Amazon is a server kingmaker. AFP
Amazon is a server kingmaker. AFP

From Amazon to Google: Why we need to pay attention to these tech giants



A few days ago, Microsoft bought software- development platform GitHub for the colossal sum of US$7.5 billion (Dh27.55bn). While the 28 million programmers who use GitHub may have spent the week worrying about how this move might affect them, the impact on the average person was non-existent – just another shimmy in the ever-moving world of business.

But the purchase represents another consolidation of power for the companies sometimes described as “The Frightful Five”: Amazon, Apple, Facebook, Google and Microsoft. Their boardroom decisions may seem inconsequential as we eat our lunch or book our holidays, but the impact they have on the world of technology is having a growing effect on society.

In January, business magnate George Soros gave a speech attacking Facebook and Google for being a "menace", and the murmured concerns about the power of the big five are getting louder. With a collective valuation of more than $3 trillion, they have been described by industry observer Farhad Manjoo as "more like governments", and their growth has certainly been unhindered by the US government. American regulations tend to be soft on monopolistic behaviour, as long as consumers aren't being exploited – and consumers seem, in general, perfectly happy with the size and power of these firms if services are delivered quickly and cheaply.

Bought by the competition

"On balance," writes Katherine Davidson of asset management company Schroders, "we are comfortable that – for now at least – these companies are contributing more to society in the form of free products and innovation than they are detracting by monopolising our data and crimping competition." Governments across the world are, however, starting to take the expansion more seriously. Last week, US Treasury Secretary Steve Mnuchin weighed in, suggesting that the US Justice Department might examine the situation. "As these technology companies have a greater and greater impact on the economy," he says, "I think that you have to look at the power they have."

While the practice of using financial and legal muscle to buy up or sabotage smaller competitors is hardly new, the tech industry has traditionally been one where big ideas bloom from small beginnings. Indeed, the big five themselves grew from bedroom businesses into corporate giants. But that organic growth would seem to be a thing of the past, according to Ben Werdmuller, director of investments at Silicon Valley firm Matter. "If you are not independently wealthy," he says, "you have to get serious investment to do anything. And if investors become fearful, it narrows the gene pool of ideas."

Investors are increasingly scared of backing start-ups that find themselves in the "killzone", where they become neutralised or destroyed by one of the big five. Those fears are well founded: aside from the headline-grabbing acquisitions such as Google buying YouTube, Microsoft buying GitHub or Facebook buying Instagram, dozens more firms are swallowed up every year. The big five collectively spent $31.6bn on buyouts last year alone. Admittedly, some entrepreneurs now see it as their goal to be acquired, but Werdmuller sees this as a lack of imagination. "If you're building something cynically to be an acquisition target," he says, "it probably doesn't have the qualities that make a service valuable to begin with."

Rebuff the advances of a big firm, however, and it's possible that they will edge out your product by aggressively launching a competitor. After turning down a bid by Facebook in 2013, messaging application Snapchat had many of its features used in a Facebook element called Stories; its stock subsequently fell and its outlook deteriorated.

Money, rather than ideas, is now king

Back in the day, it may have been possible for smaller firms to quietly carve out a niche without gaining the attention of the tech giants, but today those firms have no choice but to use the services of the big five to be able to function. Apps are made available via Google's and Apple's app stores; Google and Facebook are the effective rulers of online advertising, while Amazon, Microsoft and Google run the servers that power most services. The resulting data can be used to detect any potential business threat well in advance. As the co-founder of Yelp, Jeremy Stoppelman, recently told US news network CBS: "If you provide great content in [a category] lucrative to Google, and it's seen as potentially threatening, they will snuff you out. They will make you disappear."

By snapping up GitHub, Microsoft will gain insight into the activities of some of the world's best developers. That, along with information from LinkedIn (which it bought 18 months ago), will help alert them not only to technology trends, but who drives them. This, in turn, gives them the chance to recruit those people with unrefusable wage packets that start-ups simply cannot match. Money, rather than ideas, is now king. "The best ideas do not rise to the top," Werdmuller says. "Only a very narrow set of founders are able to get their ideas heard, and because funding comes from a narrow set of investors, their fears and worries dictate what can thrive. There is no such thing as a meritocracy in Silicon Valley."

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Read more:

Facebook confirms data-sharing deals with at least four Chinese companies

What Google knows about our home interiors 

Google leads technology giants topping world’s most valuable brands list

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Werdmuller hopes to continue challenging this situation at Matter, where assistance is given to start-ups looking to create a more "informed, inclusive and empathetic" society. But fighting corporate behemoths isn't easy. There are a few notable cases of successful companies who have managed to avoid acquisition over the years – Airbnb, Uber and Pinterest among them – but there's a reason these billion-dollar businesses are known as "unicorns": because they merit a near-mythical status.

It’s not impossible, however, that the might of the big five might one day be challenged by a small firm, according to Werdmuller. “I guarantee that they will eventually be blindsided by a technological development,” he says. “People say that Google can catch up with any product, but institutionally they cannot. And a new set of companies is emerging that is more concerned about people.”

Whether those companies are sufficiently resilient and strong-willed to avoid being assimilated by The Frightful Five is another matter, but if they can, tech culture may begin to change. “We might even get to a point,” Werdmuller concludes, “where Silicon Valley itself is no longer the centre of most technology innovation.”

Results

2.30pm Maiden (PA) Dh40,000 1,200m

Winner Lamia, Tadhg O’Shea, Ernst Oertel.

3pm Handicap (PA) Dh40,000 1,000m

Winner Jap Al Afreet, Elione Chaves, Irfan Ellahi.

3.30pm Handicap (PA) Dh40,000 1,700m

Winner MH Tawag, Bernardo Pinheiro, Elise Jeanne.

4pm Handicap (TB) Dh40,000 2,000m

Winner Skygazer, Sandro Paiva, Ali Rashid Al Raihe.

4.30pm The Ruler of Sharjah Cup Prestige (PA) Dh250,000 1,700m

Winner AF Kal Noor, Tadhg O’Shea, Ernst Oertel.

5pm Sharjah Marathon (PA) Dh70,000 2,700m

Winner RB Grynade, Bernardo Pinheiro, Eric Lemartinel.

In numbers

Number of Chinese tourists coming to UAE in 2017 was... 1.3m

Alibaba’s new ‘Tech Town’  in Dubai is worth... $600m

China’s investment in the MIddle East in 2016 was... $29.5bn

The world’s most valuable start-up in 2018, TikTok, is valued at... $75bn

Boost to the UAE economy of 5G connectivity will be... $269bn 

COMPANY PROFILE

Company name: Klipit

Started: 2022

Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant

Based: Dubai, UAE

Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded

Kill

Director: Nikhil Nagesh Bhat

Starring: Lakshya, Tanya Maniktala, Ashish Vidyarthi, Harsh Chhaya, Raghav Juyal

Rating: 4.5/5

RESULTS

Main card

Bantamweight 56.4kg: Mehdi Eljamari (MAR) beat Abrorbek Madiminbekov (UZB), Split points decision

Super heavyweight 94+kg: Adnan Mohammad (IRN) beat Mohammed Ajaraam (MAR), Split points decision

Lightweight 60kg:  Zakaria Eljamari (UAE) beat Faridoon Alik Zai (AFG), RSC round 3

Light heavyweight 81.4kg: Taha Marrouni (MAR) beat Mahmood Amin (EGY), Unanimous points decision

Light welterweight 64.5kg: Siyovush Gulmamadov (TJK) beat Nouredine Samir (UAE), Unanimous points decision

Light heavyweight 81.4kg:  Ilyass Habibali (UAE) beat Haroun Baka (ALG), KO second round

Russia's Muslim Heartlands

Dominic Rubin, Oxford

What is the FNC?

The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning. 
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval. 
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
 

The specs

Engine: Single front-axle electric motor
Power: 218hp
Torque: 330Nm
Transmission: Single-speed automatic
Max touring range: 402km (claimed)
Price: From Dh215,000 (estimate)
On sale: September

RESULT

Fifth ODI, at Headingley

England 351/9
Pakistan 297
England win by 54 runs (win series 4-0)