From the way we talk to our friends to the way in which we get paid for work, technology has crept into every corner of our lives.
Before the first iPhone in 2007, smartphones were a niche product. But now, in some countries, three quarters of the population own such devices. One study even found that in rich countries, people touch these devices 2,600 times a day. It’s no exaggeration to say that many people could no longer imagine life without them. There are also 200 billion emails sent every day, and 3 billion Google searches made in a 24-hour period — it’s tough to imagine how people would cope without these, too.
This change has led to the key players of the tech space becoming very rich as a result. Of the top 10 biggest companies in the world in 2007, businesses like Exxon Mobil and General Electric held the top spots, while only one tech business, Microsoft, made the list. A decade later, the 5 most valuable companies in the world are now all tech companies — Apple, Alphabet, Microsoft, Amazon, and Facebook.
New York Times columnist Farhad Manjoo has, in his ‘State of the Art’ column, coined the term ‘Frightful Five’ to describe these tech giants, each of which has grown rapidly and come to occupy a huge influence on the day-to-day lives of people.
Many observers now fear that these firms have an influence that far outweighs that which you’d typically expect of an organization — indeed, some say that they’re potentially more powerful than governments. To see the extent of that supposed power, you only need look at the series of investigations and inquiries underway as governing bodies try to determine whether Google and Facebook were used to influence elections.
From a business perspective, this is shaping the market in a number of significant ways. The Frightful Five now has such a stranglehold on the tech space that they can set the parameters for new companies coming to the fore. For example, consider the fact that Amazon owns cloud service storage. Netflix relies on Amazon’s servers to provide content to its subscribers across the globe, and so even companies as big and important as the popular streaming site are relying on Amazon for infrastructure.
Beyond infrastructure, Amazon now offers a much bigger service than its core online shopping platform. Through its range of gadgets, it’s been able to branch out into the Internet of Things and, with drones, even into shipping. It’s also entering into the world of physical stores with the recent opening of Amazon Go, a grocery store with no cash registers or cashiers, in Seattle. It’s not just Amazon, either; Google’s parent company even has eyes on revolutionizing transport with its work on driverless vehicles.
This sort of expansion makes it tough for any business to rely on the big five. The fact that these companies control a lot of infrastructure, however, also means that new companies have to work with, rather than against, the Frightful Five.
Consider any bright new tech company with an app. As Manjoo highlights: “All app makers have to put their apps in the Apple app store or the Google app store. And when they sell those apps, 30 percent of that money goes to Apple or Google. They all have to advertise on Facebook or Google to get customers because that’s become the way to advertise on digital platforms. And so any new app—Uber, Airbnb, Netflix, all the other sort of smaller companies online—have to go through these five to get to their customers. And what ends up happening is that other companies succeed, but always these five benefit off of that success.”
It’s fair to say, then, that these five tech giants have a lot of power. They’ve gone beyond being businesses and have morphed into something else entirely. They can shape and alter the landscape and have made themselves indispensable, both to the lives of everyday consumers and businesses trying to make their way in the world. Governments across the globe have been slow to see what’s happened—partly because this change has been so quick to occur—but it remains to be seen whether they can wrestle back any semblance of control…or if anyone else can find a way to smash the ceiling and rival these tech companies.
Contributed by Chelsea Ellsworth