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US IT giants spend fortunes stamping out competition

by on25 September 2018

Capitalism in action

US tech giants are spending fortunes keeping rivals away from their monopolies, according to a new report from Bloomberg.

Google parent Alphabet, Apple, Amazon, Microsoft, and Facebook spent a combined $80 billion in the last year on big-ticket physical assets.

This includes manufacturing equipment and specialised tools for assembling iPhones and the powerful computers and undersea internet cables Facebook needs to fire up Instagram videos in a flash.

Thanks to this surge in spending - up from $40 billion in 2015 - they've joined the ranks of automakers, telephone companies, and oil drillers as the country's biggest spenders on capital goods, items including factories, heavy equipment, and real estate that are considered long term investments.

Their combined outlay is about ten times what GM spends annually on its plants, vehicle assembly robots, and other materials.

The splurge by tech companies is behind an upswing in capital-goods spending among big US companies, which is seeing its fastest growth in years, according to a Credit Suisse analysis.

The $80 billion tab also is a snapshot of why it's tough to unseat the tech giants. How can a company hope to compete with Google's driverless cars when it spends $20 billion a year to ensure it has the best laser-guided sensors and computer chips?

Bloomberg points out that there are shedloads of physical assets behind all those internet clouds.

It seems that the only way to return to anything resembling competition is to have a government insist on a break up of the big tech companies. However, given the huge amount of money sloshing around these corporates it is difficult to find a politician brave enough to take them on – particularly in the US, where creating an anti-competitive monopoly is a sign of success.


Last modified on 25 September 2018
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