Tech the big winner in trillion dollar race

There is one thing we already know about the first company in history to be worth a trillion dollars. It will start with an “A”. No, it won’t be Associated British Foods or Astrazeneca, and certainly not Aviva. It will be either Amazon or Apple.

The technology giants are neck and neck to be the first to reach that milestone – and could easily move past it in the next couple of weeks. On one level, that might just be a bit of corporate machismo, and a striking headline. On another level, however, it will symbolise how tech is now creating wealth on a vast scale.

For at least a year, most Wall Street analysts reckoned Apple had the race to be the first private corporation to hit a market value of a trillion dollars sewn up. It certainly looked to be no contest, as the company kept on racking up record profits, building its formidable cash pile and rolling out new versions of the iphone. The company is now worth $944bn (£719bn) and only needs another few dollars on the share price to take it into 12-digit territory.

But Amazon is now coming up close behind. Yet another good week on the market, which has seen the shares rise from $1,760 to $1,820 a piece, has taken it to a market value of $883bn.

For a brief period on Wednesday, it went over $900bn after announcing that it sold more than $100m worth of products in its Prime Day sale. In the last year, the company’s shares have almost doubled, making its founder Jeff Bezos the richest man in the world. Alphabet, the parent of Google, is a potential late runner in this contest – with a market value of $823bn – and could still come into contention. But it looks like a two-horse race between Apple and Amazon.

Hitting the magic trillion number is largely symbolic, and could easily end up looking like ego tripping. Size by itself doesn’t matter that much. Dig a little deeper, however, and it is clear the symbolism matters – and that it matters which firm hits that milestone first. It will tell us two important things about the way that corporate power and influence are shifting.

First, it will be a dramatic confirmation that technology is now the driving force in the global economy. It was in 2011 that Apple overtook the oil giant Exxonmobil as the world’s largest company, but since then it has been joined by a group of similar powerhouses.

The six biggest companies in the world are now all in tech. You have to go all the way down to Warren Buffett’s Berkshire Hathaway to find an old-style industrial conglomerate in the rankings, and that is hundreds of billions behind. New ones are rising up as well. Netflix recently overtook Disney to become the biggest media company in the world, and Spotify, with a value of $33bn, is already worth a lot more than any of the music labels it feeds off. The emerging Chinese giants, such as Tencent, with a value of $500bn, are coming up fast. The web is now where wealth is being created, and no other industry comes close.

Next, the firm that makes it to a trillion first will illuminate a divide within the tech universe. These are, of course, two very different companies, with very different strategies, and with very different lessons. If it is Apple, it will be confirmation that its closed ecosystem of devices and apps, its premium pricing, and its relentless focus on design, innovation and quality offer the ultimate strategy for global domination. If Amazon, it will be proof that its drive to lower costs, its focus on value, its customer services and ability to spin out new ideas is a better way to build a business that will last for decades. If Apple is the winner, entrepreneurs may decide upmarket is the way to go. If Amazon, more will head for the mass market.

Either way, for both, hitting the trillion mark will provide the firepower to make more acquisitions – the streaming giants Spotify and Netflix are natural targets, because both could potentially provide millions of new customers, but so potentially are banks or retailers.

There will be nothing that either company couldn’t buy for a fraction of their overall worth. Whichever wins the race, it will confirm big tech is the most vibrant and dynamic part of the economy – and for all its faults, it is creating wealth on an epic scale.

‘The web is now where wealth is being created and no other industry comes close’