Tech giants getting 'blockbustered'
Picking the next titan to fall
Hey there, Modern Human.
You likely don’t realize this, but a big portion of your life is being presented to you courtesy of a small cabal of corporations.
You’re likely reading this from a device operated by Google (Android), Apple (iPhone and Mac laptops), or Microsoft (operating systems).
Facebook (or ‘Meta’) will be your go-to for connecting to your loved ones and colleagues through Whatsapp, Messenger, or Instagram.
Any website you frequent (including this article on Substack) will likely be on a cloud service hosted by Amazon - just like your favorite entertainment on Netflix, Hulu, and Spotify.
Try to boycott these five companies at once, and you will be holding a Nokia feature phone, sending SMSs in complete silence, isolated from all the stream of information and your usual online activities.
I’ll stop momentarily to apologize for how this sounds depressingly Black Mirror-esque, but there’s a silver lining to all of this.
A lesson from history
This isn’t new.
We previously lived in a system dominated by a small clutch of corporations that ran everything (the only difference being that they weren’t as tapped into our data and activities, but that’s for another story at another time).
Like today’s big five tech giants, we lived in a world dominated by Blockbuster, Borders, Kodak, Nokia, and others that are no longer.
In their heyday, a world without them would have been unimaginable. Regardless, these giants of the past were disrupted and made irrelevant, and from this, we can learn that innovation is cyclical.
You have a period of growth and innovation that peaks, hits maturity, and then a new status quo emerges based on improved systems and technologies.
It’s exciting being a part of these periods of transformation. They’re highly productive in creating a whole new dimension of reality but also just as destructive. Like in nature, what is old and irrelevant - the deadwood - is cleared out to make way for a new establishment.
Investors have a TON to gain by staying ahead of these curves.
For anyone who analyzed the business models of these incumbents with a technological lens, it would have been a no-brainer to short their stocks and reap outlandish profits.
History teaches us to train ourselves to predict the next incumbents to fall.
Similarly, it’s difficult to imagine Apple, Google, Meta, Netflix, Microsoft, or Amazon becoming dinosaurs and getting blown out of the market by scrappy young technologies.
Their proprietary and vast datasets maintain their hegemony, and their deep cash reserves allow them to buy out anything that threatens their existence.
There’s no questioning their dominance, but by simply looking at the past, we can’t ignore that what feels like impossible always happens.
The innovation wrecking ball
Our current digital age was borne out of drastic shakeouts:
Apple kicked off the smartphone era with the iPhone, knocking out players like Nokia and Blackberry
Amazon put retailers like Radioshack, Sears, and others out of business
Meta disrupted traditional media and communication services
Google dominated access to media, news, and information
Netflix made streaming the primary method of accessing video content
Will these giants drive the next wave of innovation, or will they become roadkill like incumbents of the past?
It’s still too early to tell, but we can watch for signs.
These trends could shape the new era (dubbed “Web 3.0”):
Blockchain technology allows individuals to own and benefit from the networks or communities they grow through their participation. The trend of decentralization and network-owned protocols allows users to own and profit from their data sold to third parties. Imagine a decentralized YouTube where content creators own their audiences and market their presence to advertisers directly - no intermediaries like Google (owners of YouTube) are required. The meager revenue share of the current system would become a thing of the past. The same applies to all other social media networks run by Facebook and others.
AI removes the necessity to search for and surf from one website to the next. ChatGPT and other generative AI have disrupted how we interact with the internet. Companies like Google rely on search and navigation across websites for advertising revenues, putting their primary cash cow at risk. This also jeopardizes Apple’s earnings from its app store. In a world where AI does the work of multiple apps, users will no longer need to purchase from their marketplace.
The Metaverse and immersive experiential technologies (AR and VR) can reshape how we shop, consume content, socialize, and transact. How the incumbents adapt to this technology will determine if they can sustain their dominance.
If history is anything to go by, one of the best ways of profiting is by foreseeing tomorrow’s economic systems and picking out today’s giants that will fall with the loudest thud.
Follow their revenue and analyze how they’re adapting to the changes ahead.
Did I miss anything? Which companies would you bet against making it in this next wave of the digital era? Leave me a comment or hit reply if you’re reading this from your inbox - I would love to hear from you!
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