After a decade of rapid expansion, Big Tech growth is decelerating.
With the global economy slowing due to a multitude of factors ranging from production bottlenecks to the cost of living crisis, many major tech firms have responded by cutting jobs and reducing outgoings. Even the untouchable tech giants like Google and Microsoft are being affected. In light of this, we take a look at how Big Tech firms have risen over the past few years, and how the future is looking for the industry.
What is Big Tech?
Over the past few decades, rapid technological advancements combined with changing consumer behaviour has led to tech companies becoming some of the largest in the world. The term Big Tech was coined only a few years ago and describes the top five internet-based technology companies that dominate the stock market and have a huge impact on our daily lives.
Since the early naughties, these firms have gained enormous global power and in 2021, had a combined revenue of 1.4 trillion US dollars, with growth exacerbated by the pandemic. Currently, the brands that fall under this umbrella are Meta, Apple, Microsoft, Alphabet (owner of Google) and Amazon. Whilst Netflix, WhatsApp, Twitter and PayPal closely follow.
Look back a year ago and the Big Five were virtually bulletproof. Largely because they’ve been leading the technological boom over the past twenty years.
Let’s just reflect a moment… In 2000, only 25% of the UK population were internet users but by 2020, that percentage had grown to a whopping 96%. That’s only 4% of the population who don’t use the internet. With stats like this, it’s pretty clear to see how Big Tech has seen such substantial growth.
Thanks to the internet, we’ve had the rise of social media, smart technology, working from home, the Internet Of Things, ecommerce, data-tracking and so much more. Some argue it’s for the better, and some for the worse. Whichever side of the argument you’re on, it’s safe to say these companies are embedding themselves deeper into our lives, every day. But is that about to change?
In recent weeks, Big Tech firms have reported stagnant growth and in some cases, negative growth. Take Google for example, in 2021 their growth was 62% compared to a mere 13% growth in the same quarter of this year. What’s to blame? It’s pretty clear that the current macroeconomic environment is largely to blame for the sudden downturn. As is the inevitability of downward growth due to the steep rise of Big Tech during the pandemic.
It seems that during the online boom of 2020, the likes of Amazon over-projected future growth, anticipating higher demand due to more people working from home and changing consumer habits. Consequently, they hired too many employees and made too many investments that unfortunately, they can no longer keep up with. Since the world reopened, consumers have ventured out and about and turned to brick and mortar experiences after so long without them.
The downturn also comes at a time when consumer trust is declining. For the first time in its history, Facebook has reported a decline in active daily users on the platform. Perhaps highlighting a move away from consumers who are glued to their phones? Or more likely, a lack of trust due to the multiple data-tracking scandals Meta has faced in recent years.
Additionally, competition for the Big Tech firms is growing stronger. With WhatsApp’s momentum still growing, TikTok becoming the new go-to social platform and expanding into ecommerce, it’s likely that the wave the Big Tech firms have been riding for so many years, may be coming to an end.
So what does the future look like for the Big Tech firms? Whilst they’re certainly not going anywhere anytime soon, they must rethink their strategies. Determining how they will remain competitive in this uncertain economic climate and in a time when consumer choice is ever-expanding, will be make or break for the Big 5.
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