Tech giants seem invincible. That worries lawmakers

In the technology industry, the sharks have never long been safe from the minnows. Over much of the last 40 years, the biggest players in tech — from IBM to Hewlett-Packard to Cisco to Yahoo — were eventually outmaneuvered by start-ups that came out of nowhere.

The dynamic is so dependable that it is often taken to be a kind of axiom. To grow large in this business is also to grow slow, blind and dumb, to become closed off from the very sources of innovation that turned you into a shark in the first place.

Then, in the last half decade, something strange happened: The sharks began to get bigger and smarter. The Frightful Five: Amazon, Apple, Facebook, Microsoft and Alphabet, Google’s parent company, compose a new superclass of American corporate might. For much of last year, their further rise and domination over the rest of the global economy looked not just plausible, but also maybe even probable.

In 2017, much the same story remains, but there is a new wrinkle: The world’s governments are newly motivated to take on the tech giants. 

The precise nature of the fights varies by company and region, including the tax and antitrust investigations of Apple and Google in Europe and Donald J Trump’s broad criticism of the Five for various alleged misdeeds.

In 2017, the Five are bigger than ever. As in 2016, they are half of the world’s 10 most valuable companies, when measured by stock market value. Their wealth stems from their control of the inescapable digital infrastructure on which much of the rest of the economy depends — mobile phones, social networks, and the data and computing power required for future breakthroughs.

The Five aren’t exactly immune to business cycles. The Five also aren’t entirely safe from competition from start-ups, and one of the persistent features of the tech industry is that some of the most perilous threats to giants are the hardest to spot.Still, at the moment, thanks to smart acquisition strategies and a long-term outlook, the Five sure do look insulated from competition from start-ups; today’s most valuable tech upstarts, like Airbnb, Uber and Snap, could grow quite huge and still pose little threat to the collective fortunes of the Frightful Five.

What has changed is public perception. For years, most of the Five enjoyed broad cultural good will. Over the last year perception began to change. As technology wormed deeper into our lives, it began to feel less like an unalloyed good and more like every other annoyance we have to deal with.

Silicon Valley grew cloistered, missing people’s unease with the speed with which their innovations were changing our lives. When Apple took on the Federal Bureau of Investigation last year over access to a terrorist’s iPhone, a majority of Americans thought Apple should give in.

During the long presidential campaign, Trump said a lot of things that people in tech found ridiculous. He vowed to call on Bill Gates to help him shut down the parts of the internet that terrorists were using. He promised to force Apple to make iPhones in America. He suggested that The Washington Post was running critical stories about him because its owner, Jeff Bezos, was scared that Trump would pursue antitrust charges against Bezos’s main company, Amazon. Few in the tech industry supported Trump, but the industry’s antipathy seemed to matter little to the public.

For years, most of the Frightful Five were given the benefit of the doubt as economic disrupters that were undercutting the cultural and economic power of the big industries that many people despised.

“During the periods where incumbents are battling disrupters, in general the US has done a good job of encouraging disrupters,” said Julius Genachowski, the former chairman of the Federal Communications Commission.

But as Genachowski noted, as the disrupters grow, the dynamic often shifts. 

That’s where we are now. The Five have become incumbents themselves, and they are more likely to be treated as such by governments, who will look to both sides of the ledger — their benefits to society as well as their potential costs — when deciding how to police them.

©2017 The New York Times News Service