Technology Monopolies Keep Growing and Winning

Some people are expecting some kind of crash for the big technology stocks. The run in the big technology companies has given Jeff Bezos a net worth over $200 billion.

When you get historically wealthy like Rockefeller or Carnegie then this wealth is usually only lost when the next generation cannot handle it or if governments take it.

Amazon and Facebook are global. The US hearings on the monopoly power looked like there would be no action. If there was a splitting of the companies like the ATT split. The pieces of ATT became more valuable after the split. Jeff Bezos would not control all parts of an Amazon Retail, Amazon Cloud and Amazon Fulfillment but he would continue to own most of them.

Walmart kept growing after it made Sam Walton the richest man in the world. His three main living heirs have a combined $170 billion.

There was no coming back for most mom and pop stores or Sears or KMart.

The rise of Amazon has put Walmart in a trailing position. The Walmart heirs have probably taken dividends and invested in the big technology companies.

Apple is dominant as well. When did people stop expecting the previous cellphone leader Nokia to rise to the competition? At its peak, Nokia was worth over $300 billion. Now it is $28 billion. Apple is worth $2.16 trillion.

The major US technology giants are worth over 50% of all US stocks.

This makes many people argue there is a bubble and they are overpriced. Valuation is not cheap but they still have 20+% growth each year. They also have more information about what people are buying and will be buying. They also are using the money to build more and more technology advantages.

Falling from the top is not easy or simple. Especially if they are at the top because they have the best technology, monopoly advantages and the best people. It was easier to displace the top company if it was an oil company.

People complain about how the top 1% of individuals keep winning. The big technology companies are at the very top of the business and financial food chain.

People and companies very rarely get into the top ten globally via luck. If there was luck involved then they have spent the last ten years solidifying their advantages. Riding along the rise of the technology super-elite has been among the best investment strategies for the last 20 years.

The best investment returns came from the FAANG (Facebook, Apple, Amazon, Netflix, and Google). It was not the SP500.

It seems safe to assume the winners will keep winning.

SOURCE- Wikipedia, Investopedia
Written By Brian Wang, (Brian owns technology companies directly and in index funds)

45 thoughts on “Technology Monopolies Keep Growing and Winning”

  1. In 1999 I made the observation in a business meeting that there were only so many eyeball-moments to go around. My remark was roundly rejected. Dotcomm crash, 2000. Mega-opolies, 2020.

  2. They consider Amazon a technology company
    Because Inc. (AMZN) poured billions of dollars into research and development (R&D) last year, surpassing all of corporate America and spending 41% more than 2016 when it was also top of the list.
    That’s according to an analysis by Recode, which found the e-commerce giant spent nearly $23 billion on R&D in 2017
    Amazon’s spending has gone to boost its cloud computing business Amazon Web Services (AWS) as well as to beef up Alexa, its voice-activated digital assistant, and to support futuristic projects like its Amazon Go cashierless store, which it rolled out earlier this year.  
    How many `convenience stores` do you know do research in A.I or cloud computing.

  3. "And their hugeness can become a problem, if by its mere existence it forbids others from appearing and growing."

    Still not sounding like a monopoly.

    "…once the services they provide become much more well defined and standardized."

    Will those well defined and standardized services be able to compete with each other. How could Amazon's retail business be split in 2, eCommerce makes regional demarcation a bit irrelevant.
    A split between AWS and retail wouldn't be in competition, and the new buyers could be paying for what ends up as vapor. Any part that is calved off, the retail half could always recreate it's own Ex: AWS service, the evolutionary progenitor hypervisor(Xen & KVM) sources are freely available.

    I usually respond with extreme derision when people mention the likes of FB and the word monopoly in the same sentence. The only way their service could get any cheaper for consumers to use would be for FB to pay those narcissists to waste more of their lives posting irrelevance on their website. They never articulate exactly how FB runs afoul of the Sherman Act of 1890, Clayton Act of 1914 or Federal Trade Commission Act of 1914.

  4. " that captured network effects are civilization's crack cocaine — public or private sector."

    -> And you know about crack cocaine a lot, apparently..

    " The biological agents being unleashed on the West by the CCP are cultivated from among the likes of The Mises Institute, the American Enterprise Institute, the Chicago School of Economics"
    -> You forgot about the impending invasion by the reptilians

    Just saying

  5. Funny how when the orange man says he'd have to think about whether he accepts the election results, you and CNN and other Dems assume he's planning to call out his vast brainwashed army of redneck deplorables (or maybe the Russian army?) to try staying in office by force.

    But when Hillary comes right out and says that Biden absolutely shouldn't accept the election if Trump wins, clearly she just means that the Dems should take to the courts and demand recounts and any other perfectly legal options open to a candidate who is concerned that a mistake (or something shady) has happened.

    (Stop making me defend Donald Trump!)

  6. Yep, what the other gender thinks and likes (or the same, if you are into that) drives a lot of things in our lives.

  7. Agreed. Big doesn't mean monopolistic, illegal behaviors. But they may cross the line at any moment. And their hugeness can become a problem, if by its mere existence it forbids others from appearing and growing.

    These companies became so big because they could create and manage whole new markets and services, and their size may now be necessary due to the complexity of creating the technology allowing their business to exist and continue.

    But a few may eventually need to get the chop and be partitioned in several, once the services they provide become much more well defined and standardized.

  8. With AI, robotics, and automation in general. I don't see a labor shortage by 2030, quite the reverse, actually.

    After a decade of equity based income rising substantially in proportion to wage based income, this would seem to indicate a huge inequality between those who were invested and those who were not.

    Whereupon demand would fall, given the inability of the non-invested to purchase the necessary quantities of goods and services, reducing opportunities for high return equity investments. Which would be expected to lead to "too much money chasing too few investments."

    Eventually it will no doubt sort itself out, but there will most likely be a lot of pain along the way.

  9. Apple, Google, Facebook, and Amazon are generally considered to be in the top five (some say ten) worldwide for AI development. AI is projected to grow by at least two orders of magnitude . . . in the short run.

  10. well, now we know why: "…A new study says that Apple iPhone users are more likely to get a match than Android owners on popular dating apps — and you have almost no hope if you use Blackberry.

    According to the study, owners of Apple's iPhone, Apple Watch and AirPods who had those devices in their dating profiles were up to 76% "more attractive" than users of others devices or those who had no tech displayed.

    The study, carried out by CompareMyMobile, analyzed the results of 50,000 "swipes and matches" on popular dating apps. The site had created identical profiles where the only difference was the technology brand that appeared.

    Per the results, having an iPhone increased a user's chances of being "swiped right on" up to 76%. An Apple Watch contributed 61%, while AirPods contributed 41%.

    As far as Android devices, having a Samsung on display actually provided a positive sentiment with an 19% increased likelihood of a match.

    From there, it was downhill for Android users. Google devices decreased a user's chances of being matched by 10%. Sony devices decreased it by 14%, Huawei handsets dropped it by 23%, and OnePlus devices decreased it by 30%.

    The worst device to show off in a dating profile, the study found, was a BlackBerry. Having a BlackBerry actually negatively impacted the chances of being matched by 74%…" .. haha jokes. jokes. jokes.

  11. "It seems safe to assume the winners will keep winning."
    So said people before the stock market crash of 1929, 1997 and 2008 and so on..

    When monopolies are based on being monopolies alone they may crash soon.
    China will challenge them

    Just saying


  12. Note these are all American companies at a time when American policy is to sanction any country it doesn't like, including China and Russia which has some of the best entrepreneurs and STEM researchers, respectively. The internet is bifurcating and some of the world's largest tech companies will be on the Chinese side of it. Europe is being pushed away from America, with former allies p.o.ed at American policy, NATO disengagement, etc. and being pushed towards China and even Russia. They may adopt some of their tech too, and don't like the loss of privacy from Google and Microsoft (not on the FANNG list, but in the same neighborhood) either. American monopoly, not tech monopoly, is what will break first.

  13. It's hard to follow what you are claiming. You write like a bot..

    I'm having a stab at it: the chinese are somehow fueling something something so that universal income is not implemented in the USA. The result will be civil war. Was that correct?

  14. I expect that Apple might lose out to Android in the smart phone market. Then it will slowly wither away.

  15. Yep big money gets funnelled into think-tanks, astro-turf groups, and political donations. That means the interests of big money tends to win over the interests of the little guy.

  16. "'green energy' " Seems the idea of Carbon tax has both libertarian and practical benefits. No way it will happen!

  17. (This is in response to scattered comments downstream) The term "regulation" is confused in that it includes both economic manipulation and just plain anti fraud food labeling requirements, for example. I'm a lot more willing to let gov enforce fraud laws than control "regulate" the economy for political reasons. If we mix the ideas, neither pro nor con "regulation" makes practical sense.

  18. But most important is the fact that the people demanding Trump and his supporters accept the outcome of the 2020 election, haven't themselves accepted the outcome of the 2016 election, and aren't likely to accept the outcome of 2020 election if it doesn't go their way.

    As an independent, (small L) libertarian, even though I can find things I agree with on both sides of the political divide in the United States, it seems to me that those 'dyed in the wool' democrats, and those on the far left, politics for them comes down to a 'heads I win – tails you lose' dynamic.

    Here's the thing you have to have to come to terms with, if you want to understand politics in the US… No matter which republican had won the nomination and went on to win the Presidency, that person would be painted as the most heinous racist there ever were, and would be the 'next Hitler.'

    My point being, even Mitt Romney was called a racist in 2012, but now he's the darling of the American left, so long as he attacks the current republican in the Presidency. George Bush was the previous 'Hitler' before Trump became 'literally Hitler!'

    In my 5 decades, I've learned to just tune out democrats screaming, "racism," because the charge more often than not is a cudgel the DNC uses to get their way politically.

  19. That's a false dichotomy. It's not an either or situation, because accepting the results of an election is conditioned on the idea there aren't any irregularities in that election.
    NO its fecking not once you open that box .. you had bloody well hope your democracy does not collapse because if it does and if the other side win then there had better be a god, because nobody else will help you.

    It does not `scream` bloody fraud , Mr Trump is a highly intelligent man is president of the most powerful country on earth with the technology of the same, will access to TRILLIONS and you are telling me he cant pump a extra 50 Billion or even 500 Billion (to ensure Democracy I would spend 10 Trillion because without it you are lost a Russia a China) if need be at this to make it secure .. rubbish .. you can secure it .. if not what then? .. What happens when you open that political door?

    You say your a independent thinker .. then think .. if you get to the point were people don`t have to accept the result, even when they can secure that votes veracity … Even if Mr Trump is everything you hope, you said `maybe` to a vote and one day their will be a Democratic President and you handed them this key .. what then?

  20. Bezos is the proprietor of a convenience store, why do most consider Amazon to be a tech company. It's subsidiaries that would fit the definition isn't the largest source of revenue, that being AWS. Would their 3rd party retail sales file under retail or tech sales as a service?

    What exactly are these tech companies supposed to be monopolizing?
    Big != monopoly

    Doesn't Amazon do ~6% of the total US retail pie?

  21. Dealing with right wingers who are against gay people makes me feel like I'm dealing with a bunch of closet cases, totally ashamed of the fact they played around sexually with a friend when they were 12 and liked it, but since they've chosen never to enjoy that again, they believe in their own minds that no one else should enjoy it either…. That's how I feel about those right wingers.

    What I think is: to each his own.

    I distinguish these people from right wing Christians, because I've dealt with far too many Christian, republican voters who had absolutely no issue with gay people. As an atheist, in the conversations I've had with them, it seems they have the attitude that if they started eliminating people out of their lives for the sins they had committed, it would be an awful lonely life.

    After all, doesn't Christianity teach that we're all sinners?

    "has or has not the current president of a Democracy refused to answer point blank, in the affirmative that he of course will accept the result OR that he will `see` if he accepts the result of a election or not?"

    That's a false dichotomy. It's not an either or situation, because accepting the results of an election is conditioned on the idea there aren't any irregularities in that election.

    One side of the political equation in the US is demanding the use of ballot procedures never tested or used on a national election in the the US, let alone even a plurality of states… That screams fraud.


  22. Talking of how the biggest cant easily fall and how solid they are. The biggest companies were:

    • Exxon Mobil in 2010
    • GE in 2005
    • Citigroup in 2001
    • Microsoft in 2000 – Dud investment until Nadella took over
    • IBM in 1980s

    The mighty dont stay mighty for long!

  23. This is what people say at the top of most market manias. In 2014, people would say $100 oil as far as the eye can see. In 2008, people said shape oil and gas is not a serious contender. In 2000, Apple, Amazon, Facebook (did not exist), and Google were not serious contenders. In 2007, they became more dominant. In 2020, they are basically monopolies. During technological shifts, the first few decades see a good deal of turnover in extreme fortunes. Then during high productivity, median income growth periods there is less turnover but also less extreme wealth because technologies are being more widely adopted and profit pressures from rising wages and labor shortages become predominant.

    In short-term by the end of the decade, the current tech and retail powerhouses will become part of a larger ecosystem of companies and lose their dominance. Wages will begin rising as the incomes and wealth of the top 1% and 10% begin declining.

  24. And dealing with the far right makes you feel? .. the far left and far right are BOTH a bloody pain in the neck ..
    Millions died under both far right and left, the US being so bloody powerful means your current politics are scaring the b`Jesus out of good proportios of the world.
    The video is funny and makes a point
    has or has not the current president of a Democracy refused to answer point blank, in the affirmative that he of course will accept the result OR that he will `see` if he accepts the result of a election or not?

  25. A key to the concept of "monopoly" (as opposed to the orig meaning of gov granted monopoly) is that of *barriers to entry* into the market. If entry is easy, or not barred, then an illegal monopoly does not exist, as anyone who wants to could move in and compete. The monopoly operator is just doing such a good job that nobody bothers. BTW, anti-trust is more about collusion than monopoly, but the terms get mixed. Anyway, these tech people/companies can move in on markets pretty easily. Also, as we enter Space, the opportunities will exceed the current big guys. One of them does seem to have an advantage there, however!

  26. Nice updated pict Brian! You look cleaner…

    On topic, give it three or 4 generations after Bezos’s death and I expect the money to be mostly gone.

  27. I am a UL citizen that closely follows US politics.
    Over the past 20 years as these companies have rose BOTH the Democrats and the Republicans have at one time or other held the levers of power .. neither has shown any real commitment to taxing or regulating such businesses.
    Conclusion? .. both are steeped in corporate money.

  28. Ever since Mao, the Chinese Communist Party has understood, as part of its _real_ Unrestricted Warfare doctrine (not the one in the paper by that name), that captured network effects are civilization's crack cocaine — public or private sector. That's why if one looks carefully at the ordinary tendency of aristocrats to shift tax burdens from property onto activity — you can see how to speed up the decay of a civilization by orders of magnitude. The Chinese have a long memory. The Opium Wars were declared by Mao to be part of "The Century of Humiliation". Forget fentanyl. The biological agents being unleashed on the West by the CCP are cultivated from among the likes of The Mises Institute, the American Enterprise Institute, the Chicago School of Economics — all providing rationalization for ignoring the capture of network effects and the resulting decadence of the most powerful private sector monopolies. On the public sector side, opposition to unconditional basic income as replacement for the welfare state and other government transfers is equally important — that's why the Democrats are so opposed to it that it isn't unreasonable to suspect them of knocking off MLK who, in his last book, recommended it rather than affirmative action. Sure, you have an occasional loose canon like Charles Murray writing "In Our Hands: A Plan To Replace the Welfare State" with UBI, but they can easily be suppressed.

    The impending war within the West may be inevitable as a result.

  29. That's because they vote democrat… The left will do anything to keep the FTC from doing its job with regard to tech companies.

  30. "There was no coming back for . . . Sears or KMart."

    Their own fault, I worked in a K-Mart when I was in college and I could see what the Meijer's Thrifty Acres (pretty much a precursor of a Super-Walmart) across town was doing to us. A part-time sales clerk could see it, their management could not.

    Also, when Sears and K-Mart merged, they should have changed their name to S-Mart. I would have gone there for all my boomsticks because I'd be shopping smart, I'd be shopping S-Mart.

Comments are closed.