Twenty years ago, people would have probably called companies like Exxon Mobil or BP the most powerful companies in the world. They control major energy deposits, have large amounts of capital and oversee one of the largest employee bodies in the world. Today, however, things have changed.
With the rise of major tech companies in the past two decades, we have seen the emergence of a new kind of power; the power of information.
Scott Galloway, a professor at NYU, was interviewed by CNBC about this phenomenon. He points to four particular companies that have pulled well ahead of the pack to control more information and data than any other: Amazon, Google, Facebook and Apple.
“Facebook and Google own media; Apple owns the phone; and Amazon is about to molest the entire retail ecosystem,” he says.
Galloway has a very negative view of what these companies have done to the economy, but his criticism tells another story; these companies control what are arguably the three most important sectors of the market.
According to The Economist, “Amazon captures half of all dollars spent online in America. Google and Facebook accounted for almost all the revenue growth in digital advertising in America last year.” That means that if you want to advertise on the most used form of communication in the world or order something online, you are almost always doing it through one of these companies.
This type of market domination is what has allowed these companies to attain extraordinary levels of control. In addition they have incredible potential to grow that control many times over. Galloway says:
“If Amazon tests an AI-like offering anticipating all your retail needs — sending stuff automatically and calibrating based on what you send back or edit via voice … the stock will become antigravity matter and triple to a trillion dollars in value.”
While almost every investor is aware of the size and growth of the GAFA stocks (Google, Apple, Facebook and Amazon) they may want to look one level further and understand the true scope of these companies. They will continue to define the economy for years to come.
To read CNBC’s interview with Scott Galloway, click here.
To read The Economist’s article on the expansion of big tech, click here.
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