Technological change: the shifting economic landscape
The relentless advance of technology over the past 20 years has changed the world and caused a fundamental shift in the ways that economies work. The truly global nature of markets, and the low levels of capital needed to make internet-based business models work, have produced a groundswell of innovative start-ups as well as companies so vast, powerful and influential that governments are increasingly intervening.
Last year, according to Business Insider(1), Facebook generated revenue greater than the total GDP of Serbia. Meanwhile, Alphabet (the parent company of Google) earned more in revenue than Puerto Rico, and Amazon’s revenue surpassed the entire GDP of Kuwait. But the minimal regulation that huge tech companies have enjoyed up until now is unlikely to continue. Just like the banking, tobacco and healthcare industries, ‘big tech’ is now very much on the regulators’ radar.
The protection of privacy, the issues around free speech and censorship, the enormous market power of these companies, plus the safeguarding of laws, elections and national security are top of the regulators’ agendas, as highlighted by the Guardian (2). There are also the calls for these companies to pay taxes at the same rates as other corporations.
As David Cicilline, chair of the US Congressional anti-trust committee, has made clear: “Nobody should expect these technology platforms to regulate themselves … Our job is to figure out the responsible way to regulate these large platforms so that we are promoting competition, protecting privacy and making them responsible stewards of lots and lots of data.”
The long-term impacts that the major tech companies will have on innovation, global economies, employment and investor returns will take many years to become apparent. It’s obvious that there are threats associated with the sweeping and fast-moving changes that the internet-based industries bring, but there are also hugely exciting opportunities and rewards.
Although the UK’s tech sector is still small compared with the US, the UK has many fast-growing tech companies that include: Deliveroo, Improbable, Skyscanner and fintech companies TransferWise and Revolut. Just Eat and Rightmove are two UK tech companies that now have stock-market listings worth hundreds of millions.
There is no shortage of innovation in the UK, and the country’s ‘flat white’ economy – a term coined to encompass start-ups, entrepreneurs and small businesses across both the digital and creative sectors – is thriving. In 2018, ‘flat white’ businesses represented the largest sector of the UK economy, with one of the most important elements being digital marketing, a huge growth area due to the UK’s exceptionally high number of online consumers. According to Tech Nation 2018, (3) over 2016–17, the turnover of digital companies in the UK rose by 4.5%, while overall UK GDP grew by 1.7%.
Existing companies do not necessarily need to be threatened by the advance of the digital start-ups and innovators. There are ways for existing business models to embrace technical innovation to enhance their own offerings and profits. Learning from the ‘flat white’ innovators also means not just embracing all things digital, but understanding that creativity too is a real resource.
One example of a business that has benefited from being both digital and creative is the media company Future. Run by Zillah Bing-Thorne, Future publishes specialist content both in a traditional physical format and online. By attracting special interest groups to specialist publications – for example, photography enthusiasts who read specialist photography magazines – Future is able to monetise content directly, by selling premium advertising space, and can generate commissions by offering its customers a direct opportunity to buy relevant products like cameras, tripods, lenses and bags. The approach fosters a niche space and specialist community for the customer and creates a place where they are understood, and where their needs are met.
The marketplace of the future is likely to be vast. It will also be diverse, offering endless choice for customers and endless opportunities for sellers. One thing is certain: the relentless growth of technology in our lives continues to create new products, new services, new businesses and new customers.
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