Like what happened a few months ago in Sudan when the former leader, Omar al-Bashir, was taken down because of bread. Yes, the good Sudanese people could not withstand messing up with their bread. This was a man IMF, World Bank, AU, U.S., EU and indeed the world could not normalize; BREAD did the job.
Sudan’s fallen ruler, Omar al-Bashir, won many fights for three decades. He mastered the politics of UN. He overcame America and South Sudan. He triumphed over IMF and World Bank. He fought rebels, friends and enemies – and won. But at the end, he fell because of BREAD. Yes, bread – so simple and harmless- brought down one of the last surviving yoyo men of Africa.
Take that to the big tech where nothing has seemed to slow down Microsoft, Amazon, Apple, Alphabet and Facebook as they break records over records. Writing the lecture notes for the ongoing Tekedia Mini-MBA over the weekend, I referred to Microsoft and its then-$1.36 trillion market cap. I was making a case that a new business model, under a new CEO, turned largely the same products into something that delivered 4X of market cap in 6 years! Yes, your business model is very important!
In 2018 a new word entered Silicon Valley’s lexicon: the “techlash”, or the risk of a consumer and regulatory revolt against big tech. Today that threat seems empty. Even as regulators discuss new rules and activists fret about the right to privacy, the shares of the five biggest American tech firms have been on a jaw-dropping bull run over the past 12 months, rising by 52%. The increase in the firms’ combined value, of almost $2trn, is hard to get your head round: it is roughly equivalent to Germany’s entire stockmarket. Four of the five—Alphabet, Amazon, Apple and Microsoft—are each now worth over $1trn. (Facebook is worth a mere $620bn.) For all the talk of a techlash, fund managers in Boston, London and Singapore have shrugged and moved on. Their calculus is that nothing can stop these firms, which are destined to earn untold riches.
This surge in tech giants’ share prices raises two worries. One is whether investors have stoked a speculative bubble. The five firms, worth $5.6trn, make up almost a fifth of the value of the s&p 500 index of American shares. The last time the market was so concentrated was 20 years ago, before a crash that triggered a widespread downturn. The other, opposite concern is that investors may be right. The big tech firms’ supersized valuations suggest their profits will double or so in the next decade, causing far greater economic tremors in rich countries and an alarming concentration of economic and political power
The public outcry did not stop the big tech. U.S.-China trade war had no meaningful impact. Regulation from Europe was nothing. Big fines were largely seen as the cost of doing business. But then came a virus – the coronavirus – and big tech lost balance. Yesterday, most lost at least 4% of their market values.
If you do not believe that coronavirus could be a back swan on this year’s economic output, now is the time to recalibrate. This a different type of virus, unique in many ways from the virus, made of 1s and 0s, big tech has mastered and figured out. This one has biological cells and solutions are expected not from McAfee but likes of Pfizer, and Johnson & Johnson.
The world needs solutions on this virus – urgently.
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