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Tech giants rule the world

06 August 2018Magda Wierzycka, Sygnia
Magda Wierzycka, CEO of Sygnia.

Magda Wierzycka, CEO of Sygnia.

In 1995, Jeff Bezos launched Amazon from his garage. The company only sold books, all shipped through the Post Office. Today, it is the second largest listed company in the world by market capitalisation, and Bezos is the planet's richest man.

Amazon has not only grown its offering to sell just about anything, and deliver it by drone, but it has also spread its influence far beyond online retail. It has branched into areas such as consumer electronics, media, entertainment and cloud services. It has also taken steps into financial services and ticketing.

This is very much a model that all of the world's major technology companies have adopted. Apple, Alphabet, Facebook, Microsoft, Tencent and Alibaba operate across multiple industries and dominate almost everywhere they go.

They are also leading venture capital investors in the research and development of new technologies still to come. When Google restructured itself as Alphabet in 2015, this was part of their vision. It wanted to allow different business units to operate independently of each other and to act more nimbly to take advantage of the explosion of opportunities in the digital world.

The company has interests in areas as diverse as healthcare and disease prevention research, artificial intelligence, autonomous vehicles and smart fabrics. It is working on specific ideas, such as self-driving cars, which are expected to launch before the end of this year, and contact lenses that can monitor your glucose levels. Alphabet is also a highly active corporate investor. In 2017 its three venture capital arms invested in 103 different start-ups, and it now has interests in sectors as varied as home owner’s insurance and non-dairy milk production.

This in addition to the many web services that Google is already well known for, like Google Play, Hangouts and Google Cloud. The company also owns YouTube, which is the second most-visited site on the web.

Sygnia CEO Magda Wierzycka believes the incredible expansion of these tech companies has fundamentally changed many areas of business. “They have disrupted, re-imagined and reinvigorated dozens of industries and will almost certainly do the same to many more,” says Wierzycka.

Apple, Amazon, Alphabet, Facebook, Microsoft, Tencent and Alibaba are now the seven largest companies in the world by market capitalisation. Apple broke stock market records by closing with market capitalisation of over US$1 trillion on Thursday, and Amazon is also closing in on this remarkable figure.

“They have been astonishingly good investments over the last decade, with their share prices having grown multiple times. At the end of July 2008 you could buy Amazon shares for $85 each. They are now worth over $1 800,” says Wierzycka.

What has made all of these companies so dominant is the amount of money that they are able to invest in ground-breaking ideas or in researching their own ideas. Their insatiable desire to innovate and develop has made them powerful players in multiple industries.

“Of course there is always the threat that the disruptors will at some point be disrupted themselves. For now, however, that threat feels very far away,” concludes Wierzycka.

 

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