by Rodrigo Fernandez, Tobias J. Klinge, Reijer Hendrikse and Ilke
About the Authors
Rodrigo Fernandez is a senior researcher at the Centre
for Research on Multinational Corporations (SOMO).
has published on offshore financial centres, shadow
banking, real estate and financialisation.
- Tobias J. Klinge is a PhD candidate at KU Leuven, the
University of Leuven.
works on corporate financialisation processes.
- Reijer Hendrikse is a postdoctoral researcher based at
the Vrije Universiteit Brussel.
- Ilke Adriaans is a researcher and policy advisor at
the Centre for Research on Multinational Corporations.
of Big Tech corporations
now wield more
It's time to
subject them to democratic control
power erodes democracy.
A few months since the pandemic forced societies into digital
interfaces under conditions of lockdown and social distancing,
Naomi Klein noted how a high-tech 'Pandemic
Shock Doctrine' was shaping up. In the US, tech
billionaires like Microsoft founder
Bill Gates and former Google
executive Eric Schmidt were invited by New York governor
Andrew Cuomo to discuss the digitization of state functions and
tackle the Covid crisis.
New York Gov. Andrew Cuomo
looks on as Google executive chair Eric Schmidt, left,
talks during the Smart Schools Commission report
at Mineola Middle School on Oct. 27, 2014 in Mineola, N.Y.
Photo: Alejandra Villa-Pool/Getty Images
In the UK, Big
invited to Downing Street to discuss the tech solutions required
to overcome Covid-19, which saw the surveillance giant Palantir earn
lucrative contracts to streamline data flows across the state.
France and Germany lauded the launch of the new cloud computing
Gaia-X, designed to enhance 'digital sovereignty' across the
European Union - only to give front-row seats to the usual American
Big Tech suspects.
Today, a handful of
Big Tech monopolies form
the infrastructural core of an ever-expanding tech universe,
operating as obligatory digital interfaces for social exchange -
colonising professional life and private consumption, monopolizing
flows of information and communication.
In the latter case,
the digital platforms that abetted the rise of the far-right joined
forces to banish Donald Trump from the digitized public sphere after
inciting violence in Washington, D.C.
While we might feel
relieved to be rid of Trump's digital tirades, and although there
are legitimate arguments for Big Tech countering imminent political
violence, these developments illustrate the mounting unchecked power
these companies wield over social life.
a recent report for the Dutch Centre for Research on Multinational
Corporations, we investigated the financial accounts of the
world's largest digital technology firms in order to come to grips
with the fuzzy notion of 'Big Tech'.
Zooming in on the
apex of capital accumulation unfolding at the frontier of capitalist
development, we analyzed how these companies extract income from
their respective positions in the digital economy, and how these
strategies are augmented by financial techniques and translated into
stellar profits and unmatched resources used to expand their
platformed monopolies in both scale and scope.
a proxy for Big Tech's infrastructural core, we focused on five
US firms (Alphabet/Google, Apple, Amazon, Facebook, and
Microsoft) and two of their Chinese counterparts (Alibaba and
Compared to S&P 500
corporations, Big Tech firms have considerable more financial assets
at their disposal and follow a business model that relies on what
are known as intangible assets: patents, data, or goodwill.
In the past year,
Big Tech's combined financial assets stood at a staggering $631
billion, on top of a combined total debt of $295 billion.
In October 2020,
...had each crossed the
threshold of a $1 trillion market capitalization.
This shows that
the financial firepower of our Big Tech firms is unrivalled, and
that the chances of newly-minted platforms to mature and remain
independent are increasingly limited, as the incumbents can easily
An important marker
of Big Tech's growing monopoly power is the rising value of goodwill
on their balance sheets, which are premiums paid for the acquisition
of another firm.
Goodwill on the
balance sheet of Big Tech (minus Apple) increased by 557 percent
from $23 billion in 2010 to $149 billion in 2019, compared to just
63 percent growth in goodwill for the aggregate S&P 500
achieve outstanding profits.
Compared to other
S&P 500 corporations, whose net income as share of net sales hovered
around 10 percent in recent years, our seven Big Tech companies
(minus Amazon, for accounting techniques understating the company's
profitability) achieve a level of profitability that is at least
twice as high.
on our financial analysis, we have developed what we call the 'Big
Although the exact
business models of our seven Big Techs differ, they share common
strategies which revolve around,
and financialization are recurring phenomena in the history of
modern capitalism, platformization is how these features are
presently expressed and augmented under digital capitalism.
As argued by
Nick Srnicek, digital platforms are intermediary
infrastructures that thrive on network effects.
by Amazon's 'get big fast' credo, platforms are designed to capture
market share as quickly as possible. The resulting data generated
through scaling up can then be analyzed and turned into marketable
products for commercial and political customers.
In their own ways,
our seven Big Techs have all scaled up into platform monopolies,
allowing for the extraction of significant rents.
Brett Christophers, rent extraction can be understood as
income derived from owning or controlling scarce assets - such as
data or a loyal customer base - under conditions of little if any
extract rents either through selling advertising or levying
commissions on transactions.
monopoly rents are being turned into money and further refined can
be understood by considering the companies' financialization
dynamics - that is, their operations in financial markets and
through financial instruments.
underscore the notion of a Big Tech model operating as a machine
dedicated towards ever-expanding rent extraction that can be
properly understood in its contemporary context only, as opposed to
an a historical and surprising aberration in the socioeconomic
the breadth and depth of rampant digitization invites us to rethink
the logics of capitalism.
really something qualitatively distinct about the forces of
production that eat brains, that produce and instrumentalize and
Shoshana Zuboff goes as far as claiming that the rise of Big
Tech has given rise to 'a new logic of accumulation' known as
surveillance capitalism, geared toward data extraction and
Yet critics argue
that despite these novelties, Big Tech firms merely augment
pre-existing capitalist tendencies. These include capitalism's late
nineteenth century embrace of the large corporation, heralding the
ascent of monopoly capitalism and rentierism.
In other words,
what is new is not the tendency towards monopoly, but rather,
rampant commercialization of digital footprints...
self-reinforcing market-conquering logics of the Big Tech model at
work, the seven Big Techs (5 of which are
headquartered in the US, namely Alphabet-Google,
Microsoft, and 2 in China, namely
Alibaba and Tencent) are likely to dominate the tech universe
for the time being, with thousands of smaller platforms orbiting
around them, and millions of applications built on top of them - all
relying on its core infrastructure, and paying rent for doing so.
With each firm
having cornered its own monopoly, Big Tech as a whole has
effectively come to colonize key forms and means of social exchange,
broadly defined, overlaying the ways in which people used to
interact via digital interfaces for,
communication (Facebook, Tencent)
In setting the
standards for software toolkits (Google's Android, Apple's iOS) and
programs (Microsoft's Office 365), and spearheading the development
of the hardware to enable exchange (Apple's iPhone), Big Tech has
become the obligatory interface for all types of exchange in the
It is as if a new
screen now overlays economy and society, with Big Tech functioning
as its underlying operating system, increasingly subjecting the rest
of the world to its imposing and intrusive logics.
the increasing platformization of capitalism, we anticipate that
scholars will direct their attention to what might eventually be
labeled the 'platform state'.
accumulating rents, Big Tech companies have also built up
substantial power over economy and society, including
infrastructural power vis-à-vis sovereign states.
Benjamin Braun has studied how
Central Banks exert power through
financial markets, creating various interdependencies between public
and private domains and interests.
infrastructural core is continuously refined through data extraction
and analysis, accumulating more rent and power in a self-reinforcing
feedback loop which augments the tech dependencies of states:
management of the pandemic has seen governments worldwide
embrace the services of Big Tech, shutting up Trump underscores
the extent to which Big Tech polices our rapidly-digitized
public sphere - but according to standards they invariably set
That said, as
Western liberal democracies fall under the infrastructural spell of
American Big Techs, where the deepening of tech-driven governance
requires the increasing rollback of liberal protections by design,
as in the case of
policing services, we need to redirect our gaze
to fully grasp how Big Tech's infrastructural power becomes inter-digitized
with - and central to - political control...
This brings us to,
the geopolitical angle of Big Tech and the geo-economic, military,
and technological rivalry between the US and China, which promises
to sharpen over the decades to come.
potential of Big Tech is also visible in existing multilateral and
bilateral frameworks for trade and investment.
The way platforms
monetize their operations is not compatible with the principles that
were created to regulate corporate activities in the physical world.
For one, Big Tech is at odds with the existing cross-border
allocation of tax rights, and as a result our Big Techs largely live
tax-free lives in offshore wonderland.
How to tax Big Tech
remains an open question and is subject to fierce diplomatic
The speed at which
the sector has developed into a focal point on the stock market, in
political communication, in geopolitics, and in daily life sharply
contrasts with the much slower pace at which civil society and
decision-making bodies have been able to grasp the transformative
nature of these firms.
Big Tech's opacity
has so far provided it with an advantage and left regulators to play
However, on both
sides of the Atlantic, we are now seeing early signs of change.
have to rein in the mounting power of Big Tech, before Big Tech
absorbs the power of democratically-elected governments...
Big Tech companies
have become highly-financialized cash machines for their
shareholders and executives.
These developments are reminiscent of
earlier transformative epochs, not least the second half of the
Back then, new
means of transportation and communication came to remodel the
socio-economic order of the day in gales of 'creative destruction',
resulting in excessive wealth and power in the hands of the
so-called Robber Barons...
Then, as now,
existing regulations failed to counteract this new technology-driven
regime centered on monopolies, sparking a popular backlash which,
brought the Gilded Age to an end...
As such, the past
how to approach the Big Tech Barons of today's
Gilded Age, which at minimum requires a serious update of the
outdated competition and tax policies presently failing to rein in
We need to urgently
reflect on the possible ways in which societies can rein in what we
in the report have called the looming 'Big
everything', going beyond free market imperatives to break up the
Big Tech monopolies, or simply break open their data treasure
We need to
contemplate the ways in which consumers or users might reclaim
ownership over data as citizens, ideally short-circuiting the core
operating logics of surveillance capitalism:
might be to embrace 'open source' solutions to circumvent
Big Tech enclosure
is to take the infrastructural core of Big Tech into public
hands altogether, recognizing them for the crucial public
utilities they are
In any case, we
urgently need to come to terms with the ways which Big Tech has
become the underlying operating system of our age, and consider
rewriting its codes to appropriate its spoils for more meaningful