The financialisation of Big Tech

Engineering digital monopolies

Publication

Rodrigo Fernandez

Reijer Hendrikse

Tobias J. Klinge

Ilke Adriaans

17 December 2020

This report investigates the financial numbers behind the operations of seven leading Big Tech companies, five of which are headquartered in the US, namely Alphabet (Google), Apple, Amazon, Facebook and Microsoft, and two in China, namely Alibaba and Tencent. We selected these companies on the basis of their unequalled size in financial markets. Specifically, at the time of writing, each of the seven firms’ market capitalisation stood above US$500 billion, in some cases surpassing US$1 trillion (= US$1,000 billion), or even approaching US$2 trillion. These sums are not only unmatched against companies from other sectors, such as oil & gas or pharmaceuticals, but they also help distinguish the seven companies – Big Tech’s ‘infrastructural core’ – from smaller tech firms, which typically rely on their infrastructures.

Furthermore, this report looks at the business models of the world’s most powerful Big Tech firms through the lens of corporate financialisation, examining the ways in which non-financial firms become dominated by the drive to partake in financial narratives, practices and measurements. The report argues in detail that the financialisation of Big Tech is the prime example of a global economic shift in capital accumulation towards monopolisation and rentiership.

The way platforms monetise their operations is not compatible with the principles that were created to regulate corporate activities in the physical world. For example, Big Tech is at odds with the existing cross-border allocation of tax rights. How to tax Big Tech remains an open question and is subject to fierce diplomatic contestation. The speed at which the sector has developed into a focal point on the stock market, in political communication, in geopolitics and 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 catch-up.