Is big tech now just too big to stomach?

The Covid crisis has turbo-charged profits and share prices. But are the big six now too powerful for regulators to ignore?

The coronavirus pandemic has wrought economic disruption on a global scale, but one sector has marched on throughout the chaos: big tech.

Further evidence of the industry’s relentless progress has come in recent weeks with the news that Apple and Amazon both raked in sales of $100bn (£72bn) over the past three months – 25% more than Tesco brings in over a full year.

Amazon also revealed that its founder, Jeff Bezos, is to step down as chief executive. It was a big moment for the company founded in Seattle 26 years ago. But the shares barely stuttered, and few expect the company to, either.

The relentless rise of the big six tech firms - Facebook, Amazon, Netflix, Google owner Alphabet, Apple and Microsoft, now known as the Fangam stocks – powered US markets last year.

The S&P index – the barometer of corporate America – ended the year up more than 18%, an extraordinary outcome given the market crash of March. But two-thirds of that gain was entirely down to the increases in value registered by the six Fangam stocks.

The gains are eye-watering. Amazon’s share price is up 62% over the past year, valuing the business at $1.7tn, $650m more than a year ago. Apple stock is up 70% over the same period, an increase which has taken its valuation up by more than $1tn, to $2.3tn.

Results published so far in 2021 show no sign that the gains will let up. Apple in January reported its most profitable quarter ever, and Facebook also said the pandemic had helped it grow.

Amazon recorded sales of more than $100bn for the first time in the last quarter of 2020 – allowing Bezos to sound a positive note as he changed roles to focus on his ambitions in space, his Earth Fund and his ownership of the Washington Post – and Alphabet posted record revenues for the second successive quarter.

The eye-catching performance of big tech has prompted increased political scrutiny and the threat of heightened regulation from Washington, especially now that the Democrats have won control of the Senate.

There is now a real possibility that President Biden will take on tech companies over issues such as privacy, liability and market dominance. And such is the collective scale of the US tech titans, it will be difficult for them to hide.

How big is big tech?

Apple became the world’s first trillion-dollar company in August 2018 (barring a few state-owned oil companies whose true valuations remain murky). Just over two years later – in the midst of the pandemic in August 2020 – Apple notched up the $2tn (£1.5tn) milestone.