Bill Gates warned us about viral pandemics in 2015. The world did not listen. We did not want to talk about illnesses. Now, Covid-19, a mild condition for most people, but a dangerously contagious one, has exposed the mind-blowing lack of our preparedness. We are losing lives as a result. Having run out of options, governments have been shutting down economies and locking people in their homes while desperately beefing up their supply of face masks, respirators, ventilators, hospital beds etc.

Interestingly, the big software and Internet companies (Big Tech) are set to reap massive strategic benefits from this lack of preparedness and the resulting unprecedented losses of personal freedoms. This is because the widely implemented lockdown measures:

  1. make consumers almost entirely dependent on online services, for personal communication, work, finances, entertainment and beyond. This allows Big Tech to expand its Cloud solutions, leaving the consumers with little choice but to share their precious personal data even more extensively.
  2. force businesses to urgently find ready-made Cloud solutions for communication and beyond. This is a unique opportunity for Big Tech to grow and get access to sensitive data in the traditionally more conservative and fragmented corporate digital market.
  3. harm legacy businesses that compete with online alternatives; Social distancing is forcing the consumers to look for alternatives to shops, events, entertainment, spots, travel etc. This will lead to bankruptcies and hence permanent loss of alternatives to some Big Tech services.
  4. divert attention away from potential anti-trust actions against some Big Tech companies; Authorities in Europe and the US have been stepping up their effort to assure efficient functioning of the big data markets. The Covid-19 crisis may at least temporarily divert attention away from some of these initiatives, potentially allowing Big Tech to further expand its unique big data assets without facing new regulatory constraints.
  5. force governments and businesses to focus away from visionary strategies to short-term problem solving; Voters, consumers and employees usually want a ‘purpose’ to aspire to, even at the time of a crisis. There is now heightened risk that many governments and businesses may provide mainly populist and short-term solutions. Big Tech, which is usually strong in visionary planning, could exploit such a void.
  6. undermine Big Tech’s potential strategic rivals; The Big Tech industry tends to be cash rich and often keen to opportunistically acquire strategic rivals. Potential strategic rivals, which may depend on external funding for example due to financial leverage (telecoms) or due to earlier stage of their development (smaller companies), appear at higher risk of being adversely affected by the lockdown.
  7. legitimize potential ‘unauthorized’ use of personal data; Opportunities to deploy digital solutions to fight Covid-19 such as the smart quarantine create a moral dilemma between compromising private data and saving lives while restarting the economy. This may create a precedent when potentially ‘unauthorized’ use of personal data becomes ‘acceptable’ in exceptional circumstances, boosting future strategic flexibility for Big Tech.
  8. reduce the ability of governments to develop societies through investment in education, sports, infrastructure etc. Higher debt and destabilized economy will leave governments weaker post the Covid-19 crisis. This will also impact their ability to invest into development of societies, opening opportunities for Big Tech in such areas.
  9. show advantages of the Chinese style tech-driven surveillance society; The Chinese data-driven authoritarian approach has proven effective in dealing with the spread of Covid-19. This further exposes value of ‘surveillance data’ currently in possession of Big Tech.
  10. possibly accelerate 5G capacity investments allowing network virtualization; Big Tech relies on network capacity built by the telecom operators. The escalating demand for bandwidth due to the Covid-19 lockdown creates stronger urgency to upgrade the capacity of the wireless networks, which currently means accelerated deployment of 5G networks. Big Tech may subsequently benefit from such newly built networks, but also the so-called network virtualization, which may allow Big Tech better access to the network infrastructure than before.

 

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One response

  1. Dear Dalibor,

    I trust you are well.

    I agree with you. In fact, I am trying to get a sense how much corporate capital spend will increase for updated hardware (beneficiaries Cisco, Juniper and further down the totem pole, Intel and ASML….to name a few) and online (Zoom type solutions).

    Do you know of anyone who tracks this data?

    Best regards

    Conrad

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