Is 2020 the Year Tech Companies Take Over the Global Economy?

The coronavirus pandemic is dramatically disrupting not only our daily lives but society itself. This show features conversations with some of the world’s leading thinkers and writers about the deeper economic, political, and technological consequences of the pandemic. It’s our new daily podcast trying to make longterm sense out of the chaos of today’s global crisis.

On today’s episode, Sir Martin Sorrell, the founder of WPP and S4 Capital, discusses the increasing dominance of tech companies among the global economy, which has been further exacerbated by the COVID-19 crisis.

From the episode:

Sir Martin Sorrell: How do you go after Amazon, Andrew, when Jeff Bezos says the purpose of Amazon is to deliver goods and services to the consumer at cheaper and cheaper prices? I remember the day they were in Congress, the four horsemen or however you describe them, were in Congress. I think Amazon was announcing free delivery of groceries in the UK. So what’s not to like? So I think you have to be extremely careful and also be careful what you want in terms of Google and Facebook. I mean, 60, 70 percent—I saw an analysis from Michael Nathanson that suggested even more… a greater percentage than 70 percent, maybe even 80 percent of their advertising revenues are coming from small- or medium-sized businesses. And those are the engines of growth in terms of employment. So just be careful what you wish for.

These companies become very powerful. They are trillion dollar companies. You know, Google’s a trillion, Apple’s a trillion. Amazon’s a trillion. Facebook is not quite a trillion. It’s earning about 700 billion, a little bit more. But today, Apple hit an all time high. Amazon hit an all time high. So, you know, these are companies that are going to continue to grow because of the pressures of COVID-19 in addition to the underlying strategic trends that you alluded to.

Do I worry about their power and their dominance? Well, they are strong, but we’ve been here before. We’ve had other industries where companies have dominated. Regulation has been enacted against them. I’m not sure what advantage you’re going to get from regulating these companies. For example, here in the UK, a digital sales tax was put on Google and Facebook in May of two percent, and that’s being passed on to the consumer, certainly by Google, I think starting in November. So, again, these are platforms that are extremely efficient, extremely effective, otherwise they wouldn’t have got to where they were. They do have enormous power. With that power comes responsibility. And I think if, for example, in Facebook’s case, it is exercising that power with greater and greater responsibility.

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Sir Martin Sorrell is Executive Chairman of S4Capital, a new London listed vehicle with the objective of building a new age, new era, digital advertising and marketing services platform for clients. S4Capital has completed the acquisition of MightyHive in December 2018 for a total consideration of USD 150 million. MightyHive is a San Francisco based market-leading programmatic solutions provider. This transaction followed the acquisition of MediaMonks for €300 million in July 2018 and furthered the company’s strategy of combining award winning creative production with digital media planning and primary data analytics. Sir Martin graduated from Cambridge University and has an MBA from the Harvard Business School.