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

That's small potatoes

[rsilvergun]

compared to what they're spending on Mergers & Acquisitions. That's where the real non-compete comes from. I don't remember the last big tech company that didn't just get bought out. That's the trouble with letting these companies hold onto so much cash. They don't have anything to spend it on except buying out competitors. Not since Bell Labs have they felt the need to put real money into basic research...

Re:That's small potatoes

[monkeyxpress]

trouble with letting these companies hold onto so much cash

Why do you think other people's resources somehow belong to you and you should have a say in what they do with it?

Well, in principle I agree with you, until enough of those people come for your stuff with pitch-forks, and don't seem to be particularly interested in your protestations that they are breaking a sacred moral code.

Re: That's small potatoes

[Anonymous Coward]

I'm going to pretend the notion isn't socialism but rather originalist thinking.

One bit of forbidden knowledge that nobody teaches in the US is how the founders handled corporations. They were quite familiar with multinational megacorps, having dealt with and been abused by the British East India Company, which was basically the Wal-Mart of its time period.

So they knew all about companies buying laws and using wealth to block competition because they'd had it done to them.

This is the big reason the founders were protectionists, believed strongly in tariffs, and used that belief to build a thriving economy until corrupt politicians created the income tax and the IRS, and later Reagan and every president after him until Trump tore down tariffs and let internationalists run amok with their alleged free trade policies.

The founders regulated corporations heavily. A corporation could only exist for a defined period of time, and only for one purpose. It could not own other corporations. It could be shut down and liquidated if it was found to not be operating in the public interest. Profits had to be returned to shareholders.

That last part is the key, because you don't want corporations hoarding cash. No good ever comes of that.

This is why when someone needed to build a bridge or something big they'd literally find investors, make a company, do it, and return the profits and, if they wanted, go on to find something else to do.

So tightly regulating corporations and preventing massive growth is actually a conservative position to have--but nobody wants you to know that.

I find myself wondering...

[CrimsonAvenger]

...just what spending on capital equipment has to do with "making sure noone else can compete".

Have we actually reached the point of thinking buying machine tools is anti-competition? And if so, does that mean that when a small company buys machine tools, they are also "making sure no one else can compete"?

When I saw the headline, I assumed that "make sure no one else can compete" meant they'd spent the $80B in Washington buying legislation. Because it never occurred to me that buying the machinery required to make your product could be seen as anti-competitive. By anyone