RISE OF THE BIG FOUR

Record gains and losses made as balance of tech giants shifts

FACEBOOK HAS MADE the record books again, by posting the largest ever one-day drop in market value in US history. It took a $119 billion tumble at the end of July, prompted by lower revenue growth and a slowing in the number of new accounts, the most sluggish ever. Zuckerburg took a personal loss of $17 billion. Twitter took a 20 percent hit, too, after it announced lower user numbers, caused largely by the deletion of fake and offensive accounts. Netflix suffered a similar fate on lower than expected subscriber growth.

Apple is heading the other way. It made the record books by becoming the first public company to be worth $1 trillion, helped by profitable iPhone sales and cloud services. Amazon is riding high, too; its Amazon Web Services now provide the bulk of its profit. Cloud services are also providing healthy amounts of cash for Microsoft and Google.

It looks as if the “Faang” group of highfliers (Facebook, Apple, Amazon, Netflix, and Google) is making way for a smaller group of companies, “Maga” (Microsoft, Apple, Google, and Amazon). These are more focused on the infrastructure of the Internet, and Internet services, rather than ad revenue, subscriptions, or user accounts.

Facebook and friends are vulnerable to people’s caprice. The fuss over offensive content, fake accounts, privacy, and other issues highlighted this. User-lead growth can lead to huge highs, but people can be fickle, and numbers can be hit by legislation, and even relatively small scandals.

Facebook et al will bounce back—they hold a wealth of valuable data for starters— but they are vulnerable. Predicting the end of rocket-like growth of innovative tech stock would be foolish, but there is something to be said for investing in the infrastructure of the Internet and tech. An active user account can disappear at any moment, but a server farm is a server farm forever.