I spend most of my day thinking, writing, and talking about the small tech companies, app developers, and innovators spearheading growth across the global economy. In Washington, I often talk with people for whom “tech” is an all-encompassing term. To paraphrase Arthur C. Clark — to them, any sufficiently advanced technology is indistinguishable from magic. But when dealing with policy issues, it’s critical to “deconstruct the magic” and explain how business models influence technology.
When a curious policymaker asks, “What does tech think?” I always respond with “What do you mean by tech?” Where you stand depends on where you sit, and each tech company’s viewpoint is tethered to their business model, which influences their policy considerations.
Asking what “tech” thinks gives the impression that all technology companies are interchangeable. Yet the most recognizable “tech” companies – Amazon, Facebook, Google, and Apple – are fundamentally different entities operating in different industries and using different business models.
To paraphrase an old children’s song, all these things are NOT like the others.
Take the most diverse business of the bunch, Amazon. When you consider the size of its retail business in comparison to its ventures in cloud computing, streaming video, and computer hardware, this “tech” company has more in common with IKEA or Costco than other digital players.
Google and Facebook have more in common with newspapers and TV stations because of their advertising business model. Roughly 90 percent of Google’s revenue comes from advertising. Whether through its search engine, its YouTube video platform, or apps on their Android operating system, they’re in the business of using targeted advertising to link consumers with the products they want or need. Facebook is similar in that advertising is its key driver. However, it operates differently in how it gathers information and protects its users.
Finally, Apple is really more like Bang & Olufsen or Porsche than other tech platforms. Just as Porsche doesn’t compete with Kia, Apple has kept an upmarket focus for its phones, tablets, computers, and watches, and a reliable platform for innovative apps and games.
The only shared characteristic of these companies is the incredible level of success, and their pioneering use of the internet to achieve it.
Today, nearly every company depends on the internet to drive its business model. Newspapers are all online, IKEA and Costco sell their wares on internet marketplaces, and app innovators sell their digital products to consumers around the globe.
Though Amazon, Facebook, Google, and Apple have blazed a path, the internet is now the commonality that links all major corporations—whether “tech” or not. We must stop talking about these companies as a monolith operating outside our old conventional markets and industries. We need to accept that tech companies, even the tech leaders, are individual entities, driven by their business models and the interests that define them.