This article was originally published by AI Frontier.
Google, Facebook, Amazon, Apple, need to be disrupted


The author | SCOTT GALLOWAY


Compile | Debra Natalie


Edit | Vincent

“In the past, the Internet was wild and it was hard to see clear rules,” Liu qiangdong said at zhou Hongyi’s book launch last year. “Things have gotten better in the past two years, but the polarization is getting worse and traffic is becoming more concentrated.” Today, the global Internet industry is moving towards monopoly, which is a dangerous thing, so not only the enterprise to fight on, but also constantly appeal to promote the whole industry to civilization. That’s how you leave the door open for countless new entrepreneurs. If in 10 or 20 years, China is still BAT, jingdong and 360360, it will definitely be a bad thing for the country.” If China’s big four tech giants are BATJ, the rest of the world sees Amazon, Apple, Facebook and Google. How much do you know about the dark side that tech giants bring to our lives as we bring countless conveniences?”


Four companies — Amazon, Apple, Facebook and Google — have infiltrated our daily lives almost everywhere. We love beautiful phones and one-click service, allowing these behemoths to enjoy an economy they haven’t enjoyed since the Gilded Age and hoard vast wealth. In that case, what’s the only logical conclusion? We have to break the monopoly of the tech giants.

In fact, I’ve learned a lot from tech giants. Prophet, a consulting firm I co-founded in 1992, explores new possibilities in Google’s reinvention. If Amazon doesn’t spark interest in e-commerce, then Red Envelope, the upscale e-commerce company I co-founded in 1997, won’t. More recently, L2, a company I founded in 2010, won’t be sitting on the mobile and social bandwagon because it needs a new approach to performance testing on social platforms.

On another level, tech giants have done me good, too. In my portfolio, the appreciation of Amazon and Apple stocks after the Great Recession put our family finances back in order. Amazon is now also the biggest recruiter for the brand strategy and digital marketing courses I teach at NYU Stern school of Business. These companies have been great partners, clients, investors and recruiters. And based on more than two decades of working with and researching these companies, I’ve come to a strange conclusion: It’s time to break up these tech giants.

Over the past decade, the combined economic value and influence of Amazon, Apple, Facebook, and Google — what I call the tech giants — has surpassed that of almost any business group in history. With a combined market capitalisation of $2.8 trillion (French GDP), they account for 24% of the top 50 s&p 500 companies, a figure close to the value of every stock traded on nasdaq in 2001.

How big are they? Amazon’s market capitalization is estimated at $591 billion, That’s more than walmart, costco, t.j. Max, Target, Ross, best buy, Ulta, Kohl’s, Nordstrom, macy’s, Bed Bath&Beyond, Saks/Lord Taylor, dillard, JCPenney, and sears combined!

Or take Facebook and Google (now known as Alphabet), which together are worth $1.3 trillion. The top five global advertising agencies (WPP, Omnicom, Publicis, IPG and Dentsu) and the top five media companies (Disney, Time Warner, 21st Century Fox, CBS And Viacom), Together, the five largest telecom companies (AT&T, Verizon, Comcast, Charter, and Dish) are worth only 90% of Google and Facebook.

And apple? With a market capitalization of nearly $900 billion, Apple is the most valuable publicly traded company in the world. More significantly, its profit margin of 32 per cent is close to luxury brands Hermes (35 per cent) and Ferrari (29 per cent). Apple made $46 billion in profits in 2016, more than any other U.S. company, including jpmorgan Chase, Johnson & Johnson, and Wells Fargo. And Apple’s profits are higher than Coca-Cola’s and Facebook’s. This quarter, it will make twice as much profit as Amazon has ever made in its history.

The wealth and influence of the big four are staggering. What should we do?

As I wrote in My book The Four, The only way to create a company as dominant and influential as Google, Amazon, Facebook and Apple is to harness human nature as a core “organ.”


Google: A replacement for the brain

Our human brain can ask very complex questions, but it’s not equipped to answer very complex questions. Since the dawn of human society, we have often had to pray, look up to heaven and hope for an answer: “Is my child ok?” “Who will attack us? “

As Western societies became richer, religion’s influence in society waned. But the need for questions and answers creates opportunities. Thus Google was born and has become the “almighty God” in modern People’s Daily life. No matter what your education level or background, Google has the answer for you.

But, come to think of it, is there a group you trust more than Google? When you reveal all your secrets, questions, desires, and hopes to Google through the search box, who knows you better than Google?


Facebook: Appeal to the heart

Facebook has a huge appeal to our psyche. Research has found that feeling loved is a key factor in maintaining good health. According to a study of Romanian children, the real cause of orphans’ delayed or abnormal physical development is not malnutrition, but a lack of care from others. According to developmental psychology expert Susan Pinker about Italy Sardinia island of centenarians (the number of centenarians is 6 times of the Italian mainland, 10 times) is North America’s survey found, Sardinia centenarians very pay attention to the social relationship and personal face-to-face communication, other studies have found that longevity is not genetically determined, The secret lies in a good lifestyle, especially maintaining social relationships.

Facebook is a tool for its 2.1 billion monthly active users to rekindle their love for others, meet their need to express care and maintain social relationships, and serve as a bond between family and friends.


Amazon: Consume! Consumer! Consumer!

After food and clothing, people’s desires may not be satisfied, so they turn to consumption. Take a look in your closet and see if there are many things you don’t need.

Amazon itself is a giant consumer gut. It stores material and distributes it to the cardiovascular system of 64 percent of American households. It took the smartest strategy in the history of business — more is less — and made it work more than any company in history.


Apple: status symbol

After the survival problem is solved, the greatest instinct of human beings is the need to reproduce. As sexual animals, humans are more graceful, intelligent and creative to compete for more mating rights, and Apple understands this human nature from the early days. Apple became more than just a phone. It became a status symbol. It advertises in vogue, a luxury magazine, using models to create an image of luxury. It’s a sign of a better quality of life for its owner, and someone paying $1,000 for a Phone X is more likely to be a display of social status than a passion for facial recognition.

By appealing to all four of our organs, the tech giants are making us more insatiable and more expensive. But is what is good for consumers necessarily good for society?

The answer is yes. These four companies have had such an impact on our lives that it’s hard to imagine life without any of them.

Meanwhile, as we hand over more and more of our lives to a handful of Silicon Valley executives, people are talking about the downsides of these companies. Because they affect us so much, now some voices of concern, even hatred, are beginning to emerge, and people are beginning to seriously consider whether there should be government or institutions to step in and control the situation.

The four companies took a lesson from monopoly Microsoft: they used pr and lobbyists to build their public image.

However, they say nice things and do cunning things. By promoting something softer than profits, such as the science boom that grew out of the Manhattan Project and the Apollo missions, these companies convince their employees that they have a mission and create a different image for the public.

These pr strategies paid off handsomely, but they also pushed them to the edge. The higher you stand, the more painful the fall, as when you suddenly discover that a normally perfect person is actually a drug addict, the impact is double.

From my experience working at Internet companies, the employees of these four companies are just like the rest of us. They’re just a bunch of people exploring for a living, but with a little more education, luck and intelligence. If you had to choose between human well-being and Tesla, which one would you choose? Most people will choose the latter, and start trying to adapt to Tesla’s leadership culture. But does that mean they are worse or better? Of course not, it just makes employees more profitable.

Our annual government budget is about 21% of GDP. How much do these big companies pay in taxes? Is it fair to society? Most people would say no. Between 2007 and 2015, Amazon paid only 13 percent of its profits in taxes, compared with 17 percent for Apple, 16 percent for Google and 4 percent for Facebook. The average tax rate for S&P 500 companies is 27%.

Yes, these four companies are avoiding taxes, just like you… They’re just better at it.

Apple, for example, uses accounting tricks to shift profits to areas such as Ireland, allowing the world’s most profitable company to cut taxes. As of September 2017, the company had $250 billion in offshore assets that were barely taxable, but they shouldn’t have counted as offshore in the first place. That means the American company has enough cash overseas to buy Disney and Netflix.

Apple is not alone. Ge is also involved in massive tax avoidance, but we’re not that angry because we don’t like GE that much. This mistake was made by us and our democratically elected government. We need to simplify our tax code because complex rules tend to protect those who can take advantage of them, and we need to elect officials to enforce those rules.


jobs

The job destruction of these four companies has also been profound, even frightening.

Facebook and Google’s revenue grew by $29 billion in 2017. To operate and service this additional business, they will create 20,000 new high-paying jobs.

But the other side of the coin is not so bright.

Either digital or similar form of advertising is a low growth (flat) more and more business, this means that if the bank owner zero-sum (refers to the parties to participate in the game, under the strict competition, one party gains inevitably means that the other party’s loss, gains and losses of the game parties together sum for ever “zero”, there is no cooperation between the two sides may). Instead of making extra money from advertising, Google is using another company to make money. If we use the five largest media services companies (WPP, Omnicom, Publicis, IPG and Dentsu) as representatives of this industry, we can estimate that $29 billion in revenue will require about 219,000 traditional advertising professionals to service it. That means 199,000 creative directors, contributors and agencies each year decide to “spend more time with their families.”

The successful companies of the past employed more people than the ones making headlines today. P&g has a market cap of $233 billion and a workforce of 95,000, or $2.4 million per employee, after its share price rose in 2017. Intel is a new economy company, more capital efficient, with a market cap of $209 billion and 102,000 employees, or $2.1 million per employee. Meanwhile, Facebook, founded 14 years ago, has a market capitalisation of $542 billion and just 23,000 employees, or $23.4 million per employee, ten times more than Procter & Gamble and Intel.

Of course, unemployment is not uncommon. But we’ve never seen a company so good at causing job losses. Uber makes employees even less valuable, with 12,000 employees worth $68 billion, or $5.7 million per employee. Henry Ford’s coffin could hardly be weighed down by a company that wants drivers to take to the road and arbitrages the middle class.

But Uber is doing this by creating a two-tier employee approach, plus a new category: “driver-partner,” in other words, contractor. The drivers are not on its payroll, meaning Uber’s investors and 12,200 white-collar workers will not share $68bn of equity in the company with their “partners”. In addition, the company will not experience any inconvenience in not having to pay for medical or unemployment insurance for the 2 million drivers employed.

The destruction of jobs by tech giants allows them to collect more tax revenue, which the government can cushion with retraining and social services. But we should be careful not to allow the disappearance of jobs to be the only catalyst for intervention. The shift in productivity from farmers to factory workers, from factory workers to service workers, and from service workers to technicians is all part of the American innovation story. It’s also important to embrace the anomalies behind success.

Let’s have another look. What if a company takes money from advertisers to spread information about meddling in democratic elections? It’s really sad. During the 2016 election, Russia spread some 30 million political ads on Facebook’s paid pages, and fake news reached 126 million users. The GRU, Russia’s military intelligence agency, is spreading alarming news through social media such as Facebook, Twitter and Google. These platforms didn’t make enough investments and efforts to prevent this from happening, and GRU bought Facebook ads.

Facebook has the discretion to modify the algorithm, which will save Facebook a lot of money. But expecting big companies to voluntarily allocate precious resources for the good of society is like asking Exxon to take a leadership role in global dimming.

But in November Richard Burr, chairman of the Senate Intelligence Committee, told the Facebook, Google and Twitter committees that the latter was a front line for defence, and that state and city officials in Chicago had proposed that Amazon decide “reasonably” where to spend its $1.3 billion in employee payroll taxes, giving amazon the right to use the tax. These incidents were a wake-up call to me about the existence of a trust gap and the importance of rules.

Can Facebook and Twitter be the frontier of national defense? Of course not! Our national defense should be army, navy, Air Force and Marine Corps at all times. Not the likes of Zach.

The compromise of the government has put us in a more difficult position.

No one will believe that these products are similar to tobacco addiction delivery systems, and a seven-year-old won’t even look away from your iPad because you might be in danger of being killed. If you don’t believe these platforms are addictive, ask yourself why American teenagers spend an average of five hours a day staring at screens. Like a slot machine, these social media are enticing us to constantly check for notifications. Studies have shown that children and teenagers are particularly sensitive to the dopamine boost from these platforms. Many tech executives say they won’t let their children use the devices.

All these are visible concerns. But neither of them is enough to justify breaking up the tech giants. Here’s why I believe four companies should be broken.


Economic purpose

Ganesh Sitaraman, a professor at Vanderbilt Law School, argues that The United States needs a middle class, and that the Constitution was designed so that our representative democracy balances the sharing of wealth. If the rich have too much power, it leads to an oligarchy. If the poor have too much power, it will lead to revolution. So the middle class needs to be at the helm of America’s democratic direction.

I believe that the economy and one of its main components, the primary mission of corporations, is to create and sustain the middle class. From 1941 to 2000, the American middle class in the history of the world to create a lot of good things, they support, participate in and win the war of capitalism, care for the elderly, treat polio, send astronauts on the moon, and to show the rest of the world what is its own interests, and that of consumption and innovation, Could be an engine of social and economic transformation.

An economic spiral depends on circular flows between households and businesses. Households provide resources and labor; firms provide goods and jobs. Competition incentivizes better production and distribution of products, drives the whole production activity, and tech giants create huge stakeholder value. So why is it that we’ve seen the middle class grow in other countries while ours has declined for the first time in decades? If an economy can sustain the middle class, and the social stability it promotes, then our economy looks like it has failed.

There is no doubt that the productivity gains in the United States over the past three decades have been enormous. There is no denying that the American consumer is the envy of the free world on every level. Yet rising productivity and the creation of modern aristocratic consumers have created a utopia in which we trade high-paying jobs and financial security for powerful mobile phones and coconut water delivered within an hour.

How did that happen? Since the turn of the millennium, companies and investors have fallen in love with companies that can replace humans with technology, leading to rapid growth and greatly increased profit margins. Those huge profits attracted cheap capital and left the rest of the industry weak. Neither old-economy firms nor start-ups are involved.

Both companies and individuals end up in a winner-takes-all economy. Society was divided between those who participated in the innovative economy (lords) and those who did not (serfs). A good idea becomes a vc darling, while those with mediocre performance or bad luck (most of us) must work harder to secure their retirement.

Becoming a billionaire is no more difficult than becoming a millionaire. Sadly, the invisible hand has been against the middle class for the past three decades. For the first time since the Great Depression, 30-year-olds are poorer than their parents were when they were 30.

What if these markers of innovation are a blight on our economic health? Can we make our economy better and still earn higher wages? However, the evidence suggests that this did not happen. In fact, the trend towards divergence seems to be getting stronger. This is probably the greatest threat to our society. Many people would think that this is the world we live in, but isn’t it the world we create? And we are consciously shifting the mission of the United States from producing millions of millionaires to one billionaire. Alexa, let me ask you, is this a good thing?


Markets are falling, everywhere

Now we live in dramatic times when markets are falling and governments are blinded by the public’s fascination with tech giants. Strong and healthy markets are so efficient and powerful that even a football match requires the intervention of a referee, yet overly free capital has contributed to climate change, the financial crisis and the instability of America’s health-care system.

Monopolies in and of themselves are not always illegal or undesirable. Natural monopolies exist to allow a company to achieve the necessary scale to invest and provide services at reasonable prices. But this requires strict rules to check and balance. NextEra Energy, the parent of Florida Power and Light, which serves tens of millions of people, has a market value of $72 billion. However, pricing and service standards are set by public trustees.

By contrast, the four companies retained monopoly power without strict regulation. I describe their power as “monopolistic” because, with the exception of Apple, they haven’t done what most economists would call monopolistic behavior, which is to raise the price of goods.

Yet the big Four have successfully exploited our excessive antipathy to government to make most of us forget that competition, not to mention that private property, wage labor, voluntary exchange, and the price system are essential to the functioning of capitalism. Their sheer size and unchecked power compresses competitive markets and prevents the economy from fulfilling its mission, which is to foster a vibrant middle class.


Cut off the oxygen of life

How did they do it? It’s helpful to think about how Microsoft killed Netscape in the 1990s. Starting from scratch, Microsoft built a remarkable product (Windows) that became the gateway to the entire industry, what we now call a platform. To keep growing, the company points portals to its own product (Internet Explorer) and bullies its partner (Dell) to maintain a competitive edge. Although Netscape’s browser was more popular, with more than 90 percent of the market, it could not compete with Microsoft’s implicit Internet Explorer subsidy.

The same is true of the Big Four companies, where the entire first page of Google’s search results is slowly overrun by advertisers for better monetization, the iPhone home screen is flooded with unqualified products (like Apple Music), all of the company’s assets are coordinated (Facebook) to destroy threats from rivals (Snap), And the information age, through rigid dumping, which prevents other companies from bringing in capital (Amazon).


A natural monopoly

Perhaps consumers prefer these “natural” monopolists. But the Justice Department doesn’t see it that way. In 1998, the federal government filed a lawsuit against Microsoft, accusing it of anticompetitive practices. During the trial, a witness reported that Microsoft executives had said they wanted to “cut off the oxygen of Netscape’s existence” by giving away Internet Explorer for free.

In November 1999, a district court found That Microsoft had violated antitrust laws and later ordered the company to be split into two parts. (One company sells Windows; Another company sells Windows apps). An appeals court rejected that proposal, and Microsoft eventually agreed to a settlement with the government to rein in the company’s monopolistic practices with less stringent measures.

The settlement has been criticized by some as too lenient, but it’s worth noting that Google, now valued at $770 billion and revered by free-market enthusiasts, would exist if the U.S. Department of Justice hadn’t warned Microsoft about infanticide. Without antitrust law, Microsoft might have used its dominant market position to support Bing over Google, just as it has used Windows to recruit Netscape.

In fact, the Justice Department’s case against Microsoft may be one of the biggest market-driven cases in business history, unleashing trillions of dollars in shareholder value. The concentration of power created by these four companies stifles the market. The conversation I have with many small companies is pretty much the same: “We don’t compete directly with the big four, but they’re good acquisition candidates.” The company was deprived of the oxygen of survival. The number of IPOs and venture-backed businesses has been declining steadily for the past few years.

Unlike Microsoft, which was labeled an evil empire in its early days, Google, Apple, Facebook and Amazon have long maintained their image through pr and lobbyists.

The power of the big four is often expressed as an impediment to competition. Consider: Amazon has become a force so powerful, that it is now able to use the jedi before entering the market thought (jedi study, research and utilization of a known as the force that exists in the basic force of the Star Wars galaxy, is usually the bright side of the force, its mission is to defend and maintain the galactic republic and the stability of the Milky Way) damage to potential competitors. Consumer stocks are typically sold on two key signals: the company’s underlying performance (Pottery Barn up 10% per square foot) and the broader economy (more housing construction). Now, however, private and public investors have added a third key signal: what Amazon may or may not do in related areas. Take some recent examples:

Shares of dental supply companies fell 4% to 5% the day Amazon announced its move into the dental supply business. When Amazon announced the sale of prescription drugs, pharmacy inventory fell 3% to 5%.

In the 24 hours after Amazon acquired Whole Foods, large grocery inventories fell 5% to 9%.

When monopolistic behaviour emerges, Amazon’s pr team is quick to cite its favourite figure: 4%, its share of the US retail (online and offline) industry (half walmart’s). It is a useful argument against calls to break up monopolies. But there’s actually a number that doesn’t appear in Amazon’s press release: 34%, amazon’s share of the global cloud business.

  • 44% : Amazon’s share of ONLINE commerce in the US
  • 64% : U.S. households that have amazon memberships
  • 71% : Amazon’s share of home voice devices
  • $1.4 billion: The amount amazon has paid in corporate taxes since 2008, compared with $64 billion for Wal-Mart. (Amazon has included wal-mart’s entire value in its market cap for the past 24 months).

Facebook? Eighty-five percent of the time we spend on our phones is spent on apps. Four of the world’s top five apps — Facebook, Instagram, WhatsApp and Messenger — are owned by Facebook. With Zuck leading the charge, the top 4 league took out Snap (# 5), which means our phones are no longer communication tools, but delivery devices for Facebook.

Facebook even has an internal database, and when competing apps become popular with users, it responds with acquisitions like Instagram and WhatsApp, Or kill it by copying its features (as Stories did with Bonfire against Snapchat and Houseparty).

Google, for its part, now commands a 92 percent share of the $92.4 billion global Internet search market. That’s larger than the entire advertising industry in any country, and in addition, the U.S. search market is larger than the global market for:

  • Paper and forest products: $81 billion
  • Construction and engineering: $79 billion
  • Property management and development: $76 billion
  • Gas utilities: $58 billion

How would we feel if one company controlled 92 per cent of the global construction and engineering trade market? What about 92% of the world’s paper and forest products? Do we worry that their power and influence are beyond reasonable limits, or do we think of them as amazing innovators, as we do with Google? Then there is the highly profitable Apple. The total material cost for the iPhone 8 Plus is $288, a fraction of the $799 price tag.

In other words, Apple has ferrari’s profit margin and Toyota’s production. Apple’s users are also the most loyal. Its retention rate among consumers is 92%, compared with 77% for Samsung. As of February 2017, 79% of all active iOS users had updated the latest software version, compared to 1.2% of all active Android devices.

Apple has used its privileged position in consumers’ lives to instill monopoly-like power in rivals such as Spotify. In 2016, the company refused to update iOS Spotify, preventing iPhone users from accessing the latest version of the music streaming service. While Spotify has doubled the number of Apple Music users, Apple has made up the difference by levying a 30 percent tax on it.

Apple has not been shy about capitalizing on its popularity with consumers. Recently, Apple has been deliberately slowing down the performance of outdated iPhone models in the hope of enticing users to upgrade faster. This is the confidence of a monopolist.

In the late nineteenth century, the term trust was used to describe large corporations that controlled a large share of a particular market. Teddy Roosevelt earned a reputation as a “monopoly buster” by breaking up beef and railroad trusts and filing more than four dozen antitrust suits during his presidency. Fast forward a hundred years, to 2016, and we find Trump declaring during his presidential candidacy that “the Trump administration will not approve the merger of AT&T and Time Warner because power is too concentrated in the hands of a few people.” A year later, his Justice Department sued to block the practice.

So our president is fighting for what’s right, right? So let’s analyze it. AT&T has 139 million wireless subscribers, 16 million Internet subscribers and 25 million video subscribers, about 20 million of which come from DirecTV. Time Warner owns content production brands such as HBO, Warner Bros., TNT, TBS and CNN. In theory, a vertical merger between the two companies could lead to the creation of a giant company capable of producing and distributing content across its network of millions of wireless phone, Internet and video users.

Might this lead to too much concentration of power? But if content and distribution weights were what we were worried about, Teddy would have knocked on the door of Jeff, Tim, Larry, and Mark a decade ago. Now, any of the big four companies has more content and distribution channels than AT&T and Time Warner combined would.

  • Amazon spent $4.5 billion on original video in 2017, second only to Netflix’s $6 billion. Prime Video is available in more than 200 countries and recently struck a $50 million deal with the NFL to stream 10 Thursday night games. Amazon controls 71% of voice technology, and Prime is installed in 64% of U.S. households. In addition, Amazon controls more of the cloud computing market than the next five companies combined. Alexa, will this spur innovation?
  • Apple will spend $1 billion on original content this year. The company controls 2.2 million apps and set a record for the number of songs sold on iTunes in 2013, with $25 billion in sales. Apple’s inventory now includes 40 million songs that can be distributed across the company’s one billion active iOS devices, not including TV and video products. But does AT&T need to sell the cartoon network?
  • Facebook has a huge amount of content created by its 2.1 billion monthly active users. Through its website and apps, the company reaches 66 percent of adults in the United States. Facebook plans to spend $1 billion on original content. It is the world’s most productive content machine and dominates mobile phones worldwide.
  • With 400 hours of video uploaded to YouTube every minute, that means Google produces more video content than any other entity in the world. It also controls the operating system on two billion Android devices. But does AT&T need to filter out adult swim content?

Maybe Trump is right that the MERGER of AT&T and Time Warner doesn’t make sense, but if that were the case, then we should have broken up these four companies a decade ago. After all, each of the four companies is using destructive monopoly power and market dominance to restrict trade. But where is the Justice Department? Where is Trump’s? Let us trust that the people outside are Christian-like innovators who are using technology to save humanity, and let our government fall asleep.

Margrethe Vestager of the European Union’s competition law commission, perhaps the only official undeterred by, or not bewitched by, the tech giant, levied a $122m fine on Facebook last May, To punish Google for lying to the European Union about its ability to share information between Facebook and WhatsApp, and a month later to impose a $2.7 billion anti-competitive fine on Google.

It’s a good start, but these fines are a drop in the bucket for them.

There is no doubt that markets sent strong signals in 2017 that our economy is under regulation. But there is a difference between regulating and eliminating monopolies. We ignore the fact that eliminating monopolies is to protect the health of the market. This is a countermeasure against extensive and illegal regulation. When market mechanisms fail, we need referees who will throw out the yellow flag and restore order. We’re right there.

With the big four accounting for 40% of the S&P500’s earnings in October, it is clear that they are operating in an unhealthy market. Late last year, two up-and-coming digital marketing startups, Refinery29 and BuzzFeed, announced layoffs, and AD technology company Criteo lost 50 percent of its market value. Why is that? Because there are companies like Facebook and Google. All the others, including Snap, are dead. They just don’t know it yet.

Do these companies deserve to die? Or is there something wrong with our market system that allows these new digital marketing companies to grow, hire, and innovate, impeding the development of a healthy ecosystem?


Search… How you feel

Imagine if there were two markets, one of which included the following companies:

Amazon | | apple Facebook | Google

Another market includes these independent companies:

As Darth Vader asked his son, I want you to “search your feelings” and answer which market will:

Create more jobs and shareholder value.

While trust bankruptcies are usually bad for stocks in the short term, Mars Bell’s bankruptcy unleashed growth in shareholder value in the telecommunications sector. Similarly, Microsoft became one of the greatest companies in history despite being hit by the US Department of Justice (DOJ) in the 1990s. In addition, there are reasons to believe that Amazon and AMAZON Web Services could be more valuable separately than as a whole.

Stimulate more investment.

The number of publicly traded companies in the United States is half what it was 22 years ago, and most innovation economy companies understand that their most likely or only way to survive is to be acquired by a tech giant. The absence of buyers makes both options extreme: become part of Google, or shut down. Clearly, being acquired by a mid-sized company can be a stronger driver of growth.

Expand the tax base.

The concentration of power has resulted in companies having so much political influence and resources that their effective tax rate is actually far lower than that paid by medium-sized companies, leading to a rollback of tax rebates.

Why would we want to split the tech giants? Not because the four companies are villains and we are the good guys, but because we understand that the only way to ensure competition is to prune the branches, as we did with the railways and Ma Bell. This is not an indictment or punishment of the four companies, but rather a recognition that one of the keys to a healthy economy is to fix it when companies get aggressive, cause other companies to die abnormally, and have no room for new ones.

The fragmentation of the tech giants is inevitable because we are capitalists. I think the time is now.

Original link:

www.esquire.com/news-politi…

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