Big Tech is increasingly in the sights of politicians from both major political parties, although often for different reasons. Attacking “greatness” is a recurring theme in the effort to attract mainstream voters.
But before conservatives rush to dismantle social media companies because they censor right-wing opinion, or progressives rush to dismantle tech giants because they don’t censor enough, both parties should consider that the dynamic forces of a dynamic market have historically increased. to the task of mastering the “greatness” of the company.
Do you remember American Motors? How about Zenith, Avon or Collins Radio? All of them have been in the Fortune 500 at one point or another, but have either folded, swallowed up by competitors, or taken off the list of the world’s most successful companies in terms of revenue. In fact, only 52 of the original Fortune 500 in 1955 remained on the list in 2019.
“The great antitrust push of the 2020s hinges on the bizarre assumption that this kind of creative destruction won’t happen,” notes Reason.com’s Liz Wolfe, “despite historical records indicating otherwise.
The longevity of businesses is more fleeting than ever before. A 2016 report from Innosight, a management innovation consultancy, found that in 1965, companies in the S&P 500 Index – which tracks large U.S. companies – stayed there for an average of 33 years. In 1990, that number was down almost 40% at age 20, and it is expected to drop to age 14 by 2026.
As Mark J. Perry of the American Enterprise Institute observes, one lesson here is “that the process of market disruption is driven by the endless pursuit of sales and profits that can only come from serving customers with low price, high quality products and services and excellent customer service.
The challenge for successful businesses today is to replicate their success every year.
“You know, you can go back 10 or 15 years ago and look at the larger market cap companies,” Google / Alphabet Sundar Pichai recently told the BBC. “I’m sure their CEOs were in discussions like this. Some of these companies are not the best today. This has always been true when you look back. So if something somehow pleads with you, this time around it will be different. That there are those companies that will sort of always be the most successful companies. “
It doesn’t work that way – and it never has. Instead, the real constant is the insatiable urge of elected officials to score political points by making it look like they are doing something. The resulting interference is usually an exercise aimed at creating unintended consequences.
The awakened tech behemoths may have grown arrogant, fat, and happy in some ways. But if this continues, the market has a brutal way of dealing with such a condition on its own.