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Scott Galloway: Have We Let The Tech Giants Monopolize More Than The Economy?

Jul 12, 2019
Originally published on July 12, 2019 1:40 pm

Part 3 of the TED Radio Hour episode Digital Manipulation.

About Scott Galloway's TED Talk

Scott Galloway says companies like Amazon, Google, Facebook, and Apple have too much power. Not only do they affect the economic and cultural fabric of our society, they affect our basic life choices.

About Scott Galloway

Scott Galloway is a professor of marketing at NYU. He is also the author of several books, including The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google.

He was elected to the World Economic Forum's Global Leaders of Tomorrow and has served on the boards of directors of Urban Outfitters, Eddie Bauer, The New York Times Company, and UC Berkeley's Haas School of Business.

Copyright 2019 NPR. To see more, visit https://www.npr.org.

GUY RAZ, HOST:

On the show today, ideas about Digital Manipulation. And as Finn Myrstad was just saying, we as consumers may not have a lot of choice when we're dealing with these massive companies. But just how massive are they?

SCOTT GALLOWAY: Well, I'll give you some specific examples. In a 12-month period from June of '17 to, I think, June of '18, Amazon added to its market capitalization the value of the entire CPG industry.

RAZ: This is Scott Galloway.

GALLOWAY: Professor of marketing, NYU Stern School of Business.

RAZ: And that phrase that he just used...

GALLOWAY: The entire CPG industry.

RAZ: ...Means consumer packaged goods. So we're talking Nestle, Tyson Foods, Pepsi...

GALLOWAY: So you could take every consumer product sold globally...

RAZ: ...Nike, Unilever, Procter and Gamble...

GALLOWAY: When we're talking about companies - Unilever and PNG - that have been around for decades...

RAZ: ...3M, L'Oreal, Kraft, Heinz...

GALLOWAY: ...Not generations...

RAZ: ...Adidas, General Mills, Hershey...

GALLOWAY: ...Not centuries...

RAZ: ...Mattel, Anheuser-Busch, Philip Morris...

GALLOWAY: ...That have unbelievably robust consumer brands, global reach, credible supply chain - and Amazon added the entire value of that industry in a 12-month period.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON: Amazon is doing fine.

UNIDENTIFIED REPORTER #1: May be headed for global dominance.

UNIDENTIFIED REPORTER #2: The stock is now up 2%.

UNIDENTIFIED REPORTER #3: They're becoming a profit machine. You are seeing their profits...

(CROSSTALK)

RAZ: And it's not just Amazon. In his TED talk, Scott focused on the three other behemoth companies that, with Amazon, make up the big four. They are Apple, Facebook and Google. So what does it mean that these companies are so big and so good at manipulating, well, almost every part of our lives? Here's Scott Galloway's take from the TED stage.

(SOUNDBITE OF TED TALK)

GALLOWAY: These four companies - at the end of the Great Recession, the market capitalization of these companies was equivalent to the GDP of Niger. Now it is equivalent to the GDP of India, having blown past Russia and Canada in '13 and '14. There are only five nations that have a GDP greater than the combined market capitalization of these four firms.

Amazon has become so powerful in the marketplace; they can conduct Jedi mind tricks that can begin damaging other industries just by looking at it. Nike announces they're distributing on Amazon - their stock goes up; every other footwear stock goes down. When Amazon stock goes up, the rest of retail stocks go down because they assume what's good for Amazon is bad for everybody else. They cut the cost on salmon 33% when they acquired Whole Foods. In between the time they announced the acquisition of Whole Foods and when it closed, Kroger, the largest pure-play grocer in America, shed a third of its value because Amazon purchased a grocer one-eleventh the size of Kroger.

(SOUNDBITE OF MUSIC)

RAZ: When we talk about the four big companies - right? - let's put this into a historical context. Are we kind of living through a similar period in history where you had, like, the railroad barons and the oil barons and the finance barons - the Rockefellers, the Carnegies, the Crockers - is that the world we're living in today?

GALLOWAY: Yeah, we've been to this movie before. And history may not repeat itself, but it rhymes, and this definitely rhymes with periods when companies have concentrated or through excellent execution, macroenvironment, luck - whatever you want to call it - become an invasive species; and that is, small companies have a difficult time getting out of the crib. Large companies are kind of euthanized prematurely, and large companies tend to be great employers and good taxpayers.

What's different about this era is that we seem to have lost the script around antitrust. And that is, with the railroads, telcos, the aluminum companies, the seven sisters, the oil companies - we decided to move in and break them up and we had, quote, unquote, a "class traitor" (ph). And that is, a lot of people think the railroad money elected Teddy Roosevelt, a Republican, but he was willing to go in and say, I love you guys. Thanks for getting me in the office, but I'm now breaking you up because we need to oxygenate the economy. But we have been to these levels of concentration before.

(SOUNDBITE OF TED TALK)

GALLOWAY: Whose fault is it? It's our fault. We're electing regulators who don't have the backbone to actually go after these companies. Amazon only needs one person for two at Macy's. If they grow their business $20 billion this year, which they will, we will lose $53,000 cashiers and clerks. This is nothing unusual. This has happened all through our economy. We've just never seen companies this good at it. That's one Yankee Stadium of workers.

It's even worse in media. Facebook and Google grow their business $22 billion this year, which they will, we're going to lose approximately 150,000 creative directors, planners and copywriters. Or we can fill up 2 1/2 Yankee Stadiums and say, you are out of work, courtesy of Amazon.

(SOUNDBITE OF MUSIC)

RAZ: When it comes to Google or Amazon or Facebook or even Apple, how much do we control our interaction with those platforms and how much are we controlled by our interaction with those platforms?

GALLOWAY: So look - every time you light up a cigarette, you're making a conscious choice. But the question is, at some point, do you become so biologically addicted to nicotine, does the organization require scrutiny around what it's doing to addict you? And power corrupts, and when you're a monopoly and you're Facebook, and the worse that's going to happen to you is a fine that's equivalent of seven days' income or seven weeks of cash flow and maybe some public shaming, you're always going to find a reason not to figure it out.

The NRA has never been able to connect the sale of assault weapons with the murder of children. Big Tobacco was never able to connect tobacco with cancer. Big tech is never going to connect the underlying algorithms of their companies and the lack of security and the lack of human discretion and screening of their content with the division or serious division in our culture, the weaponization of these platforms to clear (ph) our elections or teen depression. They will never make that connection on their own because when it's raining money, it blurs your vision.

RAZ: See, I think the thing about these big companies that really worries me is how much I feel manipulated by them. And I don't - and it's not that I want to blame them because I am making choices. I am deciding to use these platforms and to check on Facebook or Twitter or buying things on Amazon because it's easy, you know. Like, that's the part of it that really bothers me, more than the sort of the economic cost of it, which is obviously a problem; it's the personal cost. It's how it sort of changes and has changed our behavior.

GALLOWAY: Hundred percent. And I would argue that if you're going to look at price, at some point, if we end up with a group of people who can all have Netflix, all have a great phone, all have tons of content and get paper towels delivered really inexpensively, but we're - our wages are flat for five decades, OK, do we need to reevaluate priorities? I would argue that the pricing or the prices we pay for these platforms has skyrocketed. And that is, when we have a country where a lot of us wonder if the elections were manipulated, that's an enormous price we all pay.

When we worry about our 16-year-old daughters sitting in their room, knowing they weren't invited to a party, that's one thing. But seeing the party play out in real time, on their phones, as they're in their rooms alone, that's a price that my household pays. I'm worried that my son, my oldest son who's 11 and does a handstand, and I video it, and he asks me to post it on YouTube, and then he gets a like, and he says, can we check back in and see if I got more likes? And then someone makes kind of a snarky comment about his video, and it really bums him out. And Google responds, well, yeah, but your son can learn how to play the piano on YouTube.

RAZ: Yeah.

GALLOWAY: There's some wonderful things about social media, but the addiction here - we know we're being manipulated. That's an enormous price we all pay.

(SOUNDBITE OF MUSIC)

RAZ: That's Scott Galloway, professor at NYU's Stern School of Business. You can watch his full talk at ted.com. On the show today, ideas about Digital Manipulation. Stay with us. I'm Guy Raz. And you're listening to the TED Radio Hour from NPR. Transcript provided by NPR, Copyright NPR.