Tech Giants Spend $80 Billion To Make Sure No One Else Can Compete (bloomberg.com)

An anonymous reader quotes a report from Bloomberg: Google parent Alphabet and the other four dominant U.S. technology companies -- Apple, Amazon, Microsoft, and Facebook -- are fast becoming industrial giants. They spent a combined $80 billion in the last year on big-ticket physical assets, including manufacturing equipment and specialized tools for assembling iPhones and the powerful computers and undersea internet cables Facebook needs to fire up Instagram videos in a flash. Thanks to this surge in spending -- up from $40 billion in 2015 -- they've joined the ranks of automakers, telephone companies, and oil drillers as the country's biggest spenders on capital goods, items including factories, heavy equipment, and real estate that are considered long-term investments. Their combined outlay is about 10 times what GM spends annually on its plants, vehicle-assembly robots, and other materials. The splurge by tech companies is behind an upswing in capital-goods spending among big U.S. companies, which is seeing its fastest growth in years, according to a Credit Suisse analysis. The $80 billion tab also is a snapshot of why it's tough to unseat the tech giants. How can a company hope to compete with Google's driverless cars when it spends $20 billion a year to ensure it has the best laser-guided sensors and computer chips? There are a lot of physical assets behind all those internet clouds.

Comments

Re:That's small potatoes

[youngone]

Exactly. The company I work for is not a tech company, and you have definitely heard of it.
Last year our CEO used exactly that pitch to the shareholders of our biggest competitor.
"If we buy you out, just think how much we will be able to jack our prices up!"
That's not exactly what he said, but that's what he meant, and everybody knew it.

OR: "Tech giants spend $80B to reduce their costs"

[whoever57]

That's what I was thinking. It appears to be money invested in reducing costs, increasing capacity.

It may have the effect of making it difficult for younger companies to compete, but, if you are a small company trying to compete with a large company, you have already failed if you plan to offer a small cost reduction to your potential customers.