I post this not tied to any immediate issue but because I found it as interesting as TPM Reader JL did. I will say that it ties pretty clearly to an issue that I’m thinking a lot about and plan to write more about: monopolies and their role in today’s economy.
The following is not especially relevant to any of the topics I see on TPM but thought you’d be interested.
So … something I’ve been increasingly aware of and which strikes me as hugely important is the influence of the Megatech Gang of Five: Alphabet, Amazon, Apple, Facebook, and Microsoft. I think the MTG5 will increasingly dominate huge parts of the technology world because of their vast scale. They have immense resources to invest in the future of AI, virtual reality, etc., etc. And because they all touch so many aspects of our digital lives (“our” including businesses as well as individuals) they have the incentive to continue to do so.
Another incentive the MTG5 has to spend vast amounts of money inventing the future is that increasingly the fundamental competitive force amongst them is competition for the best engineers. To win that competition each of these companies has to stay on the cutting edge or the young hotshots will gravitate elsewhere.
I just did some quick and dirty research to try to put numbers around this. The R&D line item for the MTG5 is, in aggregate, clocking in at an annual run rate of around $62 billion. I asked Mr. Google how much the federal government spends on R&D and the answer is around $70 billion for defense R&D and around the same for non-defense. But, of course, that includes a much wider scope of investments.
In spite of covering a much wider scope of investments, federal non-defense R&D will soon be eclipsed by MTG5 R&D. After all federal R&D is either flat or heading in the wrong direction. MTG5 R&D is growing significantly north of 10% a year and should continue to do so for several years if not longer. Five years from now, MTG5 R&D will have left federal non-defense R&D in the dust and will be rapidly gaining on total federal R&D.
Pretty amazing if you ask me. Good? Bad? Yes and yes I suppose, but I’ll leave that for another day. For now I just wanted to draw your attention to the phenomenon.
