This is the control that the monopolies exert. The FAANG group (Facebook, Apple, Amazon, Netflix, Google) has a collective market capitalisation of over 6 trillion$ and makes up a staggering 15% of the market share on the S&P500. 3 of these 5 namely- apple, google and amazon have an individual market capitalisation of over 1 trillion$ alone. Facebook and Netflix are also said to breach the 1 trillion$ mark soon. To put that into perspective, if the FAANG group was a country, it would be ranked 3rd just behind US and china! These numbers speak volumes about its ubiquity in every corner of the world.
THE INDIAN CONTEXT
India is poised to become the 3rd largest economy in the world by 2030. Even in this pandemic ridden year, India witnessed record inflows via FDI and FPI. It is argued by many global firms that for a company to become truly global, it is imperative for it to have an adequate presence in India. The anti-china sentiment that is gaining ground since the US-CHINA trade war and which was further aggravated during the covid-19 crisis has tilted things in India’s favour even more. If we consider the FAANG group’s presence in India, it has grown by leaps and bounds in the previous decade.
Hitherto inactive in India (if we talk about their investment) owing to the regulatory challenges, Facebook struck a deal with Indian behemoth Reliance with a 9.99% equity stake in its subsidiary- Jio Platforms. The deal has catapulted Facebook’s presence in India to even greater heights. India is already its largest market with 330 million users.
In the last 3 years, there has been a shift in apple’s presence in India. As stated above, the US-CHINA trade war has been a major driver of Apple shifting some of its production capacity to India. It is being argued that Apple may consider making India its new export hub. Although Apple faces stiff competition in India, it can emulate its world presence in India in the years to come given the enormous power it has.
In January 2020, amazon founder Jeff Bezos promised a 1billion$ investment in its India operations. In FY 2019-20 alone, it pumped in over 11000 crores to bolster its presence in one of the most valuable markets outside the US. Amazon has completely changed the e-commerce landscape of India and is continuously expanding its presence by meandering into the brick-and-mortar stores as well.
You name an industry, and Google has forayed into that! Recently, Google acquired a 7.73% stake in Reliance subsidiary- Jio Platforms. It was the tech giant’s biggest investment in an Indian company. It has entered the digital payments space as well via GPay and has emerged as a market leader in that segment as well going past Paytm and Phonepe with an overall market share of over 40%! (however, Phonepe recently trumped over GPay to become the leader)
Netflix is the smallest in the Faang group with a market capitalisation of 250 billion$. It received a major boost during the lockdown when its subscriber base grew manifold. Since its inception, it has had a stellar growth having added over 200 million subscribers worldwide and has created a presence in 190 countries!
The question that arises now is, why is the world out to ‘de-fang’ the FAANG group. It wouldn’t be wrong to say that at times, it feels as if we have placed them on a pedestal. With little to no regulation of these companies, (although this notion is fast changing) it seems as if they have been given a carte blanche. Of course, we aren’t denying the fact that they have made our lives easier and much more interesting. However, the problem arises when these technology behemoths start abusing their monopolies.
The excessive domination by the Faang group has led to the overlooking of a very crucial element, i.e., the privacy of users. It is observed that owing to their wide reach, these companies have a certain amount of leverage when it comes to data sharing. This leverage has arisen because of the varied services they offer which tends to shift the focus away from data privacy concerns. This exploitative behaviour may tarnish their images once users become more concerned regarding data privacy.
It is worth noting that governments around the world are finally taking cognizance of this dominance exerted by the Faang group and are responding by stringent inquiries and at times also levying hefty fines. For instance, the US government recently roped in Facebook for abusing its market power by creating a monopoly and eliminating competition. According to the lawsuit, Facebook may be forced to sell Whatsapp and Instagram which it had acquired for 19billion$ and 1 billion$ respectively. Facebook has time and again been accused of using the sinister ‘BUY and BURY’ strategy. If it feels a slight threat to its dominance in the market, it basically thwarts it by simply buying the company! Apple was also fined 1.2 billion$ by French antitrust authorities over anti-competitive behaviour. The antitrust authorities accused Apple of creating a monopoly environment by forming cartels and suppressing competition. Apple has also earned the bad reputation of slowing down the software in its older models to propel the sales of the newer ones. Amazon and google are also no strangers in this regard. Their algorithms are also being scrutinised every now and then.
Tactics such as these harm consumer confidence. It is detrimental to the interests of the companies itself. The influence of the Faang group has traversed to the election sphere as well. Many argue that platforms such as Facebook favour a certain party by helping propagate their ideology using a certain set of algorithms. In fact Facebook has been hauled up by regulators in this regard as well. As the privacy debate evolves, it is yet to be seen if the world shuns these companies or continues to overlook user privacy. It is very welcoming that antitrust regulators around the world have started taking heed of this. It would augur well for the FAANG group to mend its ways as soon as possible!