When Is Big Too Big

Posted by Tom Locke on February 15th, 2018 filed in Business, History, Technology

Scott Galloway teaches brand strategy and digital marketing at NYU’s Stern School of Business. Galloway has been an Internet pioneer since 1992 and has owned and sold several e-commerce companies over the past couple of decades.

In Galloway’s latest book called ‘The Four’  he addresses the rise of Amazon, Apple, Facebook and Google, and the influence these companies have on the global economy. Galloway’s conclusion is that they should be broken up for their near monopolistic power. Here are some of the stats he shares in his book that were laid out by John Thomson in his recent wifi hifi newsletter:

“So how big is Amazon? With a current market cap of $591 billion Amazon is worth more to the stock market than Walmart, Costco, T.J. Maxx, Target, Ross, Best Buy, Kohl’s, Nordstrom, Macy’s, Bed, Bath& Beyons, Saks, Sears, Dillards and JCPenny combined!

If you combine Facebook and Google together, they have a market cap of $1.3 trillion. If you were to merge Disney, Time Warner, 21st Century Fox, CBC, Viacom, AT&T, Verizon, Comcast, Charter and the Dish Network, and then add the five largest advertising agencies in the world – WPP, Omnicomm, Publicist, IPG and Dentsu, according to Galloway you would still only be at around 90% of what Facebook and Google are worth together.

How about Apple? Apple is on track to be the first trillion-dollar company with a market cap of $900 billion. In the last quarter alone Apple earned $46 billion, twice the profits that Amazon has earned in its entire history. Ferrari is reported to work on a profit margin of around 29% while Apple’s profit margin of 32%. Stern observes that Apple’s profits in just one quarter was greater than the total revenue of either Coca-Cola or Facebook in the same period.

So what is wrong with this in Galloway’s estimation? In a phrase – too much control in the hands of four companies. These four hold a 24% share of the S&P 500 Top 50 and, at a combined market cap of $2.8 trillion, are close to the total value of every stock traded on the Nasdaq in 2001.”

With the Big Four’s technological capabilities that we tap into daily, it makes one wonder if we are in control of our lives or are just part of a fiefdom.

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