Are the Big Tech Companies Too Big?
Some of the biggest companies of our day are the digital trailblazers like Facebook and Google, each of which take in billions of dollars in profit each year. These companies oversee billions of accounts and trillions of searches each year, and because of that they have a large workforce to handle it, and a large amount of profits because of that volume. That's led some to question if these companies are too big, and if breaking them up is the best choice for dealing with the problems at these companies.
Mark Jamison, scholar of technology and economics, does not believe that breaking up big tech is the best answer. These companies are so large because of our choices as consumers to use their products. And we get quite a bit of value from these products, especially given that there is little or no monetary cost involved in signing up or making a search.
So saying they're too big is to say they provide too much value, which doesn't make sense.
Another objection to big tech is that these companies "make too much money." But is that really true? A more in-depth view of how the tech world operates shows that these companies' profits are actually encouraging further innovation that otherwise might not exist.
Other people argue the big tech makes too much money: Facebook's 2017 profit was 16 billion dollars, about 40 percent of its revenue. Does Facebook really need that much money? That's the wrong question. Only about 10 to 20 percent of tech firms ever make a profit, so 80 to 90 percent either break even or lose substantial amounts of money. The profits of the few drive investors to endure the losses of the many.
So these companies' large profits are nothing to be feared. If anything, Jamison believes that gratitude is due to companies like Facebook and Google for the services they offer.
On average, the tech sector's returns are comparable to those of the S&P; 500. So when someone says that tech companies are too big, say you're grateful: You're getting great value and competition for the future!
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