When Tech Giants Take Control

Feb.21,2017-- LondonSchool ofEconomicsPr.JeremyGhez– [email protected]

WhenTechGiantsTakeControl

THERISEOFTHE21ST CENTURYOLIGOPOLY?

Copyright©2017,J.Ghez 2

Looking forSignificanceThere are diverging views on the economic significance of thesefirms, ranging from caution to outright skepticism: the servicesthey provide don’t match previous transformative innovations.


Source: Robert Gordon, “The death of innovation, the end of growth,” TED Talk, April 23, 2013(http://bit.ly/2m4spUD)

Looking forSignificance

At the same time, there seems to be a consensus about theoverwhelming power they have, especially with regards toconsumers, states and potential competition


Source: “Survival of the Biggest,” The Economist,December 1, 2012 (http://econ.st/2m4w4lm)

TheRiseoftheGAFA

Is this the real, meaningful oligopoly of the 21st century?


THEPARADIGMOFCONVENIENCE


InfinitelyCustomizable

A proposition:

The GAFA’s success has come with the creation of an ecosystemthat can potentially be customized to the extreme, for every singleone of its users.

GAFA members are not only competing for relevance. They alsowant to each become the indispensable hub for all of youractivities.


DevelopingaNewParadigm

This ecosystem is a factor of convenience that the consumervalues significantly… for now.



The GAFA put this ecosystem together, relying on:

Ø Its financial might;Ø Its geopolitical power;Ø Its microeconomic influence;Ø Its pragmatic approach to cooperation.




Ø Its financial might


Will Oremus, “Tech Companies Are Dominating the Stock Market as Never Before,” Slate, July 29, 2016



Ø Its geopolitical power

Will we ever think about distance, proximity, communities, interdependence and information

the same way?




Ø Its microeconomic influence: capturing and influenceconsumer preferences




Ø Its pragmatic approach to cooperation: this relationship is notonly about competition


CANTHEPARADIGMSURVIVE?


Competition:MeettheNATU

This oligopoly, like others, can be short lived.

Others are going after the benefits of the platform approach…


APossibleTippingPoint?


Source: Agnieszka Maria Walorska, “Privacy vs. Convenience. Challenges for UX with Privacy and Personalization,” February 16, 2011 (http://bit.ly/2kSFWiD)


A word of warning:

“Mr. Bezos has created a transaction engine that is reinventing theway entrepreneurs can do business. If his ambition is to colonizethe entire infrastructure of consumption, it is not likely to beAmazon’s technological skills that set the limits, but the world’swillingness to accept him.”


Source: Barney Jopson, “From warehouse to powerhouse,” Financial Times, July 8, 2012.


Consider the particularly perilous business environment…


ThePossibleUltimatum

This is a powerful reminder that strong actors should be cautiouswhen interacting with populations which increasingly believe thatthey have nothing to lose.


TheUltimateUltimatum


The ultimate warning comes from within:

“The America that voted for Trump does not own a Tesla, nor anIPhone and when it needs money, it does not ask business angelsfor help: it relies on bad credits. It is time to recognize that weneed to develop technologies and businesses that will benefit thewidest range of people possible, algorithms that do not divide butthat bring together.”

Source: Carlos Diaz, «Le mur de Trump, c’est la Silicon Valley qui l’a construit», L’Opinion, November 13, 2016

When Tech Giants Take Control

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