This author thinks Amazon could break up to keep regulators at bay
- An NYU professor says the internet's "Four Horsemen" face competitive threats and argues their survival isn't assured.
- It will be a battle of the giants, with all four pitted against each other.
- Amazon could shed its web services business to keep ahead of regulators.
NYU Professor Scott Galloway says despite the awesome power of what he calls the Four Horsemen — Amazon, Apple, Facebook and Google — their survival isn't assured, especially given the competition they face with one another.
Galloway's new book, "The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google," out today, is no fawning tribute, criticizing the Four Horseman on taxes, privacy and jobs.
I called Galloway to ask what will happen with these four companies.
His answer: it will be a battle of the giants, with all four pitted against each other. "At least two or three now compete in each other's markets, whether it's advertising, music, books, movies, social networks, cell phones — or lately, autonomous vehicles," he said.
Will they all survive? Given the awesome power of these companies, Galloway is surprisingly reticent to say yes. The one exception may be Apple, which stands alone as a luxury brand and which presents the advantage of fatter margins and a competitive edge. Here he feels comfortable making a prediction: "Only Apple has the potential to cheat death."
Galloway says if he were advising Amazon (he's not) he would tell them they should spin off Amazon Web Services. "It would increase value and keep regulators at bay for another couple of years," he says.
Some companies might be able to challenge the internet giants. Galloway goes through the usual suspects — Alibaba, Tesla, Uber, Airbnb, even Wal-Mart — and concludes that of the big guys, Airbnb has the best shot.
He believes Airbnb's market capitalization (now $31 billion) will surpass Uber's (now $70 billion) by the end of 2018. (For the record, Amazon and Facebook are each around $500 billion in market value, while Google's parent Alphabet is around $660 billion and Apple is inching toward $800 billion.)
Still, he concludes it's going to be tough to beat the Four Horsemen. They have the advantages in products, markets, stock valuation, recruiting, and management. "That makes it unlikely they will lose their current dominance for a (human) generation or more (famous last words)," he says.
That sarcastic close is warranted: Galloway is too smart to say never: "[A]t some kitchen table or a booth at Starbucks, a start-up team,led by the next Steve Jobs, is plotting a new enterprise that could streak past the horsemen to become the first 1-T [$1 trillion] corporation," he says.
Time will tell whether the public will grow weary of the dominance of these companies, much as we admire them. Galloway thinks the recent investigation into Russian meddling in the election, with Facebook at the center, could be a turning point for the public's endless admiration.
"[W]e are barreling toward regulation," he said on our air last week. "If you notice, a lot of senators and elected officials - their backbone is stiffening around these very serious issues that some of these platforms have been weaponized to undermine our democracy...This could be a huge shift in the public and government's perception and treatment of these companies."
What's coming could at the very least be "the mother of all fines" for any or all of these companies. He thinks the big battle will be fought in the European Union, which this year fined Facebook $129 million over its takeover of WhatsApp and Google $2.7 billion over anti-trust rules.
"These countries register all of the down side, and a fraction of the upside benefits," from these companies, he told me, adding he thinks it is just the beginning. "You will see a $10 billion-plus fine come out of Europe."