WEBVTT 1 00:00:00.230 --> 00:00:02.489 It's been a bad year for big tech. 2 00:00:02.990 --> 00:00:07.830 We're used to seeing companies like Apple, Amazon, Google and Meta 3 00:00:07.910 --> 00:00:10.570 at the very top of the global corporate ladder, 4 00:00:10.830 --> 00:00:14.630 but the economic headwinds of 2022 have hit the sector hard. 5 00:00:16.360 --> 00:00:17.029 Yes, absolutely. 6 00:00:17.040 --> 00:00:20.880 This year has been really, really painful for tech stocks. 7 00:00:20.880 --> 00:00:25.840 When macroeconomic conditions and the products themselves kind of reach 8 00:00:25.840 --> 00:00:30.120 a certain age, then things calm down and sometimes there's a bust. 9 00:00:30.950 --> 00:00:34.510 As well as a shaky economy, the world's biggest companies have 10 00:00:34.510 --> 00:00:37.830 also been grappling with increased regulatory scrutiny 11 00:00:37.830 --> 00:00:41.030 and legal challenges from Beijing to Brussels. 12 00:00:42.600 --> 00:00:44.350 The European Commission has been using its existing 13 00:00:44.360 --> 00:00:45.979 competition powers. 14 00:00:47.320 --> 00:00:51.040 To target what they perceive as potentially abusive conduct by the 15 00:00:51.040 --> 00:00:53.110 largest digital platforms, Halo. 16 00:00:53.120 --> 00:00:57.560 The economic fundamentals of these companies have similarly been, 17 00:00:57.560 --> 00:01:00.800 you know, been threatened by this crackdown. 18 00:01:01.350 --> 00:01:02.650 Is the party over? 19 00:01:02.830 --> 00:01:05.429 In this video we'll ask if this is just a bump in the road 20 00:01:05.440 --> 00:01:08.830 for big tech or a full blown existential crisis. 21 00:01:09.190 --> 00:01:11.940 There is a season for all of these technologies 22 00:01:11.950 --> 00:01:15.209 and particularly with consumer facing products. 23 00:01:15.230 --> 00:01:16.380 Consumers are fickle. 24 00:01:16.390 --> 00:01:17.530 You know, we move on. 25 00:01:18.800 --> 00:01:20.860 It's all coming up on business beyond. 26 00:01:22.240 --> 00:01:24.509 As you've probably already gathered, we'll be using the term big 27 00:01:24.520 --> 00:01:27.580 tech quite a lot in this video, But what exactly does it mean? 28 00:01:29.040 --> 00:01:31.350 Big tech typically refers to the most dominant firms in 29 00:01:31.360 --> 00:01:33.459 the information technology sector. 30 00:01:33.520 --> 00:01:36.020 That usually means the US tech giants. 31 00:01:37.180 --> 00:01:42.580 Alphabet, which is Google, Amazon, Apple, Meta, 32 00:01:42.580 --> 00:01:45.280 formerly known as Facebook, and Microsoft. 33 00:01:46.520 --> 00:01:48.950 The big in the name refers to both their market value and the 34 00:01:48.960 --> 00:01:51.390 often mammoth scale of their operations. 35 00:01:51.400 --> 00:01:55.320 When we're talking about tech, big tech, what I mean by that is what 36 00:01:55.320 --> 00:01:58.800 would be what we'd refer to as mega cap stocks. 37 00:01:58.800 --> 00:02:02.040 So those are those companies, you know, 38 00:02:02.160 --> 00:02:05.110 brushing on the or have at least touched on the trillion 39 00:02:05.120 --> 00:02:08.190 dollar valuation at some point in their in their life. 40 00:02:08.990 --> 00:02:13.110 Only a handful of companies meet that criteria, all of them in the US. 41 00:02:13.630 --> 00:02:16.790 They dominate the Internet and most areas of digital commerce, 42 00:02:17.230 --> 00:02:21.310 from search to social media and from online retail 43 00:02:21.310 --> 00:02:24.590 to computers and smartphones. 44 00:02:24.590 --> 00:02:27.870 Big tech is the shorthand for the small number of mostly 45 00:02:27.870 --> 00:02:32.750 consumer facing companies based in the Bay Area and Seattle 46 00:02:32.750 --> 00:02:34.570 in the West Coast of the United States. 47 00:02:35.840 --> 00:02:38.980 Microsoft, Amazon, Apple Meta. 48 00:02:39.470 --> 00:02:40.490 And. 49 00:02:41.990 --> 00:02:43.570 What am I missing Google? 50 00:02:44.840 --> 00:02:47.350 These companies are commonly referred to as the Big 5, 51 00:02:47.360 --> 00:02:49.910 but others, such as the streaming service Netflix, 52 00:02:49.919 --> 00:02:52.960 electric carmaker Tesla and the chip maker NVIDIA are 53 00:02:53.120 --> 00:02:55.300 also occasionally included. 54 00:02:55.320 --> 00:02:57.990 That's why there's a wide range of acronyms associated 55 00:02:58.000 --> 00:03:01.960 with big tech combining letters from some or all of the companies. 56 00:03:02.760 --> 00:03:06.720 The rise of several Chinese tech giants in recent years means they are 57 00:03:06.720 --> 00:03:09.940 also increasingly part of the big tech conversation. 58 00:03:12.470 --> 00:03:16.630 China is the only country other than the United States that have so 59 00:03:16.630 --> 00:03:19.750 far been able to foster tech giants. 60 00:03:19.910 --> 00:03:22.420 So in terms of market capitalization, you know, 61 00:03:22.430 --> 00:03:27.270 companies like Alibaba, Tencent make one Pinduoduo. 62 00:03:27.389 --> 00:03:31.000 They're among the top 10. 63 00:03:31.000 --> 00:03:32.780 Tech Tech firms in the world. 64 00:03:34.080 --> 00:03:37.200 But mostly, big tech means the five firms we listed at the beginning. 65 00:03:39.960 --> 00:03:42.960 Before we take a deeper look at some of the difficulties these companies 66 00:03:42.960 --> 00:03:44.260 have been experiencing. 67 00:03:44.510 --> 00:03:46.740 It's worth reminding ourselves just how much they've come 68 00:03:46.750 --> 00:03:50.550 to dominate global business and our personal lives in such a 69 00:03:50.550 --> 00:03:52.050 short space of time. 70 00:03:53.320 --> 00:03:56.400 Until relatively recently, the world's most valuable companies 71 00:03:56.400 --> 00:03:59.060 came from industrial and energy sectors. 72 00:03:59.280 --> 00:04:01.220 Microsoft is the exception. 73 00:04:01.360 --> 00:04:04.510 It's been one of the most valuable for more than 25 years, 74 00:04:04.520 --> 00:04:07.640 and in 2010 was joined in the world's top five by Apple. 75 00:04:09.280 --> 00:04:11.340 Today, big tech firms are dominant. 76 00:04:11.480 --> 00:04:14.270 Four of the world's current top five most valuable companies come 77 00:04:14.280 --> 00:04:17.950 from the sector, namely Apple, Amazon, Alphabet. 78 00:04:18.430 --> 00:04:19.570 And Microsoft 79 00:04:21.960 --> 00:04:24.750 Silicon Valley has a long history, but really the last 20 years 80 00:04:24.760 --> 00:04:27.300 have stood apart in the scale and the speed. 81 00:04:27.320 --> 00:04:29.550 And how did these companies become so large? 82 00:04:29.560 --> 00:04:32.640 In part because they started doing more things and coming into 83 00:04:32.640 --> 00:04:34.750 more areas of life. 84 00:04:34.760 --> 00:04:38.640 Not just a device that sits on one's desk that's useful for work 85 00:04:38.640 --> 00:04:43.920 or for school, but a, you know, platforms that and 86 00:04:43.920 --> 00:04:47.060 apps that facilitate all sorts of things. 87 00:04:47.270 --> 00:04:50.670 Experts like Margaret O'Mara argue that the key to the astonishing rise 88 00:04:50.670 --> 00:04:53.500 of big tech is something which you may well be holding in your 89 00:04:53.510 --> 00:04:54.490 hand right now. 90 00:04:54.950 --> 00:04:56.130 The smartphone. 91 00:04:56.190 --> 00:05:00.830 I think a really important enabler of this was the smartphone, 92 00:05:01.670 --> 00:05:05.430 particularly the iPhone and and then following that, 93 00:05:05.430 --> 00:05:09.230 the Android, Google, Android phone, which all and all the apps that 94 00:05:09.230 --> 00:05:09.940 were built for that. 95 00:05:09.950 --> 00:05:15.070 Think about Uber and Lyft or Airbnb or these companies that 96 00:05:15.070 --> 00:05:17.810 really are made possible by. 97 00:05:18.510 --> 00:05:22.020 Cell phone use and or having a device that you're carrying with 98 00:05:22.029 --> 00:05:26.270 you that is enabled to scale up in an extraordinary way. 99 00:05:26.800 --> 00:05:30.190 Another thing which has enabled the scale up is an unprecedented 100 00:05:30.190 --> 00:05:31.370 amount of money. 101 00:05:31.470 --> 00:05:35.070 A decade of record low interest rates has been a huge boost to big tech. 102 00:05:36.680 --> 00:05:40.000 Since the global financial crisis, there has been a quantitative easing 103 00:05:40.000 --> 00:05:42.350 by central banks in the US and elsewhere. 104 00:05:42.360 --> 00:05:45.150 There's been a great deal of money slot pushing around the 105 00:05:45.160 --> 00:05:47.870 financial system with wealthy people looking to invest in 106 00:05:47.880 --> 00:05:49.990 the stock market, and tech has been a really, 107 00:05:50.000 --> 00:05:52.740 really luring that and so a lot of money. 108 00:05:52.990 --> 00:05:55.340 Has come in two companies, both public and private, 109 00:05:55.350 --> 00:05:56.290 in this sector. 110 00:05:57.720 --> 00:06:01.200 It all means we have well and truly been living in the age of big Tech. 111 00:06:01.200 --> 00:06:04.680 Since 2006, the annual revenues of the leading 112 00:06:04.680 --> 00:06:07.460 firms have swelled to eye watering levels. 113 00:06:07.839 --> 00:06:10.630 Since the financial crisis, the accumulation of 114 00:06:10.640 --> 00:06:14.320 profits has accelerated, with Apple and Amazon supplanting 115 00:06:14.320 --> 00:06:16.660 Microsoft in the race for top spot. 116 00:06:16.800 --> 00:06:19.390 Now Amazon, Apple, and Google routinely rake in 117 00:06:19.400 --> 00:06:22.880 hundreds of billions of dollars per year in revenue, helping to explain 118 00:06:22.880 --> 00:06:26.060 why these companies are valued in the trillion dollar range. 119 00:06:27.700 --> 00:06:29.520 So what could possibly go wrong? 120 00:06:30.720 --> 00:06:32.380 Plenty, if this year is anything to go by. 121 00:06:33.470 --> 00:06:36.710 Throughout 2022, and particularly in recent months, 122 00:06:36.830 --> 00:06:39.170 tech stocks have lost a lot of value. 123 00:06:39.270 --> 00:06:42.220 Take a look at this graphic showing the performance of so-called 124 00:06:42.230 --> 00:06:45.490 FFA and G stocks, which includes Netflix since August. 125 00:06:46.760 --> 00:06:49.110 Meta, Amazon, Apple and Google have all suffered 126 00:06:49.120 --> 00:06:52.360 significant losses in value, with companies like Meta losing 127 00:06:52.360 --> 00:06:55.620 as much as 40% in the space of a few months. 128 00:06:55.800 --> 00:06:59.240 Netflix did perform markedly better as it rolled out a 129 00:06:59.240 --> 00:07:01.700 new ad based subscription model. 130 00:07:03.160 --> 00:07:06.279 In one week alone at the end of October, close to $800 131 00:07:06.279 --> 00:07:09.880 billion was wiped off the value of the biggest US tech companies. 132 00:07:10.550 --> 00:07:12.500 A big reason is the same one that helped make 133 00:07:12.510 --> 00:07:15.670 these companies so big in the 1st place interest rates. 134 00:07:17.950 --> 00:07:20.740 Rising interest rates are a reflection of a global economy 135 00:07:20.750 --> 00:07:24.670 struggling on multiple fronts, fuelling uncertainty around stocks, 136 00:07:24.670 --> 00:07:26.780 which had at times looked invincible. 137 00:07:26.790 --> 00:07:30.230 More highly valued companies, or growth stocks, as you might 138 00:07:30.230 --> 00:07:34.070 have heard them called, are particularly sensitive to rising 139 00:07:34.070 --> 00:07:37.550 interest rates because what happens is investors are no 140 00:07:37.550 --> 00:07:42.030 longer kind of convinced to take on the risk of investing in 141 00:07:42.030 --> 00:07:46.190 individual more expensive, quote UN quote expensive companies 142 00:07:46.190 --> 00:07:48.610 because they can get better rates on their savings. 143 00:07:48.790 --> 00:07:51.910 One big reason people don't want to be investing 144 00:07:51.910 --> 00:07:53.900 in stocks that they view as highly valued, 145 00:07:53.910 --> 00:07:56.850 and that's why tech has been particularly. 146 00:07:58.120 --> 00:07:59.430 Hard hit this year. 147 00:07:59.440 --> 00:08:02.270 It's a it's a mixture of those dynamics of higher interest 148 00:08:02.280 --> 00:08:05.640 rates and then kind of the the risk profile that investors are prepared 149 00:08:05.640 --> 00:08:10.040 to take as well as broader really huge economic uncertainty. 150 00:08:10.680 --> 00:08:12.870 But while all these companies are broadly grouped 151 00:08:12.880 --> 00:08:15.700 together as tech, they're on very different businesses. 152 00:08:15.720 --> 00:08:18.470 For those reliant on advertising revenue such as Meta, 153 00:08:18.480 --> 00:08:21.070 the company behind household social media brands like 154 00:08:21.080 --> 00:08:24.560 Facebook, WhatsApp and Instagram, the pain has been more acute. 155 00:08:25.590 --> 00:08:29.070 We saw that revenue last quarter was down 4% and 156 00:08:29.070 --> 00:08:32.590 that was because of a drop in advertising revenue. 157 00:08:32.910 --> 00:08:35.190 And there's a few things going on at play there. 158 00:08:35.200 --> 00:08:38.960 One of the things is that the price per ad was down 18%. 159 00:08:38.960 --> 00:08:40.420 That's really stark. 160 00:08:40.429 --> 00:08:43.750 That to me tells me that just more broadly, 161 00:08:43.750 --> 00:08:46.660 the advertising space and convincing marketing teams to 162 00:08:46.670 --> 00:08:50.110 part with their cash while the economic environment is so 163 00:08:50.110 --> 00:08:52.340 uncertain is is really, really difficult. 164 00:08:52.350 --> 00:08:55.660 But also there's a question, is it that we're seeing 165 00:08:55.670 --> 00:08:58.950 that Facebook and Instagram are actually losing their potency? 166 00:08:58.960 --> 00:09:02.250 You know, there's a lot of competition for iballs nowadays. 167 00:09:02.390 --> 00:09:05.190 Is TikTok more of a threat than it used to be? 168 00:09:05.200 --> 00:09:06.380 Things like that. 169 00:09:06.390 --> 00:09:10.230 While most businesses are vulnerable in a weak economy, the turbulence in 170 00:09:10.230 --> 00:09:13.020 tech is leading to some fundamental questions about 171 00:09:13.030 --> 00:09:15.010 the future for some of these companies. 172 00:09:16.280 --> 00:09:17.470 That's especially true of Meta. 173 00:09:17.480 --> 00:09:21.480 Anticipating a shift in social media habits, its CEO Mark Zuckerberg 174 00:09:21.480 --> 00:09:26.200 has placed a big bet on the concept of a 3D virtual reality Metaverse. 175 00:09:26.640 --> 00:09:29.320 His company is investing billions into what remains 176 00:09:29.330 --> 00:09:30.630 an unproven concept. 177 00:09:30.640 --> 00:09:34.120 There's a lot of potential there, but unfortunately getting it off the 178 00:09:34.120 --> 00:09:36.699 ground is astronomically expensive. 179 00:09:37.110 --> 00:09:40.370 The group's actually just upped what it plans to spend, 180 00:09:40.670 --> 00:09:43.460 and that wasn't taken very well by the market because what 181 00:09:43.470 --> 00:09:46.590 people are seeing is actually you're pouring money into an 182 00:09:46.590 --> 00:09:49.750 unproven concept and there's not really any stringent plans 183 00:09:49.750 --> 00:09:52.410 around how things are going to to work. 184 00:09:52.630 --> 00:09:55.710 But it's not just bets on the future that are putting off investors. 185 00:09:55.840 --> 00:09:58.830 Many experts are attributing big tech's current difficulties 186 00:09:58.840 --> 00:10:01.460 to decisions made to expand during the pandemic, 187 00:10:01.470 --> 00:10:04.260 when lockdowns around the world led to a digital boom, 188 00:10:04.270 --> 00:10:07.429 particularly in the area of e-commerce. 189 00:10:07.429 --> 00:10:11.950 Well, the companies are enormous and they became in the last two years 190 00:10:11.960 --> 00:10:15.630 during the Coronavirus pandemic, had this extraordinary scale 191 00:10:15.630 --> 00:10:18.449 up even beyond what they had imagined before. 192 00:10:19.720 --> 00:10:22.080 Point of reference, both Meta and Amazon doubled their 193 00:10:22.090 --> 00:10:25.240 workforces since February 2020. 194 00:10:25.240 --> 00:10:26.950 Amazon is really struggling at the moment. 195 00:10:26.960 --> 00:10:29.310 There's no two ways about it, you know, quarterly losses, 196 00:10:29.320 --> 00:10:31.390 $3 billion last last quarter. 197 00:10:31.400 --> 00:10:33.510 That's not something that you can just ignore. 198 00:10:33.520 --> 00:10:36.030 And the reason that that's happened is that the group 199 00:10:36.040 --> 00:10:40.160 spent massively on building its fulfilment capacity. 200 00:10:40.790 --> 00:10:43.300 Over over the pandemic, when, you know, we saw that huge boom in 201 00:10:43.309 --> 00:10:46.470 online shopping, I know I was, I was guilty of of that sitting on 202 00:10:46.470 --> 00:10:47.620 the sofa ordering everything. 203 00:10:47.630 --> 00:10:51.990 But the problem is now is that demand isn't matching that scale. 204 00:10:51.990 --> 00:10:53.540 So customers are looking for value. 205 00:10:53.550 --> 00:10:55.140 They're not buying big ticket items. 206 00:10:55.150 --> 00:10:57.660 They're only buying what they have to And for something 207 00:10:57.670 --> 00:11:00.870 like Amazon that is really, really going to hurt. 208 00:11:01.510 --> 00:11:04.460 Amazon and Meta are two of several tech giants to have laid 209 00:11:04.470 --> 00:11:07.300 off 10s of thousands of workers so far this year. 210 00:11:07.309 --> 00:11:09.820 So the layoffs we're seeing from those two companies as well as 211 00:11:09.830 --> 00:11:11.010 many other companies. 212 00:11:11.429 --> 00:11:16.030 In recent weeks has been in many ways a right sizing, a kind of. 213 00:11:16.030 --> 00:11:19.350 There was so much growth and it was anticipating 214 00:11:19.350 --> 00:11:22.140 that it was responding to these very extraordinary 215 00:11:22.150 --> 00:11:26.510 circumstances of 2020 in which so many of their users were 216 00:11:26.510 --> 00:11:30.470 at home relying on a delivery of groceries to your 217 00:11:30.470 --> 00:11:35.470 doorstep or communication by by computer only. 218 00:11:35.750 --> 00:11:41.270 And now that things have gone back to a late COVID post, COVID. 219 00:11:42.240 --> 00:11:45.520 World that demands gone, so you don't need all those people anymore. 220 00:11:45.920 --> 00:11:49.200 But it's not just economic pressures which have put the squeeze on big 221 00:11:49.200 --> 00:11:54.000 tech In recent years, firms like Meta, Google and Apple have faced 222 00:11:54.000 --> 00:11:57.040 mounting legal challenges on issues ranging from privacy. 223 00:11:57.590 --> 00:11:58.729 To antitrust. 224 00:12:00.000 --> 00:12:02.470 The European Commission, which is the executive arm of the EU, 225 00:12:02.480 --> 00:12:04.030 has been leading the charge. 226 00:12:04.040 --> 00:12:06.150 It has taken on the likes of Apple on its tax 227 00:12:06.160 --> 00:12:09.880 arrangements and has increasingly been challenging the market dominance 228 00:12:09.880 --> 00:12:13.679 of the world's biggest firms, in particular Google. 229 00:12:15.320 --> 00:12:17.470 The European Commission has been using its existing 230 00:12:17.480 --> 00:12:19.059 competition powers. 231 00:12:20.440 --> 00:12:24.280 To target what they perceive as potentially abusive conduct by the 232 00:12:24.280 --> 00:12:25.990 largest digital platforms. 233 00:12:26.000 --> 00:12:29.400 In particular, Google has been hit by three separate decisions. 234 00:12:30.190 --> 00:12:32.700 In relation to Google Shopping, which concerns 235 00:12:32.710 --> 00:12:36.190 concerns its search engine, Google Android which concerned its 236 00:12:36.190 --> 00:12:38.980 mobile operating system, and then Google AdSense which 237 00:12:38.990 --> 00:12:42.250 confirmed concerned its advertising business model. 238 00:12:42.910 --> 00:12:45.620 And all of those are part of a wider trend where there is 239 00:12:45.630 --> 00:12:49.870 a perception by regulators, in particular the European Commission, 240 00:12:50.390 --> 00:12:54.870 that some of the conduct of the largest digital platforms has caused 241 00:12:54.910 --> 00:12:59.750 harm to European markets and in particular has harmed outcomes 242 00:12:59.750 --> 00:13:02.220 for consumers as well as smaller businesses that for 243 00:13:02.230 --> 00:13:04.609 some some degree reliant on their services. 244 00:13:04.990 --> 00:13:07.620 Many of the E US challenges are still ongoing, 245 00:13:07.630 --> 00:13:10.750 including cases against Apple, Amazon, and Meta. 246 00:13:11.390 --> 00:13:13.900 But the Commission recently introduced a signature piece 247 00:13:13.910 --> 00:13:17.030 of legislation called the Digital Markets Act, which it 248 00:13:17.030 --> 00:13:20.790 hopes will deal more efficiently with antitrust issues in the future. 249 00:13:21.230 --> 00:13:26.550 So the Digital Markets Act is a piece of legislation that seeks to increase 250 00:13:26.550 --> 00:13:30.070 fairness and contestability for the largest digital platforms in 251 00:13:30.070 --> 00:13:33.870 the EUA lot of these American, but they're not just American platforms. 252 00:13:34.679 --> 00:13:37.939 And and what it does is it imposes a series of set rules. 253 00:13:38.150 --> 00:13:41.390 That are designed to open up some parts of the digital 254 00:13:41.390 --> 00:13:45.150 ecosystem in other parts to ensure that there's more fairness for their 255 00:13:45.150 --> 00:13:47.980 business users and also to ensure that end consumers, 256 00:13:47.990 --> 00:13:51.510 so they like to me and you, me and you have better rights vis A 257 00:13:51.510 --> 00:13:54.910 vis the gatekeepers or with the objective of ultimately ensuring 258 00:13:54.910 --> 00:13:56.569 that markets work better. 259 00:13:57.840 --> 00:14:00.750 The Digital Markets Act in particular, is likely to force the 260 00:14:00.760 --> 00:14:04.120 world's biggest tech firms to make big changes to how they operate in 261 00:14:04.120 --> 00:14:07.440 Europe and elsewhere, but it may not necessarily mean they 262 00:14:07.440 --> 00:14:08.660 will become smaller. 263 00:14:09.710 --> 00:14:13.230 It is certainly expected that their business models will be changed, but 264 00:14:13.230 --> 00:14:16.830 I wouldn't necessarily draw a kind of a straight line between saying, 265 00:14:16.830 --> 00:14:20.270 OK, there's intervention by competition regulators here and 266 00:14:20.270 --> 00:14:23.270 that will inevitably mean that the largest platform has become smaller. 267 00:14:23.270 --> 00:14:26.370 And in many ways that may not be a good outcome. 268 00:14:26.470 --> 00:14:29.590 What we want to see is effectively better market 269 00:14:29.590 --> 00:14:34.230 outcomes for all consumers so that we effectively deliver better output, 270 00:14:34.230 --> 00:14:36.980 better quality products, and also more innovation so that 271 00:14:36.990 --> 00:14:39.340 smaller players and big tech players can innovate 272 00:14:39.350 --> 00:14:41.100 together for what's coming next. 273 00:14:41.110 --> 00:14:43.740 Because in some ways, it's all very well regulating what's happened over 274 00:14:43.750 --> 00:14:44.609 the last decade. 275 00:14:44.790 --> 00:14:46.660 For what you're really trying to do is make sure that your 276 00:14:46.670 --> 00:14:48.970 regulatory regime works for the decades to come. 277 00:14:49.230 --> 00:14:52.590 Another country where there has been a huge regulatory backlash against 278 00:14:52.590 --> 00:14:54.490 Big Tech is China. 279 00:14:55.470 --> 00:14:58.710 When the billionaire businessman Jack Ma strongly criticized 280 00:14:58.710 --> 00:15:02.710 Chinese financial regulators in a speech he made in October 2020, 281 00:15:02.710 --> 00:15:06.750 it directly led to the suspension of the IPO of his company and group. 282 00:15:08.190 --> 00:15:10.740 It then prompted an unprecedented crackdown on some of 283 00:15:10.750 --> 00:15:12.450 the country's leading tech firms. 284 00:15:14.000 --> 00:15:16.870 Since then, we see the Chinese top leadership mobilized 285 00:15:16.880 --> 00:15:20.760 a massive law enforcement campaign that you've never seen before against 286 00:15:20.760 --> 00:15:25.200 the big tech companies which affect a wide range of sectors like 287 00:15:25.200 --> 00:15:29.040 e-commerce, route handling, social media, gaming, tutoring. 288 00:15:29.040 --> 00:15:31.230 You know, almost everything you can think of. 289 00:15:31.240 --> 00:15:32.900 Think of now. 290 00:15:34.240 --> 00:15:37.600 To summarize what has happened, we can broadly see the law 291 00:15:37.600 --> 00:15:40.350 enforcement in three major pillars. 292 00:15:40.360 --> 00:15:44.560 One is antitrust, the other is data and then followed by labour. 293 00:15:46.630 --> 00:15:50.630 Few if any, major Chinese tech firms have been left untouched. 294 00:15:50.630 --> 00:15:56.350 e-commerce giant Alibaba was fined $2.8 billion in an antitrust case, 295 00:15:56.670 --> 00:16:00.150 while food delivery platform Metuan was also targeted. 296 00:16:00.550 --> 00:16:05.310 Then in the summer of 2021, the ride hailing platform DD was given a fine 297 00:16:05.310 --> 00:16:08.310 of more than $1 billion for data security breaches. 298 00:16:09.590 --> 00:16:13.070 Since the beginning of 2022, the crackdown has been eased 299 00:16:13.070 --> 00:16:17.310 significantly, partly because of concerns over economic damage. 300 00:16:17.630 --> 00:16:21.230 We started to see things slow down at the beginning of this year, 301 00:16:21.430 --> 00:16:26.630 and partly because China had experienced a economic slowdown. 302 00:16:26.870 --> 00:16:30.710 And earlier this year there was a massive sell of China's Internet 303 00:16:30.710 --> 00:16:32.930 stocks in the United States. 304 00:16:32.990 --> 00:16:37.550 So the economic uncertainty and instability touch a sensitive nerve 305 00:16:37.550 --> 00:16:39.170 of the Chinese top leadership. 306 00:16:39.680 --> 00:16:41.390 And that's why you see it much this year. 307 00:16:41.400 --> 00:16:44.560 The Vice premium premium, Liu Ha convened the meeting. 308 00:16:45.110 --> 00:16:48.020 Sending a very strong signal that China is going to ease 309 00:16:48.030 --> 00:16:51.270 regulation in a way to calm the investors. 310 00:16:51.830 --> 00:16:55.190 But a lot of damage has already been done to China's big tech firms. 311 00:16:56.760 --> 00:17:00.320 The market valuation of this Chinese companies have gone 312 00:17:00.320 --> 00:17:04.320 down very significantly like, I mean companies like Alibaba and Tencent 313 00:17:04.320 --> 00:17:08.280 lost over 50% of the market valuations as well as 314 00:17:08.280 --> 00:17:12.040 many other tech firms, probably even more like in the case of DD. 315 00:17:13.890 --> 00:17:14.470 And investors. 316 00:17:14.480 --> 00:17:16.060 A particular international investors. 317 00:17:16.270 --> 00:17:21.190 Very severe concern about investing in the Chinese tech sector. 318 00:17:21.400 --> 00:17:24.340 So to the extent that if you think you know having 319 00:17:24.350 --> 00:17:28.510 sufficient capital injected, injected into the Chinese market is 320 00:17:28.510 --> 00:17:32.950 essential for the growth and development of of the Chinese tag, 321 00:17:33.400 --> 00:17:35.980 that certainly does not bode very well. 322 00:17:35.990 --> 00:17:38.859 So far in this episode we've looked at some of 323 00:17:38.869 --> 00:17:41.970 the biggest challenges faced by the world's tech giants. 324 00:17:42.109 --> 00:17:45.670 But what is not yet clear is whether recent events fundamentally 325 00:17:45.670 --> 00:17:48.710 challenge and threaten those firms global dominance. 326 00:17:49.890 --> 00:17:53.480 For some of the companies, such as Apple and Google, most experts 327 00:17:53.480 --> 00:17:56.830 agree their dominance will continue given the power of their brands and 328 00:17:56.840 --> 00:17:59.619 how embedded they've become in the lives of so many people. 329 00:18:00.890 --> 00:18:03.430 The main point of resilience for Apple is the fact that it has one 330 00:18:03.440 --> 00:18:06.480 of the most potent and powerful brands on the planet. 331 00:18:06.720 --> 00:18:10.400 And that really is a huge asset in a high inflationary environment. 332 00:18:10.410 --> 00:18:12.790 Because it means that even though, yes, people are struggling 333 00:18:12.800 --> 00:18:15.430 with their incomes, if your brand is strong enough, 334 00:18:15.440 --> 00:18:18.880 you're still going to encourage a high proportion of people. 335 00:18:19.430 --> 00:18:21.390 To splash the cash on your products. 336 00:18:21.400 --> 00:18:24.580 Every innovator can't be an innovator forever. 337 00:18:24.590 --> 00:18:27.180 But that doesn't mean these companies will, poof, disappear. 338 00:18:27.190 --> 00:18:28.879 I think they've become too big. 339 00:18:28.920 --> 00:18:30.859 I think they've become too embedded. 340 00:18:30.869 --> 00:18:33.910 Their products are in many, so many places and embedded 341 00:18:33.920 --> 00:18:35.850 that it doesn't just vanish overnight. 342 00:18:37.119 --> 00:18:39.750 Yet the sense that the tectonic plates underneath Big Tech 343 00:18:39.760 --> 00:18:43.680 are shifting after 15 years of relentless growth is undeniable. 344 00:18:43.800 --> 00:18:45.510 The great hope of all these Silicon Valley 345 00:18:45.520 --> 00:18:49.040 venture capitalists and and tech people who are interested in 346 00:18:49.040 --> 00:18:51.230 the next generation of technology are like What's next? 347 00:18:51.240 --> 00:18:53.129 What's going to be the next thing? 348 00:18:53.790 --> 00:18:57.670 And there have been some efforts to kind of make web three the next thing 349 00:18:57.670 --> 00:19:02.670 and cryptocurrency the next thing and and then this kind of amorphous AI, 350 00:19:02.670 --> 00:19:05.670 which really is kind of an enormous category. 351 00:19:05.670 --> 00:19:08.260 Of course artificial intelligence is going to be a thing, 352 00:19:08.270 --> 00:19:10.020 but what's the use case like? 353 00:19:10.030 --> 00:19:11.250 What's the platform? 354 00:19:11.350 --> 00:19:12.660 What's going to be necessary? 355 00:19:12.670 --> 00:19:15.540 Finding that next big thing may be critical to the 356 00:19:15.550 --> 00:19:19.030 longer term viability of some of the world's biggest tech firms. 357 00:19:19.510 --> 00:19:22.550 Some could slip out of view and others, which we may not have 358 00:19:22.550 --> 00:19:24.570 even heard of yet, will take their place. 359 00:19:25.400 --> 00:19:28.510 But even if it is a big tech world we're all living in now, 360 00:19:28.830 --> 00:19:32.100 the events of 2022 have shown that no one's place 361 00:19:32.109 --> 00:19:34.530 at the top can be taken for granted. 362 00:19:35.800 --> 00:19:37.640 That's all from this edition of Business Beyond. 363 00:19:37.650 --> 00:19:40.920 If you'd like to see more from us, check out our playlist. 364 00:19:41.520 --> 00:19:44.590 A great place to start would be our recent video on how the next 365 00:19:44.600 --> 00:19:47.500 global recession could be very different from the last one. 366 00:19:47.760 --> 00:19:50.830 Thanks a lot for watching, And until the next time, take care.