Should we be fearful of the dominance of trillion dollar companies?

The sophistication of data analysis systems continues to grow, as does our willingness to allow tech giants to permeate our daily lives

The Amazon logo and stock price information   at the Nasdaq market site in New York on  September 4th, the day Amazon  became a trillion dollar company. Photograph:   Reuters

The Amazon logo and stock price information at the Nasdaq market site in New York on September 4th, the day Amazon became a trillion dollar company. Photograph: Reuters

 

What do you make of the news in the past few weeks that we now have not one but two international US tech companies with market capitalisations exceeding a trillion dollars?

Does this represent any more than just another big number milestone for sales or growth or value in the world’s biggest companies or has something changed when these high-water marks are exceeded?

When a company gets to the size or commercial position of being the overwhelming leader in a market should we be fearful or at least alert to the dominance that such a company can exert?

Market capitalisation is one measure of a company’s size, and represents the collective value of all the active shares that have been issued by a firm. Other measures could be used such as gross sales volume or profitability, but market cap was the gauge used when measured against the trillion dollar milestone.

Everyone seems to love ranking lists and top 10s of any kind so being the first to surpass a milestone becomes something of a news event, as it was when Apple passed the mark on August 2nd and Amazon then became a trillion dollar company on September 4th.

For some reason these events reminded me of the popular Terminator films which portray a civilization-ending computer takeover of the globe when a fictional military system, Skynet, starts to think.

“The system goes on-line August 4th. Human decisions are removed from strategic defence. Skynet begins to learn at a geometric rate. It becomes self-aware at 2.14 am Eastern time, August 29th,” the Terminator robot tells us. When human operators attempt to pull the plug Skynet lashes back, launching a nuclear attack that forces the remnants of humanity to hide underground.

Off switch

This is not to recommend we pull the plug on Apple or Amazon even if we could, for like the fictional Skynet it is too late for us to find the off switch. We are now willingly locked in as customers of the world’s biggest tech companies, a list that includes other household names such as Microsoft, Facebook, Google and Intel.

The products and services these companies provide are now closely woven into our lives and society, and to a degree even the smooth flow of evolution have been altered by their involvement in how we communicate with one another, entertain ourselves with video clips and top 10 lists and exchange pictures and information instantly in real time.

Our apparent addiction to these services creates a massive volume of raw data which flows back and forth through these communication channels. And this in turn is what has helped bring about trillion dollar companies.

Apparently valueless data streams are captured by the big companies, who can sell on particular subsets to clients who know how to dig down into the raw data to deliver information. This knowledge can do things, for example assess public opinion on a subject or anticipate voting patterns. It allows automated analysis of customer preference, for example offering you cheap accommodation in London if you initiate a flight booking.

And you are actually competing against a computer when attempting to find the cheapest possible flight because the system has already noted your preferred departure and return dates and will alter the price offer in an attempt to capture your booking. And your preferences may reveal personal tastes, as with the offer of goods or services with the suggestion: “Customers who bought Book X also purchased Book Y.”

This so-called big data is becoming increasingly valuable, and research groups and companies are actively studying ways to use it to comb out useful information.

Data centres

And it explains why companies like Apple, Amazon and others are willing to invest in building huge data centres to capture and categorise raw data. Nothing is lost and new ways are being found all the time to extract value from what is held.

The results, at least at the moment, are mainly about personalising an advertising message, tempting you to become click bait based on past preferences, but big blocks of data can also be used to benign ends.

Olive Keogh has reported in the Innovation section of this newspaper on the use of data analytics to make it easier to get information out of the 2009 Commission to Inquire into Child Abuse, better known as the Ryan report. It runs to 2,600 pages and so certainly represents big data, and in a project called Industrial Memories, Emile Pine, Mark Keane and Susan Levy of University College Dublin used artificial intelligence and text analytics to open up the report and help researchers extract more from it.

The sophistication of data analysis systems continues to grow, as does our willingness to allow the tech giants to permeate our daily lives. These trends are clear right now, but who knows where they will take us in the coming five or 10 years.

Perhaps we will see the emergence of a Skynet or something like it, but on current form we are more likely to embrace rather than battle what the technological advance promises.

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