“There are really two Americas right now, -There is Big Tech and there is everyone else“
The global pandemic gives Silicon Valley titans a once-in-a-lifetime opportunity to expand their power, crush rivals and change their political fortunes.
Tech titans spent much of the last year playing defense, fending off dozens of federal and state antitrust investigations and a public wary of their power.
But the global coronavirus pandemic is prompting a dramatic reversal of fortune for the tech giants. Amazon and Facebook are capitalizing on the fact that they are viewed as essential services for a public in lockdown, while Google and Apple are building tools that will enable state health departments to provide a critical public service, tracing the course of potential new covid-19 infections.
The pace of the probes against these companies has slowed as regulators and lawyers are forced to work from home. Emboldened tech lobbyists are fighting to delay the enforcement of a new privacy law this summer in California, saying they can’t comply by the July deadline due to the upheaval.
And while the global economy faces potential unemployment and contraction not seen since the Great Depression, the tech giants — and a handful of medium-size tech firms — are already benefiting from new consumer habits initiated during the lockdowns that analysts believe will turn into longer-term shifts in how people shop, work and entertain themselves. The broader stock markets tanked in recent weeks, but share prices of Amazon and Microsoft hit at or near records. Facebook is moving to acquire high-skilled talent, announcing the hiring of 10,000 new workers this year.
The tech giants‘ deep pockets will enable them to withstand the coming global economic recession, a stark contrast to what industry insiders and analysts expect to be the biggest shake up of the tech landscape in years. As many start-ups collapse, tech giants will expand on the power they’ve accumulated using the playbook of the last decade: snapping up talent, buying or copying rivals, and eroding traditional industries. Some of those weakened companies may disappear altogether and cede even more territory to tech.
Former Google CEO Eric Schmidt said at a recent virtual panel that the most powerful companies have the ability to bounce back far more quickly than others. “When you have an industry leader, and something collapses, the industry leader, if it’s well-managed, tends to emerge stronger a year later,” he said.
Facebook and Google declined to comment. Apple did not respond to requests for comment. Amazon spokesman Dan Perlet said in a statement, “While we appreciate the opportunity as a retailer to serve customers and are seeing increased demand for essential products, there are no winners out of Covid-19.”
As the tech giants start announcing quarterly earnings this week, Big Tech‘s current position is far better than in previous market crashes. In the dot-com bust of 2001, Google was not yet public. Amazon almost went bankrupt, losing 90 percent of its value in two years. The crash was seen as a crisis of Silicon Valley’s own making, as money flooded into thousands of frothy, pie-in-the-sky start-ups with unsound business models.