Future histories of the Great Pandemic that began in 2020 will have to devote whole chapters to the role of technology. Had coronavirus struck even a decade earlier, the ability to moderate its spread through social distancing — with many people, at least in the developed world, able to work, shop, learn, and stay entertained and in touch, all from home — would have been far less.
Responding to the increases in demand required mighty efforts from the big tech companies. But this week has made clear the rewards they are reaping. The five biggest technology companies — Apple, Amazon, Alphabet, Microsoft and Facebook — together made $75bn in after-tax profits in the second quarter, nearly 90 per cent higher than a year before, and 30 per cent more than expected. Their combined revenues rose by more than a third to $332bn, even if Amazon fell slightly short of expectations; annualising that at $1.3tn would put them nearly level with the gross domestic product of Spain.
Companies in a range of other sectors have benefited, too, from the strengthening economic rebound. But suggestions that big tech companies, having outperformed during lockdown, would be outpaced by other recovering businesses as economies reopened have proved unfounded. Their performance in the pandemic is instead proving not a temporary surge that will recede, but a permanent leap forward in the global transition to online goods and services. Changes in consumer and corporate behaviour are sticking.
That shift has enabled Big Tech in the past year to turn on its head the conventional wisdom that only start-ups can provide explosive growth. Putting already world-leading profits and revenues on multiples closer to those of growth stocks is leading to valuations never seen before. Apple became the world’s first trillion-dollar company only in 2018; all of the top five have now surpassed that level. Their combined value exceeds $9tn.
Growth cannot be sustained at these levels; even the tech titans will confront headwinds in coming quarters, ranging from their own much tougher comparative figures to worsening chip shortages. But the boost to Big Tech’s market share, and power, will endure.
The pressure for antitrust regulation, then, will only grow. This must be carefully handled; popular, successful businesses should not be penalised simply for being big. Since several provide services free to consumers (in the form of barter for lucrative personal data), or have driven prices down, they defy conventional measures of consumer harm that look for rising prices. Innovative approaches to assessing market power, and curbing abuses, will be needed — building on the work of academics such as Lina Khan, named by the Biden White House to head the Federal Trade Commission.
The acceleration of the online shift also risks running ever further ahead of the ability of regulators and policymakers to keep up. With the pandemic still not over, it throws down a challenge to governments, companies and individuals to find ways to deal with the effects — both beneficial and negative — on the world of work, on town centres, personal privacy, news and information, even on democracy. The danger, too, is that the digital economy could become even more unbalanced, widening wealth disparities. More efforts will be needed to combat “digital exclusion”, within developed economies and in the developing world.
It is ever clearer that the post-pandemic world will look different in many ways from the old one. As this week’s numbers have highlighted, the embedding of digital technologies will be one of the most visible, and lasting.
"lasting" - Google News
July 30, 2021 at 11:58PM
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The Big Tech boom marks a lasting change - Financial Times
"lasting" - Google News
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