Post #12: The power of influencers
Spoiler alert: this post is nothing to do with Millennials endorsing brands. Rather, it relates to the growing sums spent by big tech businesses on lobbying. When Democrat Senator Elizabeth Warren says that “today’s big tech companies have too much power” and Senator Amy Klobuchar asserts that she wants to make antitrust “cool again,” it should be of no surprise that corporate lobbying budgets are on the up.
The data are startling: last year America’s largest tech businesses spent a combined $77m on lobbying US government entities (per Federal records, published on Bloomberg). Sure, this figure looks small when compared to the $280m spent by the pharmaceutical/ healthcare sector, but tech has now become the second most influential sector when it comes to sums spent on lobbying, overtaking America’s commercial banks (which spent only $64m).
Google is the largest spender within the tech space ($21m), but the rate of change has been most significant at Amazon: the $14.2m spent in 2018 constituted a 10% year-on-year increase. However, over the last 7 years (the date from when information on this topic first became available), Amazon’s spending has grown by some 460%, well ahead of its rivals. Amazon now employs 28 full-time lobbyists in a team led by Jay Carney, former press secretary of President Obama. It also works with 13 external consultancies.
What’s going on? Inevitably, as platform businesses come to penetrate more aspects of our lives, they are facing greater scrutiny. For an opposition politician, castigating the perceived dominance of mega-cap tech businesses is, of course, an easy opportunity. From Amazon’s perspective, there is perhaps an additional agenda attached to increased lobbying when considering, say, the number of federal agencies who have the potential to rent AWS (or Azure, GCP etc.) cloud capacity. Our view: context matters. Increased political and regulatory scrutiny is not going to go away. If anything, it will increase. However, do not forget, even if Amazon controls over 50% of the US online retail market, it still has less than a 5% share of the overall American retail market. Getting this and other similar messages across therefore matters. Expect the presence (and corresponding power) of influencers to grow.
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