Strong performance in the pan-panolym makes Apple, Amazon, Facebook, Google, and Microsoft ready for continuous growth and increased regulatory oversight.
A year is not over, no more than two months. But it looks like 2020 will soon be over, witnessing a day of political tension, the epidemic spilling over to the next day.
However, it may be good to start putting 2020 behind us. It’s been a breakthrough year in the high-tech industries, as well as in every other industry, but it’s also a year of public proof for cloud, streaming, artificial intelligence, and other pillars of 21st-century civilization.
Technology has been a major pillar of the economy during the great recession
As we glide through the upcoming U.S. presidential election in the new year, the following trends will shape the technological landscape for the rest of the decade, regardless of who occupies the White House on January 20.
For beginners, the epidemic will last longer than people expect. Distance, isolation, and lock-in will still affect the global economy for at least another 6 to 12 months. However, the technology sector has found a way to continue to operate despite these obstacles. Equally important, their customers now depend intimately on the cloud, streaming, remote collaboration, robotics, smart sensors, and other digital technologies to survive.
In 2021, enterprise technology professionals will align their strategy with one eye based on the COVID-19 trend and the other as their digital transformation initiatives. Predicting prevent management will become the central element of every facility administrator’s high-tech toolset.
Social alien life will last long after the current epidemic ends. People will continue to distance from the society in most public interactions for at least the next three to five years. Through matching and getting started times, global culture is accustomed to personal protective equipment, popular bio-sensors, contactless interactions, remote collaboration, in-depth maintenance of hygiene, and other changes in the way we live and work. Many new lifestyles depend on AI, cloud services, mobile devices, robots, and other technology platforms.
Tech providers are making the most of this trend as providers — such as Amazon, Google, and Microsoft — offer a full, edge-to-edge ecosystem that enables a seamless “new normal” lifestyle.
Furthermore, the effective COVID-19 vaccine will only be released to the market after long periods of delay in R&D and clinical trials. Hopes of a quick solution to the epidemic crisis will fade as the grinding process for covid-19 vaccine development and testing continues. If we look at the history of vaccines for recent epidemics such as Ebola, it may take two to three years before the effective COVID-19 vaccine appears. However, the technology sector will benefit from the fact that vaccine development will depend heavily on AI, high-performance computers, digital technology, and other advanced tools.
As humanity seeks false hopes and counter-effects treatments and cures, the solutions of technology companies will become a lifespan to distinguish what works with what doesn’t.
FAANG will consolidate their dominant position in the global economy
Against the backdrop of these trends, I’m not going to bet that FAANG providers (Facebook, Amazon, Apple, Netflix, Google) (and even Microsoft) continue to consolidate their industries dominant throughout the 2020s.
These six suppliers – often grouped together into “Big Tech” – are the most important business success stories in the current crisis. Technology stocks are at the heart of this year’s counter-intuitive stock market recovery.
March’s small crash is backing away in the rearview mirror as FAANG providers have demonstrated the essential level of cloud, streaming, remote collaboration, edge computing, and other digital technologies for economic resilience. Over the past few months, tech giants have outsourced the rest of the stock market, with the Nasdaq-100 index up 24% this year.
Even if the epidemic breaks out, investors will flock to Big Tech providers as the safest place to place their money. Technology companies have proven to be low-risk investments, as many of today’s leading technology companies are highly profitable and can easily cover their respective debts in available cash.
Political and regulatory pressures will increase on Big Tech
A big sign of Big Tech’s future could be legal and regulatory pressures that force them to divest themselves from assets that some call an exclusive, unfair advantage in their core market.
Recently, the U.S. House of Representatives antitrust sub-committee released the results of an investigation that Google, Apple, Facebook and Amazon “have become the kind of monopolies we last saw in the era of oil tycoons and railroad tycoons”. This sub-committee specifically names Amazon’s dominate in e-commerce, Google in search and advertising, Facebook in social networks, and Apple in both content and mobile apps. Companies have been cited for anti-competitive behaviors such as acquired potential competitors and using their platforms to limit competition, control access and prioritize their own products.
To address these concerns, the committee proposed updating antitrust laws to reflect today’s digital economy. It also called for additional scrutiny of Big Tech mergers and acquisitions.
At first glance, there does not seem to be any natural way to divide these suppliers in order to achieve the stated goal. Asking Amazon to tap into the third-party seller market won’t diminish the dominate of the core online retail site “first-party sales.” Separating Google search content from mobile operating systems, digital advertising, cloud computing, and office productivity content will not diminish its motivation in any other segment. Authorize that Facebook sells its Instagram, WhatsApp and Messenger products will not dilute their core social network subscribers. And expanding Apple’s devices with app stores, music channels, and other online media channels probably won’t diminish the first-market advantage of Apple-founded services on those devices.
Dominated technology providers won’t back down
If lawmakers and regulators try to force Big Tech to get involved in the issue, they are likely to set the course for a long and prolonged lawyer-for-attorney war.
Even if any digital gypsum company is forced to partition, M&A activity in the affected segments can bring the puzzle pieces together. This is not a distant prospect if we consider how “Baby Bells” organicly re-linked in the years after AT&T canceled in 1984 or “Baby Standards” reaffirmed their collective mechanism in the decades following Standard Oil’s antitrust breakup in 1911.
Another possible outcome is that one or more FAANG companies after disbanding can quickly rebuild themselves on an “800-pound gorilla” scale through an understanding of the growth that pervaded the industry. All FAANG providers start as startups, as well as many of the assets they acquire from strategic acquisitions. There will be nothing more natural than the detachment of new, independent parts back with new capital, vision and motivation.
Over the decade, Big Tech providers will face tighter regulatory scrutiny if they try to buy direct competitors or significant suppliers in nearby niches. However, any legal effort to impede FAANG in their core markets is likely to cause a new round of acquisitions in non-traditional industries (for them). We expect that other Big Tech companies will continue amazon’s acquisition of strong brands in traditional sectors that have been severely affected by the COVID-19 recession and from technological disruptions in the past decade. In this way, brands that no longer exist in retail, hospitality, aviation, and other sectors can return to their new roles in virtual business models primarily.
This hardly needs to be said. After all, FAANG’s are owning huge piles of cash and are scrambling to find new, classical investment opportunities of any self-respecting capitaler. As of Last May, Apple held cash, cash equivalents and market securities of $192.8 billion, while Microsoft accounted for $137.6 billion, Google’s parent Alphabet had $117.2 billion, Facebook amassed $60.3 billion, and Amazon held $49.3 billion. In addition, all their share prices rose sharply during the COVID-19 crisis giving them more buying power to acquire valuable competitive assets.
In the coming year, it would not be surprising if one or more Big Tech providers decided to voluntarily partition without a specific legal or regulatory authorization to do so. We can see the omens on this as Google restructured its business units into alphabet subsidiaries four years ago. HP split into consumer and enterprise businesses in 2014, and IBM separated engineering services from its core product portfolio earlier this year.
If Apple, Amazon, Facebook, and other Big Tech providers can find reasons for shareholders to split their respective businesses next year, they probably won’t waste time putting it into operation. If doing so helps the regulated bodies not to sigh down the neck, the better.