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Tech's Ruling Class Casts a Big Shadow (theverge.com)
Veteran technology columnist Walt Mossberg believes that Google, Apple, Microsoft, Amazon, and Facebook, or Gang of Five -- as he likes to call them, are casting a big shadow over how today's startups foster, a phenomenon he believes will continue to happen over the years to come. From his column for The Verge: What we have now in consumer tech, in 2017, is an oligopoly, at least superficially similar to the old industrial-era American corporate groups that once dominated key industries. I think that their enduring and growing power casts a shadow over the Silicon Valley legend that there are lots of great new consumer tech innovations being incubated right now in garages or dorm rooms somewhere that will be taken all the way to becoming great companies, the way each of the Gang of Five was. What I fear is more likely to happen to any such startup is that, if they're good, they get acquired by a member of the Gang, or that their idea is turned into a feature for one of the Gang's products. And, even if that never happens and a startup thrives, too often it can only thrive by being successful on a platform controlled by one or more Gang members, with the big guy maybe taking a cut. For instance, Snap, the parent company of Snapchat, which went public last week, famously spurned a $3 billion takeover offer from Gang member Facebook in 2013. But it depends for its very operation on the cloud services of Google and on the mobile app platforms of Apple and Google. And plenty of other companies which either presented threats or opportunities to the Gang have been snapped up by them. Each of the five companies actively scoops up numerous smaller companies every year, in many cases just for their talent and / or patents. In fact, I'd be amazed if there weren't plenty of startups whose main goal is to be purchased by the Gang.
I think the so-called Gang of Five learned the lesson from IBM experience. Keep a massive pile of cash on hand and simply bribe into submission with stupid amounts of cash any innovator who will potentially disrupt your business model if you can't use or suppress their technology.
Another reason why tech companies with massive piles of cash should have it taxed away. They're not "investing in innovation", they're suppressing innovation by buying the innovators off and maintaining their hegemony. Without massive piles of cash hanging around, they would have to actually *innovate* -- improve their products or come up with new ones. Now they can simply buy off competition and not bother investing in their hegemonic products.
They've turned innovation into something of a lottery -- it encourages not ideas that are good, but ideas that big companies will want or *need* to buy.
Of course, some competition sneaks through, like Snapchat, but probably not because someone at Facebook or Google didn't try. The founders gambled that whatever stupid amount of money they were offered was less than what they could make in an IPO, and they were right. But there's probably not enough long-term business model there, which limited how high the big players were willing to go in paying them off.