Thereâs a little parlor game that people in Silicon Valley like to play. Letâs call it, Whoâs Losing?
There are currently four undisputed rulers of the consumer technology industry: Amazon, Apple, Facebook and Google, now a unit of a parent company called Alphabet. And thereâs one more, Microsoft, whose influence once looked on the wane, but which is now rebounding.
So which of these five is losing? A year ago, it was Google that looked to be in a tough spot as its ad business appeared more vulnerable to Facebookâs rise. Now, Google is looking up, and itâs Apple, hit by rising worries about a slowdown in iPhone sales, that may be headed for some pain. Over the next couple of weeks, as these companies issue earnings that show how they finished 2015, the state of play may shift once more.
But donât expect it to shift much. Asking âwhoâs losing?â misses a larger truth about how thoroughly Amazon, Apple, Facebook, Google and Microsoft now lord over all that happens in tech.
Whoâs really losing? In the larger picture, none of them â not in comparison with the rest of the tech industry, the rest of the economy and certainly not in the influence each of them holds over our lives.
Tech people like to picture their industry as a roiling sea of disruption, in which every winner is vulnerable to surprise attack from some novel, as-yet-unimagined foe. âSomeone, somewhere in a garage is gunning for us,â Eric Schmidt, Alphabetâs executive chairman, is fond of saying.
But for much of the last half-decade, most of these five giants have enjoyed a remarkable reprieve from the boogeymen in the garage. And you can bet on them continuing to win. So Iâm coining them the Frightful Five.
Itâs not just because Iâm a Tarantino fan. By just about every measure worth collecting, these five American consumer technology companies are getting larger, more entrenched in their own sectors, more powerful in new sectors and better insulated against surprising competition from upstarts.
Though competition between the five remains fierce â and each year, a few of them seem up and a few down â itâs becoming harder to picture how any one of them, let alone two or three, may cede their growing clout in every aspect of American business and society.
âThe Big Five came along at a perfect time to roll up the user base,â said Geoffrey G. Parker, a business professor at Tulane University and the co-author of âPlatform Revolution,â a forthcoming book that explains some of the reasons these businesses may continue their dominance. âThese five rode that perfect wave of technological change â an incredible decrease in the cost of I.T., much more network connectivity and the rise of mobile phones. Those three things came together, and there they were, perfectly poised to grow and take advantage of the change.â
Mr. Parker notes the Big Fiveâs power does not necessarily prevent newer tech companies from becoming huge. Uber might upend the transportation industry, Airbnb could rule hospitality, and as I argued last week, Netflix is bent on consuming the entertainment business. But if such new giants do come along, theyâre likely to stand alongside todayâs Big Five, not replace them.
Indeed, the Frightful Five are so well-protected against start-ups that in most scenarios, the rise of new companies only solidifies their lead.
Consider that Netflix hosts its movies on Amazonâs cloud, and Googleâs venture capital arm has a huge investment in Uber. Or consider all the in-app payments that Apple and Google get from their app stores, and all the marketing dollars that Google and Facebook reap from start-ups looking to get you to download their stuff.
This gets to the core of the Frightful Fiveâs indomitability. They have each built several enormous technologies that are central to just about everything we do with computers. In tech jargon, they own many of the worldâs most valuable âplatformsâ â the basic building blocks on which every other business, even would-be competitors, depend.
These platforms are inescapable; you may opt out of one or two of them, but together, they form a gilded mesh blanketing the entire economy.
The Big Fiveâs platforms span so-called old tech â Windows is still the king of desktops, Google rules web search â and new tech, with Google and Apple controlling mobile phone operating systems and the apps that run on them; Facebook and Google controlling the Internet advertising business; and Amazon, Microsoft and Google controlling the cloud infrastructure on which many start-ups run.
Many of these platforms generate what economists call ânetwork effectsâ â as more people use them, they keep getting more indispensable. Why do you chat using Facebook Messenger or WhatsApp, also owned by Facebook? Because thatâs where everyone else is.
Their platforms also give each of the five an enormous advantage when pursuing new markets. Look how Appleâs late-to-market subscription streaming music service managed to attract 10 million subscribers in its first six months of operation, or how Facebook leveraged the popularity of its main app to push users to download its stand-alone Messenger app.
Then thereâs the data buried in the platforms, also a rich source for new business. This can happen directly â for instance, Google can tap everything it learns about how we use our phones to create an artificial intelligence engine that improves our phones â and in more circuitous ways. By watching whatâs popular in its app store, Apple can get insight into what features to add to the iPhone.
âIn a way, a lot of the research and development costs are being borne by companies out of their four walls, which allows them to do better product development,â Mr. Parker said.
This explains why these companiesâ visions are so expansive. In various small and large ways, the Frightful Five are pushing into the news and entertainment industries; theyâre making waves in health care and finance; theyâre building cars, drones, robots and immersive virtual-reality worlds. Why do all this? Because their platforms â the users, the data, and all the money they generate â make these far-flung realms seem within their grasp.
Which isnât to say these companies canât die. Not long ago people thought IBM, Cisco Systems, Intel and Oracle were unbeatable in tech; theyâre all still large companies, but theyâre far less influential than they once were.
And a skeptic might come up with significant threats to the five giants. One possibility might be growing competition from abroad, especially Chinese hardware and software companies that are amassing equally important platforms. Then thereâs the threat of regulation or other forms of government intervention. European regulators are already pursuing several of the Frightful Five on antitrust and privacy grounds.
Even with these difficulties, itâs unclear if the larger dynamic may change much. Letâs say that Alibaba, the Chinese e-commerce company, eclipses Amazonâs retail business in India â well, O.K., so then it satisfies itself with the rest of the world.
Government intervention often limits one giant in favor of another: If the European Commission decides to fight Android on antitrust grounds, Apple and Microsoft could be the beneficiaries. When the Justice Department charged Apple with orchestrating a conspiracy to raise e-book prices, who won? Amazon.
So get used to these five. Based on their stock prices this month, the giants are among the top 10 most valuable American companies of any kind. Apple, Alphabet and Microsoft are the top three; Facebook is No. 7, and Amazon is No. 9. Wall Street gives each high marks for management; and three of them â Alphabet, Amazon and Facebook â are controlled by founders who donât have to bow to the whims of potential activist investors.
So whoâs losing? Not one of them, not anytime soon.