Question: What is a tech company?
No doubt, if I asked you to name three tech companies, most of us, or even all of us, would include Amazon, Facebook and Google…not to mention Uber and Airbnb somewhere in the mix. Certainly, the financial analysts and industry pundits would—and do—include all of the above.
As do most of the financial media, as evidenced by a headline last week in Bloomberg:
Break Up the Tech Giants? No, Just Level the Field
In the article, author Leonid Bershidsky presents a thesis I’ve been writing about for a while:
The fundamental problem with the tech leaders is that they have, for many years, succeeded in presenting themselves as something different than they are.
Could these High-Tech Digital Disruptors be fooling us?
The author continues, quoting a Harvard Business Review article:
As Robert Haslehurst and Alan Lewis of L.E.K. Consulting wrote in the Harvard Business Review last year, a market is only new if the transaction that occurs in it didn’t previously exist… “these businesses have not redefined industries in a fundamental way; instead they are ‘old wines in new bottles.’ They have more similarities than differences with traditional businesses, and should be regulated accordingly.”
Fast facts from the article include:
- Some 45 percent of American adults get news from Facebook.
- Google’s search market share in the U.S. approaches 86 percent.
- About 43 percent of all online retail sales in the U.S. last year went through Amazon.
- Uber is a taxi firm.
- Airbnb is a hospitality company.
If a company’s actual business is news, or transportation, or hospitality, or advertising sales for that matter, then we need to make them as accountable as others. Regulate so-called tech companies the same way we do their competitors in designated markets, and let the free market compete.
What exactly makes these tech companies more “tech” heavy than others? What about the corner food cart that uses square technology and social media?
In an article from last summer, The Atlantic made the following statement:
Facebook Is Not a Technology Company. Neither are Google nor Amazon.
Why does this matter to you and your business? Because if you’re going to compete, you need to know what you’re competing against. The Atlantic article continues:
What makes a company a technology company, anyway? ...Isn’t it strange to call Facebook, a company that makes websites and mobile apps a “technology” company, but to deny that moniker to firms that make diesel trains, oil-drilling platforms, and airplane engines?
Do you follow?
Every industry uses computers, software, and internet services. If that’s what “technology” means, then every company is in the technology business—a useless distinction…. “Technology” has become so overused...that the term has lost all meaning.
Now follow the money:
Almost all of Google’s and Facebook’s revenue, for example, comes from advertising; by that measure, there’s an argument that those firms are really Media industry companies, with a focus on Broadcasting and Entertainment…. Alphabet is a lot like GE, or at least it aspires to be, with its investments in automotive (Self-driving Car Project), health care (Calico), consumer goods (Nest), utilities (Fiber). But the vast majority of its revenue comes from Google’s ad business.
Amazon generates a lot of revenue from its Amazon Web Services (AWS) business— perhaps as much as $10 billion this year. It also derives revenue from manufacturing and selling computer hardware, like the Fire and Kindle. But the vast majority of Amazon’s revenue comes from international sales of consumer goods. Amazon is sort of a tech company, but really it’s a retailer.
And there you have it.
We spend so much time obsessing over the applied technology that we become paralyzed with fear as our lunches get eaten.
Jeff Bezos gave us all the hint:
If we can keep our competitors focused on us while we stay focused on the customer, ultimately we’ll turn out all right.
The consumer doesn’t care about the technology. They just want their entertainment, news, communications, and, of course, purchases delivered as easily as possible at the cheapest price available. The customer will pay accordingly as the price value equation changes.
If you’re still consumed with fear that Amazon will take your business down or that Google or Facebook has somehow disintermediated you, take a lesson from Bezos.
Listen:
“You’re not going to make Hemingway better by adding animations.” – Jeff Bezos
Worry about what you do: your products and services. Most importantly, your consumers, buyers, users, clients, guests…whatever you call them.
Tech belongs to all of us, but your consumers belong to you.
What do you think?