Winter is Coming
Harry Isenstein Newcastle 10.05.19
Entrepreneurs Society, Newcastle University
Innovation in recent years has been one of the most covered topics in the news, due to the rate it has improved our lives. In the last decade, technology has arguably taken control of our lives. Everything from personal banking to our entertainment can start and finish with our personal devices. But what happens when innovation slows down for a while?
Well, the aforementioned could be just around the corner as we see technology start-ups start to struggle up against ‘The Big Four’- Amazon, Apple, Facebook & Google. As these companies start to dominate in areas outside of their original operation, it becomes increasingly difficult for start-ups to attract any funding or traction as they have become so efficient at stopping competition early.
Google (and its parent company Alphabet) have spent billions on acquisitions in markets it has no expertise within. For example, for just $50 million they acquired Android in 2005, which is now run by 70% of the world’s smartphones. For a business that originally set out to ‘collect the worlds information’, it now holds significant market share in markets such as healthcare, autonomous vehicles and artificial intelligence.
This dominance is like Amazon, that have been able to drive down prices in markets by just suggesting it will enter it. An example of this was when they suggested that they would be moving into the pharmacy sector by purchasing PillPack (an online pharmacy solution), which later saw Pharmacy stocks drop elsewhere in the market. How are start-ups supposed to compete with this?
Spotify, an example of a successful start-up in the last decade have found that their growth has slow as Apple have sought to take back their market share. With Apple Music now pre-installed on one billion devices, they were aggressive in their retaliation by charging Spotify an extra 30% tax to be on the App Store and delayed providing help to update them to new operating systems Apple had created.
If successful start-ups like Spotify are now beginning to struggle against the Big Four, is there any hope for any ventures?
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