One year has now passed since Donald Trump’s inauguration.
In the front row, instead of bankers and oil tycoons, sat the leading figures of major U.S. technology and media companies. Elon Musk, the owner of Tesla and SpaceX and one of Trump’s allies during the campaign, was seated next to Mark Zuckerberg, founder and CEO of Meta, the company behind Facebook and Instagram. In the same row were Jeff Bezos, founder of Amazon, and Sundar Pichai, CEO of Alphabet, Google’s parent company.
Soon after, Elon Musk was appointed to the U.S. government, taking charge of the Department of Government Efficiency. Zuckerberg made repeated trips to Mar-a-Lago, Trump’s property in Florida, and changed moderation policies on Facebook and Instagram, among other measures. In addition, Amazon, OpenAI, and Google each donated one million dollars to the inauguration committee of the new administration.
This was not always the case. Yet the prominence of these companies is easy to explain. The combined market capitalization of Apple, Microsoft, Google, Amazon, Facebook, and Nvidia now places them at the level of the world’s second-largest “economy,” with an estimated value of $20.7 trillion, surpassing China’s GDP of $18.4 trillion and trailing only the U.S. economy, which reached $28.3 trillion.
It is not difficult to foresee who will soon be in pole position when it comes to setting the rules of the global game. While the U.S. and Chinese economies grow at an annual rate of around 4% to 5%, the value of technology companies, for example those listed on the Nasdaq, grows at roughly 20% per year. While economies advance at a trot, technology leaders gallop ahead. This logic applies to both hemispheres.
Until now, the world’s largest brands have steadily generated value thanks to their high degree of differentiation, customer centrality, and innovation, consistently appearing on rankings of the most valuable companies. This is the story of Apple, Mercedes, Samsung, McDonald’s, L’Oréal, Bank of America, Allianz, Louis Vuitton, Caterpillar, and Accenture, to name just a few examples from different countries and industries within a capitalist system. All operate in highly competitive markets, facing strong rivals with significant perceived value.
Let us then look more closely at the business models of some of these technological giants to understand the foundations of this new corporate era and the emergence of a new paradigm.
Many technology companies operate with two types of stakeholders. First, companies that seek to monetize their presence in the cloud through millions of apps included in Android ecosystems, such as Google’s Play Store, or iOS ecosystems, such as the Apple App Store. Second, users who act as unpaid workers, feeding the data that fuels social media algorithms for professional or personal purposes, through their preferences, biases, jokes, insults, reviews, and the intimate details of their lives. This is how Google Maps alerts us to traffic on our route or suggests monuments and restaurants not to miss after a virtual search of a city.
As users, we participate voluntarily and enjoy the process. But when all is said and done, we are witnessing ecosystems that feed on free and ever-expanding content, within which a vast array of virtual stores, apps, pay significant sums to gain visibility in this new “shopping center.”
We are truly facing an unprecedented situation. While personnel costs in major automotive companies, pharmaceutical firms, hospitality, banking, or insurance can range from 30% to 70% of generated revenue, in large technology companies this figure does not exceed 1% of turnover. This is because most of the work is carried out for free by billions of people.
We are facing an almost feudal system. It is therefore no surprise that the inauguration photo of the U.S. president featured these guests in the front row. The question that remains for the near future is who will be taking the photo and who will be the one being photographed.
Pedro Celeste, Professor at CATÓLICA-LISBON