Technology giants like Amazon, Microsoft, Meta and Alphabet have been making massive investments in areas like autonomous cars, metaverses, quantum computing, AI chips, etc. These ambitious investments aim to position the tech giants for future growth amid fears that their current cash cow businesses are losing steam. In the past year, the big tech firms have invested over $280 billion, accounting for 9% of total US business investments.
Massive investments target potential future technologies like self-driving cars and quantum computing
The tech giants are directing their investments into what they believe are the next big technologies. This includes emerging areas like autonomous vehicles, virtual reality, quantum computing chips, AI, etc. For instance, Apple is developing a VR headset to compete with offerings from Meta and Microsoft. Similarly, Alphabet, Apple and Amazon have made big bets on self-driving car technologies. Vast sums are also being deployed to design specialized chips and fund quantum computing research to power potential new devices and platforms in the future.
Investments aim to establish software and cloud platforms that enable rent extraction
Another big investment priority is software platforms that allow the tech firms to draw in users and collect economic rents via network effects. For example, Meta is spending $10 billion annually on its metaverse project to create immersive online worlds. Apple is expanding its walled garden of services like fitness and shows to keep users locked in. Microsoft’s purchase of gaming firm Activision Blizzard helps it improve gaming experiences. And cloud platforms operated by the tech giants literally charge other firms rent for computing resources.
Regulatory scrutiny looms amid rapid expansion into new territory
The tech giants’ rapid expansion has raised antitrust concerns. Their ambitious investments to enter new areas could draw even more regulatory attention. For instance, Lina Khan, the top US antitrust official, has already recommended banning big tech from moving into adjacent fields. Also, potential antitrust lawsuits may reach US courts by 2023. Moreover, Europe is close to passing legislations like the Digital Markets Act to constrain big tech firms even before any anti-competitive behavior.
The US technology behemoths are making record investments to future-proof their positions amid fears of missing the next big wave of innovation. Areas like self-driving cars, VR, quantum computing, AI chips, etc are major investment targets. However, their rapid expansions may increase regulatory scrutiny.