's new future in virtual worlds. On January 18th Microsoft, worth more than $2trn, decided it wasn't big enough and bid $69bn for Activision Blizzard, a video-games firm, in its biggest-ever deal. The decisions are part of a vast new investment surge at five of America's biggest firms, Alphabet, Amazon, Apple, Meta and Microsoft—call them MAAMA. Together, they have invested $280bn in the past year, equivalent to 9% of American business investment, up from 4% five years ago. Big tech wants to find the next big opportunity, and our analysis of deals, patents, recruitment and other yardsticks shows that cash is flowing into everything from driverless cars to quantum computing. The shift reflects a fear that the lucrative fiefs of the 2010s are losing relevance, and the fact that tech's titans are increasingly moving onto each other's patches (the share of sales that overlap has doubled since 2015 to 40%). So they are all looking to swoop into new territory.
They also have an eye on the history of technology, which is littered with once-dominant firms that were brought down not by regulators, but by missing the next big thing. Fairchild Semiconductor ruled in the 1950s but now exists only in books. In 1983 IBM was America's most profitable firm but eight years later was loss-making after botching the move from mainframes to PCs. Nokia, once emingly invincible in mobile devices, fumbled the shift to smartphones. The MAAMAs spent the 2010s fortifying commanding positions, in business tools for Microsoft, ecommerce for Amazon, social media for Meta, and so on. The pandemic has boosted demand, from bored couch-surfers to startups in need of cloud computing. Apple and Alphabet are now larger than were US Steel and Standard Oil, the two mighty monopolies of the 1900s, measured by profits relative to domestic GDP. Yet past performance is not indicative of future results, and now all of them are limbering up for whatever comes next.
The problem is that nobody knows what it will be. But it will probably involve new physical devices that will superde the smartphone as the dominant means of connecting people to information and rvices. Whoever makes such devices will therefore control access to
urs. This explains why Apple is planning a virtual-reality headt to compete with Meta's Oculus range and Microsoft's HoloLens. Alphabet, Apple and Amazon have also all placed expensive bets on autonomous cars. And vast sums are being spent on designing specialized chips, and pursuing new approaches like quantum computing, to provide the processing power for whatever new devices emerge.
The MAAMAs' other priority is creating software platforms that will allow them to extract rents, by drawing in urs, and then relying on network effects to draw in even more. Hence Facebook's renaming and its $10bn annual spending on immersive online worlds, known as the metaver. Apple has been expanding the walled garden of rvices it provides to urs of its devices, moving into areas such as fitness class and television shows. Buying Activision may help Microsoft provide a richer experience for its gaming customers, while Mesh, a platform for virtua3D workplaces, is aimed at corporate urs (e Business ction). The cloud-computing platforms operated by Alphabet, Amazon and Microsoft literally charge rent to host computing environments for other companies.
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Governments, rivals and billions of customers, who already fear the firms are too powerful, may be alarmed by all this. One view is that the companies' large customer bas, and control of pools of data with which to train artificial intelligence (AI), give them an insurmountable advantage. Won't the giants u that to squash rivals? Yet all the new areas look competitive for the time being. Many other firms are in the metaver race, for example. "Fortnite", made by Epic Games, has more than 300m players worldwide, while Roblox has 47m gamers who spend 3bn hours a month on its platform. Nvidia, a chip firm, is moving into the space, too. Even Microsoft's Activision deal would rai its market share in gaming to only 10-15%—hardly a monopoly. In autonomous cars, big tech must contend with the likes of Tesla, GM and Volkswagen. Global startups raid $621bn of venture funding in 2021, far more than big tech invested (e Culture ction). And new rivals have emerged with unexpected speed in some areas, such as TikTok in social media.
Moreover, there is an outside chance that the new terrain will prove less prone to domination by centralized platforms. Deep learning technology, the dominant form of AI to
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day, relies on large amounts of data, but future forms of AI may not. Then there are the decentralized blockchain rvices owned and operated by urs, looly known as Web3. At the moment the have clunky interfaces, u up lots of energy and are not always as decentralized as they em. But in one area—decentralized finance, or DeFi—rapid improvements are already under way.
传真Nonetheless, the temptation is for regulators to clamp down preemptively. In 2020 Lina Khan, who is now America's top antitrust official, recommended that big tech firms be banned from expanding into adjacent areas. Some big antitrust cas may reach America's courts by 2023. And Europe may soon pass a sweeping Digital Markets Act, aimed at regulating big technology companies "ex ante"—that is, constraining such firms' behavior upfront, rather than punishing them later with antitrust cas (Margrethe Vestager, the EU's competition tsar, explains all on our "Money Talks" podcast)
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