In mid-July, Bloomberg published a revealing, or if you wish, shocking message: a list of the fifteen ultimate corona crisis stock market winners. The top-10 consists of ten men, almost all of them 50+ and almost all of them are American.
The world’s richest man Jeff Bezos became even richer: he added $74.5 billion to his net worth in 2020. Only about 15 months ago, Bezos divorced his wife Mackenzie, and had to give her $35 billion of his wealth as a settlement. By now, Bezos’s estimated assets stand at an all-time high of more than 190 billion dollars - a large part of which is represented by his shareholding in Amazon. According to Bloomberg, Bezos added $963.8 million to his wealth on 17 July alone.
MacKenzie can have no complaints either: her package of shares in Amazon was worth $63.2 billion on 17 July, an increase year to date of $26.1 billion. These record rises are mainly due to the American central bank, which decided to provide massive liquidity support on 23 March. The S&P subsequently rose by 35% from its trough, with tech stocks rising even more.
Monopolies
The reason to give attention to these masters of the universe are the hearings that are taking place this week in the House of Representatives of the US Congress. These companies are on their way to becoming monopolies of their own: Google/Alphabet runs the world’s dominant search engine, Microsoft is the master of operating software, Facebook stores all our personal data and Amazon is the largest retail chain in the world with its home assistant Alexa who can hear everything in the house and bedroom.
It is rather delusionary: the tech giants once promised freedom and individual development, but what we got as users is expropriation - expropriation of our financial and medical data and expropriation of our subconscious feelings and desires. And if the omens do not deceive, then this is only the beginning: self-learning machines and algorithms will potentially lead us to a world where the machine understands us better than we do ourselves and where sophisticated techniques could play on our subconscious feelings. At the top of that menacing dystopia is a handful of people who are so rich and so powerful that even states may not be able to halt their dominance.
Free markets given up
Matt Stoller, author of the book Goliath, The Hundred Years War between Monopoly Power and Democracy said about the tech giants: ‹They distort competition and undermine democracy in America›. He argues that politicians can break these new monopolies with regulation, or by simply breaking them up, as happened at the beginning of the twentieth century. ‘ It’s only a question of political will,› he says.
Monopolies, which are a consequence of liberalisation, deregulation, globalisation and rapid technological innovation, is a major theme among economists. For example, Thomas Philippon writes in his bestseller The Great Reversal that the United States has given up the idea of free markets. Newcomers hardly stand a chance, and all promising newcomers are being bought up.
The question is whether American politics is prepared to cut and unbundle the six companies, which together already account for more than 20% of the market capitalisation of the S&P 500. Wall Street doesn’t have to: they don’t necessarily want more competition, they want more stable earnings growth, and monopolies can take care of that.
From a political point of view, the dilemma is that these mastodons of the S&P can play a key role in the battle for the new technology-driven world hegemony. In this battle, China and the United States are rivals. In the former, the government plays a crucial role in the background of local techs, while in the United States this happens in a much more subtle way.
There is no longer a frontline
Consultant Joshua Cooper Ramo, author of the bestselling book The Seventh Sense, noted the digital revolution has led to ‹hyperconnectivity›, which poses a constant threat.
‘In a world entirely connected to the internet, there is no longer a front line. It can be a battlefield everywhere,’ he said, adding: ‹It not only means the end of the distinction between places of peace and war, it also means the end of the idea that there would be a distinction between periods of peace and war. The network is always active, and that means that the risk is always there.’