Amazon Wins Without Even Trying
Three months ago, the Amazon chief executive Jeff Bezos effectively declared that his company would try to lose money. Instead, Amazon declared on Thursday the largest profit in its history.
It was a bit awkward.
Companies are supposed to make money, for sure. But this comes at a moment when politicians and the public are wondering if America’s digital superstars are so powerful — and perhaps, tilt the game to their advantage — that they simply can’t be beaten.
A company like Amazon planning to lose money and instead making billions of dollars in profit is a pretty compelling sign of dominance.
This week in technology made me think of that old line about a once dominant car company: What’s good for the United States was good for General Motors, and what was good for GM was good for the country. (There’s a debate about what the GM executive meant by this, but it’s still a good line. Stay with me.)
The bosses of four of America’s tech giants, dragged (virtually) in front of Congress this week, said some version of that old saw. They said that their successes are uniquely American, and that their companies enrich the country and the lives of people who live in it.
That’s true. It is, however, hard to ignore that the fortunes of the country and its leading corporate citizens are currently going in opposite directions.
We learned on Thursday that the United States wiped out five years of economic growth in a matter of months, as my colleague Ben Casselman put it. During that period, Amazon, Apple, Google and Facebook mostly raked in money hand over fist.
Mostly, this makes sense. During a pandemic, we have needed the products and services these companies provide. That does not, however, guarantee them financial success.
(Read more: Last year, my colleague Kashmir Hill wrote about trying and mostly failing to cut the five big U.S. technology companies out of her life. Now, Kash is reflecting on what she learned from that experiment.)
Facebook’s Mark Zuckerberg said a few months ago that the way his company makes money — selling ads to a local bakery or an online luggage maker — tends to naturally rise and fall in tune with the economy. That’s generally true, but not right now. The economy is tanking at its worst rate in many decades. Facebook’s advertising sales are fine.
What has been bad for the United States hasn’t yet been bad for Big Tech. Is, then, what’s good for Big Tech good for the country? I’m not sure.
There’s an axiom in technology that change happens gradually, then suddenly. Tech companies can seem unbeatable until they aren’t — often because of some rapid evolutionary change. It happened to Nokia and Sun Microsystems — whose old headquarters was taken over by Facebook in a symbol of one empire replacing a crumbled one.
So could there be a Fall of Rome moment for today’s tech superpowers? Yes, in theory, and we might never see it coming. Right now, though, despite broader economic pains and a growing backlash to their power, these four American tech superpowers appear to be as close to invulnerable as you can get.