The past few months saw a revolution quietly run its course in Italy. For a country that has traditionally preferred to shop in person with cash, online retail – and more specifically, Amazon – became increasingly popular. Record numbers of Italians stuck at home due to pandemic lockdown regulations turned towards Amazon to shop, and even as the country opens to more in-person economic activity, this behavioural shift is here to stay.
This is a seemingly nondescript chapter of a much larger story. As with any revolution, it was something that seemed inevitable in hindsight. Amazon has grown more than 10x in revenue over the last 10 years and holds an over 50% share of the e-commerce market in the US; it is likely that few readers are surprised by these numbers. Italy was one of the last holdout markets in Europe. The pandemic, of course, solved that problem for Amazon.
For Amazon, and for so many other tech companies, this pandemic was an opportunity, not a crisis.
For Amazon, and for so many other tech companies, this pandemic was an opportunity, not a crisis. Business in most sectors suffered through the spring and summer economic shutdown over the summer, while tech thrived. The new “virtual” normal was a chance for them to develop new markets, to introduce new tech that had previously received pushback, or achieve phenomenal growth as their previous marginal platforms or tech are suddenly now at the centre of a new online world. Over the summer, tech stock had skyrocketed, to the incredulity of some and the smug satisfaction of others. Companies from every tech sector have performed well through the crisis, both in the shift to remote work and in protecting their bottom line.
What is at the root of these companies’ success? They own the online platforms and tools through which all productive activities are conducted. Companies like Amazon (e-commerce), Zoom (web communications), Facebook (social media), Snowflake (cloud computing), and Apple (our personal portal to the virtual world, and a status symbol) own the technologies that the modern world needs to do its work.
Those who control the critical element in which economic activities occur, in this case the virtual platforms owned by tech conglomerates, are set to gain no matter what happens in the world. They thrive in times of prosperity, and they stand uniquely to gain in times of crisis – or at least immediately after. When the world starts again, it will rely on this fundamental resource to get back on its feet.
The so-called “tech elite” is not the first handful of influential entities that controlled the basic building block of society, and neither does this building block remain constant throughout history. In the 18th and 19th centuries, physical land was the fundamental element of productive activity. David Ricardo, one of the classical economists from the early 19th century, spoke of “rents” as an unearned surplus that landlords gained simply from owning the land. Because the economy back then was still largely agricultural, productivity of business-owners depended directly on the productivity of the land. The landlords that owned more productive land were endowed with “extra” profits by nature.
Those who control the critical element in which economic activities occur, in this case the virtual platforms owned by tech conglomerates, are set to gain no matter what happens in the world.
A few centuries later, the world moved to oil. Whoever owned the most productive oil fields, and had the means to extract them, was able to profit immensely from it and hold influence over world events. Today, Big Tech has replaced Big Oil to own and manage the world’s operating systems from a different perspective. In fact, they own more than virtual platforms on the Internet – they also have in their control a deluge of data. Thus, they wield not only the channels of all modern business activity, but also the resources to make sense of and leverage human activity.
So, what do we make of their power? We can only watch and learn. There is always something to be learned from the rise and eventual fall of giants. Perhaps those of us born in the Internet age, the first generation to enter into the world taking for granted the presence of these big tech companies, will live to see their glorious deaths and the rise of the next group of industrial elites that will rule the globe.