Microsoft, the creator of the world’s first “beloved” “AI” assistant Clippy, turns 50 this week. Apple also celebrates its birthday this week, but is a year younger, while the rest of the big tech crop are a couple of decades more recent – Amazon is 31 years old, and even Google and Facebook are approaching 30.
The era of the big tech giants being new, fresh or anything resembling startups ended long ago. In reality, the current incarnation of big tech companies are bigger than anything they “disrupted” during their own ascent. Seven of the world’s eight largest public companies are tech companies, while the eighth is the state-owned oil giant Saudi Aramco. All of the tech giants are worth well in excess of a trillion dollars.
The consequences of this can be read in the employment numbers. At its peak, Kodak employed around 145,000 people and IBM had 400,000 or more. Amazon, meanwhile, employs 1.5 million workers today. Google sits on around 188,000 and Meta (the owner of Facebook) has 76,000, though both of these companies have legions of moderators, employed through contractors across the world, who don’t enter into these figures.
During their rise, each of these companies came to dominance through focus – by doing one particular thing much better than any existing company, securing a market of millions and then billions of people through that, and ruthlessly monetising that monopoly. But today almost none of the tech giants can be said to be focused.
Alphabet/Google has its search engine, an email app, calendar and office productivity tools, cloud service providers, YouTube – and about a dozen sub-businesses within that – smart home tools, security tools, self-driving car, fibre-optic infrastructure, business-to-business health data, drone delivery and more.
Amazon does parcel delivery, cloud infrastructure, defence contracting, runs a TV commissioning service, music, smart devices, home security, and a hundred other things. Apple and Meta are somewhat more focused, and yet both still sprawl across continents and business areas, doing almost everything their rivals do just in case they miss out on the next big thing.
They hate it to be said, they balk at the very suggestion, but they have become exactly the kind of sprawling corporate conglomerates that dominated the business world in the 1970s and 1980s – notorious for their bureaucracy, slow decision-making, inefficiencies and rigid corporate structures. Within big tech, that’s what these companies are known for now: being the slow and staid incumbents, where you go to work for a big pay packet but in the secure knowledge that you won’t be doing the kind of project about which movies get written.
The data tell the story of big tech’s middle-aged incumbent era in one way, but using the products tells it even more clearly: so much of what is on offer right now is simply not any good.
Google’s core search product has been getting degraded for years now, with it getting ever more difficult to find what you’re actually looking for amid adverts and low-quality slop. The AI summaries Google now offers before showing you any content make errors on even the most basic of searches – it cannot even accurately summarise popular TV shows, though this doesn’t stop it from trying.
Facebook is less a social network than a punchline to anyone under 50, its timeline dominated by AI-generated filler. The idea of anyone using it to share major life updates feels decades old. It can barely handle moderation, still hasn’t worked out how to monetise WhatsApp – its new AI rollout to WhatsApp looks as if it was designed by people who have never opened the app, while Meta execs live in fear of the coming day when Instagram also becomes passé.
Microsoft is almost helped by being as resolutely unsexy as it is: corporations are still happy to pay a fortune for its business-to-business services, and LinkedIn might be an unglamorous social network, but it’s a largely non-toxic one. Even so, Microsoft is botching AI in its products too, and recently faced a backlash for a huge hike in monthly subscription costs for Office, as it introduced a range of unasked-for AI features.
Apple is probably still better-liked than most of its tech rivals, but has gone almost a decade without launching a genuinely new product. Its virtual reality headset was widely agreed to be better than any other VR headset, but still not good enough for anyone to actually want to use it: sales have been crushingly poor.
Otherwise, each year it releases a new iPhone model that is fractionally better than the one before, and people head out to buy it.
Most of the tech giants are now dealing with founders who are still alive but who have one or both hands off the wheel. Bill Gates departed Microsoft long ago; Jeff Bezos has moved from being chief executive of Amazon to being chairman, while Meta still has Mark Zuckerberg at the helm – and with disproportionate control, thanks to a share structure designed to empower him. But nowadays Zuck is more a god-emperor to be appeased than an asset.
All of this is to say that there are two ways to read the current state of big tech, which at first seem directly contradictory. The first is that it’s wildly profitable, bigger and more dominant than at any point in history – the tech giants have become masters of leveraging monopoly power in one area (search, phone handsets, social, online retail) and using it to extract huge profits from others – music, TV, gaming, or any number of others through app stores. Despite tough talk across the planet, politicians and regulatory agencies have been completely unable to check that power.
The second reading is that big tech has never been more vulnerable than it is today. They are exactly the kind of companies they once disrupted, only bigger, fatter, more sprawling and more complacent than anything that went before.
They are sitting on the kind of profit streams of which most companies can only dream, but with none of the ruthless efficiency that raised them to the top. Google in particular is notoriously bureaucratic and badly managed, but a similar rot extends across all of them. They are disjointed empires of tens of thousands, and while they’re still more than capable of breaking things, it’s been a long time since any of the tech giants moved fast.
The tech conglomerates are using a different trick to extend their lifespan, and that is to buy up anything that they think might pose a threat to them. This is very much how they’re handling AI – which they assume is going to be the tech breakthrough of the next generation – but it’s also how they handled the metaverse, crypto, and any number of other perceived threats.
It has worked until now, and might continue working for a while. But with interest rates going up around the world, it gets more expensive to do this – and each time they make the wrong bet (as with the metaverse) it leaves their own companies even less focused and more confused. Meta even changed its name, to a product that now seems at best marginal to its future productivity.
The smarter bosses at the tech conglomerates must know it is coming and they are working to delay the inevitable. There is no way for any of the giants to regain their magic – they will never be startups again, they will never be nimble again, and they’ll certainly never be the hot new property again. Their best hope is holding on as they are. Their worst fear is that in a decade they’re a business school case study.
Big tech is still powerful and still dangerous, but it’s the threat posed by an empire in decline rather than one in its ascendancy. The real shock to the system for America in particular will be if whatever supplants the current tech giants doesn’t come from the USA – TikTok emerged from China, but for now it is just one company.
If a new era of Chinese tech giants follow it, world politics could be upended in turn. The world is learning the risks of being reliant only on America: without US tech giants, the internet would be unrecognisable to most of us. What’s the alternative to US search? Or streamers? There basically is none.
Calling the timing on something like this is an almost surefire way to lose money. John Maynard Keynes famously said that the markets can remain irrational much longer than any investor can remain solvent.
The tech conglomerates might remain dominant longer than a critic would hope. But all the same, the story is changing – they are ripe for disruption, ready to be challenged, and ambitious young people around the world cannot fail to have noticed that.
Tech CEOs, especially Mark Zuckerberg, are overly fond of classical history and the Roman empire. All too soon, they may get their memento mori.
