After relentless searches on what to write about as a blog post, I noticed something that interested me. It was not only the high number of new tech startups, but also the capital they are raising. The sums are staggering, I cannot help but wonder if this is in any way related to all that is going on in the tech industry. The tech companies nowadays are valued at an insane amount of money; some are worth their value, but, in my opinion, most of them are way overvalued. Why do I think they are overvalued? For me, the answer lies in the investors. Not many whales (big investors), or long-term investors are jumping onboard to bet their money on these new ventures, and if they do, it is far from the capital they possess for investing. I think it is because while these new companies are appealing and somewhat promising, there is still a lot of uncertainty on how their future might be. Nevertheless, let us try to evaluate the big picture.
Starting with the presidential election in the United States finishing with the crackdowns happening on the big tech players, one big question arises. Is everything that is happening a green light for the new guys to get their hand into the honey pot of the tech market?
You are probably asking what does the newly appointed president of the United States has to do with the tech market? Well, the United States is still a powerhouse in the today’s tech market, so anything happening there will have a global effect. President-elect Joe Biden has made some comments on what he plans to do concerning the big tech players, but to what extent we can only speculate. It’s become clear where he stands on corporate taxes, which let’s face it, would affect financially the big boys to a certain degree, but it wouldn’t stop them from abusing the power that they currently have in the industry. In an interview done by New York Times back in January Mr. Biden made his position clear on this matter, and I quote:
“From my perspective, I’ve been in the view that not only should we be worrying about the concentration of power and we should be worried about the lack of privacy and them being exempt.”
Based on the quote above, I believe he may support regulations that would limit that abuse and open the market to new players.
Meanwhile, the EU antitrust committee is forging new rules for the dominant companies of the tech market which includes up to 20 companies. Their intent is to have them change the way they conduct business; firstly, share the gathered data with their competitors, secondly, be more transparent on how they gather data. There have been numerous complaints about how they abuse their power and limit the market space for the smaller companies. It looks like we are at a crossing point where EU law meets the big tech giants.
China also took a swing at its tech sector by implementing new regulations. Although we can only speculate about the reason for what is happening, there are a few circulating theories. First, Jack Ma made a comment criticizing the Chinese financial system being outdated and unable to see the full picture right before Ant Group went to market. Following this comment, President Xi Jinping, was personally involved in stopping the much-anticipated IPO. Secondly, the government might be reevaluating its power grip on the tech market. Chinese government has been known for twisting the arm of its own big tech giants occasionally, even though it is not without their involvement that they dominate the home tech market.
From all off the above, I would say that the governments around the world are somewhat paving the way for already existing or emerging tech companies to enter the market. I think Europe could be the hotspot for the newer companies as they seem to be passing regulations that will most hinder the current tech leaders. In my mind, this could be in part to give the European companies a chance as the current dominant companies are from overseas. Nevertheless, this seems to be a good time to hop on a new venture in tech.
https://www.ft.com/content/a18c4480-43f0-4a9e-a994-c9c776c67681
https://www.nytimes.com/interactive/2020/01/17/opinion/joe-biden-nytimes-interview.html
https://www.ft.com/content/c8c5d5dc-cb99-4b1f-a8dd-5957b57a7783
I think EU union has been much better and smarter compare to other union or govs, many program has been developed and direct funded, that is an optimistic vision.
Thanks for the article, very informative 🙂