Why Amazon and Google are Acting Like Startups
Amazon and Google are fighting gallantly to remain relevant. Whether or not they will remain relevant is a question that hundreds of billions worth of investment will answer. To which more than a few readers will ask what could possibly be meant by the above comment. Among other things Amazon and Google respectively dominate shopping and search on the fact of life that we know as the internet. The very notion that they must fight for relevance vandalizes common sense. That would certainly be the view of federal officials who've harassed both companies with all manner of antitrust lawsuits in recent years.
Of course, what’s lost on federal officials constrained by the known is that when it comes to commerce in the most economically dynamic country on earth, the present is always the past. Equity markets tell us why. To investors, the present is already "priced" in the marketplace. They want to know what corporations will do in the future, and in particular what the prominent businesses of the present will do to remain relevant in the future.
All of which explains Google's 2025 plans for $75 billion in largely AI-related investment alongside Amazon's objective to put $100 billion to work. Hopefully the $75 and $100 billion exist as sizable reminders that whatever the opinion of antitrust officials in the federal government, Amazon and Google aren't at all operating in monopolistic fashion. If anything, they're working in startup fashion in a desperate search to discover a future that is far from certain.
About all the money they're putting to work, what choice do Amazon and Google have? Other prominent American technological names like Meta and Microsoft are similarly investing enormous sums in AI, AI-adjacent, and other future-seeking endeavors, not to mention the vast sums being put to work by venture capitalists in startups that feel they see what's ahead more clearly than do the established players in technology. The VC investment is particularly important to contemplate.
It is because to the antitrust officials invariably constrained by the known, it's a fool's errand for VCs to put money behind startups striving to achieve the impossible whereby they topple the existing giants of technology. Missed by the naysayers, however, is that it's the business model of VCs to invest in seemingly "impossible" notions. While they'll fail well north of 90 percent of the time, the very few successes will more than pay for all of the failures. Which is the point.
It's not just that Amazon and Google are competing with others frequently described as "Big Tech," it's that the valuations of Big Tech are a magnet for a great deal more in the way of investment by intrepid VCs searching for today's startups that will rate the Big Tech descriptor tomorrow. In other words, abundant success that some errantly describe as "monopoly" doesn't deter investment, rather it's the biggest driver of it. Which explains once again why Amazon and Google, so prominent in the here and now, are operating as though they're startups. They have no choice. In business, the past and present are lousy indicators of the future.