Now we are on the eve of another momentum. The press maintains that the big technology companies are facing a new crisis. Certainly, the scandals due to the layoffs are the gasoline to ignite the situation, but everything seems to indicate that what is happening is a correction in the expectations that the industry has generated over the years.
Context
The technological platforms that we have today are the product of a technological generation that is not appreciated by the public, but that for analysts has made all the difference. This has to do with the leap from 3G to 4G technology. 3G allowed us to have a narrow band, and bad and expensive internet browsing, to have our mobile office. All platforms had no more than 200 million desktop users, but 4G transformed the digital ecosystem and thus all platforms became global with more than 2 billion users.
A state of constant innovation came, telecommunications networks became markets and the internet as well. The ‘age of access’ arose, in which no one wanted ownership of things, but rather to have access to collections of intellectual property catalogues. That is to say, no one wanted physical records anymore, but access funds from music catalogues; no one wanted book ownership anymore, but rather a tool to refresh the reading experience; Nobody wanted movie formats anymore but streaming…
Today, the platforms would not be as powerful if it were not for the 4G world. In a period of 12 years we have seen new business models evolve and in the last four fintech and cryptocurrencies were born. Throughout all these years, the largest companies have not stopped growing and the market has accompanied them by investing in them.
The pandemic digitized our lives and this generated exacerbated optimism on the part of digital technology companies. On the one hand, telecommunications infrastructure companies connected more people and were forced to offer better quality and service. For their part, digital platforms began to grow excessively.
It’s time to pay the price
“Companies suffered from optimism and began to hire a lot of staff, but the aggregate demand caused by an exogenous element (pandemic) was not going to maintain the demand for services and we were going to have to go back to a state of normality, who did not want to see the technology companies. The furor was enormous and now we are beginning to see the consequences”, complements Jorge Fernando Negrete, president of Digital Policy & Law Group.
“Large technology companies are still very powerful, they look further afield and are advancing in research and development, but these are natural correction processes in the face of inflated expectations and real income returns,” says Sebastián Cabello, an expert in digital public policies. and CEO of SmC+Digital Public Affairs.
This crisis is part of the recessive environment, but it has a different impact on different players and regions. Thus, explains Jorge Fernando Negrete, in terms of connectivity, Latin America is in the perfect storm because it registers high prices for radioelectric space, some of its currencies have already begun to devalue and there is a war on rates to the downside. Therefore, there is less deployment of connectivity, less infrastructure and little cash on the part of the telecommunications operators.
Meanwhile, some digital platforms issued obligations to generate investment and capitalize. They were used to a lot of utility and now they have to pay the bill. For example, the financing rounds to invest in unicorns have already decreased and now investors no longer want storytelling, but rather results in their financial statements. Cryptocurrencies, in turn, are living dark days.
However, the hegemony of Big Tech is not in doubt. Those that lead the cloud, social networks, operating systems, will continue to fight for the throne. Now 5G is coming, enormous computing capacities will be released, technology will be completely embedded in the ‘cloud’, digital transformation processes will accelerate and new value chains will emerge.
“You have to think about internet businesses with a very forward-looking vision. For these companies, the key and their main dilemma is to become gatekeepers, which are those who have the door through which everyone has to go later in the future”, explains Sebastián Cabello.