How Big Tech Threatens the Global Economy
"Big Tech" has gotten, well, very big: Facebook, Apple, Amazon, Netflix, and Google (now Alphabet) — the five American giants known in Europe as "FAANG" — have a market capitalization of $2.4 trillion, a figure roughly equivalent to the GDP of France. Their success has made them iconic brands throughout the world. But could they be harming the broader economy?
Rana Foroohar, a global business columnist at the Financial Times, argues that the largest American technology firms first achieved success through innovation. Once they acquired enough intellectual property, though, their emphasis shifted.
"Google, Facebook, and Amazon began to realize that they were no longer in the business of innovation so much as the business of data monetization," she said in a breakfast conversation at Asia Society on Wednesday. "This is particularly true of Facebook and Google. Their business model isn’t about churning out something truly innovative but capturing as much data as possible and tweaking it via algorithms to allow for hyper-targeted advertising.”
Facebook and Google have come under sustained attack in recent weeks for their proliferation of false and misleading information, both throughout the 2016 presidential election and in particular after Sunday's massacre in Las Vegas. But the financial success of the two advertising giants and fellow "Big Tech" firms has contributed to a rather lopsided American economy in which 10 percent of companies accumulate 80 percent of profit.
"I hear from a lot of mid-cap firms and small innovators that they’re under a lot of pressure," she said. "And to me, that’s worrisome because I think the digital economy has the potential to really radically increase inequality if it’s not managed."
"It’s very important as we build out a digital economy that it does not become a monopoly situation."
Watch the complete video of Foroohar's appearance at Asia Society below. To purchase her book, click here.