Tech world's gang of four

Book review of 'The Four: The Hidden DNA of Amazon, Apple, Facebook and Google'

The Four

The Hidden DNA of Amazon, Apple, Facebook and Google

Scott Galloway 

Penguin Random House (Bantam Press)

310 pages; £31.99

Scott Galloway’s not-so-charitable account of rise and rise of Amazon, Apple, Facebook and Google is a scary read on the smothering tech oligopoly over our lives.

As its latest offering, the iPhone X, went on sales to enthusiastic crowds across the world, Apple Inc’s market capitalisation briefly breached $900 billion on November 3, well on its way to be the first firm to brace the trillion-dollar mark. On the same day Amazon’s founder Jeff Bezos beat Microsoft’s Bill Gates to become the world’s wealthiest person once again on the Forbes rich list, with a fortune of $90 billion.

Four days later, in Washington, Google and Facebook, the other two of the quad that make up the tech industry’s enviable “Gang of Four”, testified before the US Congress on the investigation into their alleged role in Russian meddling in the last US Presidential elections that put Donald Trump in the White House.

Apple is the most profitable company in history, with its cash hoard equal to Denmark’s GDP. One in every five of the 7.5 billion people on earth has a daily relationship with Facebook. About one in six of the 3.5 billion queries posed on Google each day have never been asked before. And Amazon is unquestionably the biggest store on the planet.

With so much market, consumer, financial, societal and, increasingly, political heft behind them, no wonder these four invite so much awe, imitation, derision, even hatred. How did the “Four Horsemen,” as Scott Galloway calls them, aggregate so much power?

“Are they the Four Horsemen of the apocalypse?” poses Mr Galloway, once a reluctant investment banker, a serial entrepreneur and professor of marketing at NYU’s Stern School of Business.

Making his uncharitable judgement of these firms’ obvious right at the start of the book, he writes; “…Facebook and Google own media; Apple owns the phone; and Amazon is about to molest the entire retail ecosystem.” The book profiles each of them, and it is in these chapters that some of the “hidden DNA” promise of the book comes alive, making it an interesting read for anyone — consumer, competitor, partner or regulator — wanting to understand the staggering success of these firms.

Take Amazon. Mr Galloway avers that it is not operational capabilities, engineers or brands that make up its “core”. It is the understanding of and appeal to our instincts in whatever it does that makes Amazon such an amazing and successful, though a heartless, enterprise.

How, one may ask? According to Mr Galloway Amazon appeals to our hunter-gatherer instinct to collect more stuff with minimum effort — from one-click shopping that it pioneered, Amazon is ushering in virtually effortless, zero-click ordering though its cashier-less offline convenience stores (Go) and its artificial-intelligence voice-ordering assistant (Alexa).

“Leveraging big data and unrivaled knowledge of consumer purchasing patterns, Amazon will soon meet your need for stuff, without the friction of deciding or ordering… Your order will arrive with an empty box; you’ll put stuff you don’t want in the return box, and Amazon will record your preferences. Next time, the return box will get smaller,” writes Galloway.

This is not just future talk, as the firm has already launched its Wardrobe service in the US, where a customer pays only for the selection they make, and get a full week to decide what to keep and send back. And Amazon is not even letting out the fact how much robotics — another of its core competencies — it is employing at its warehouses and the job havoc it is creating. Mr Galloway estimates roughly 76,000 retail jobs will be destroyed in the US alone this year as a result of Amazon increasing the number of robots in its operations by over half last year.

All this wouldn’t be possible but for Amazon’s serenading investors with amazing storytelling about its future, where “patient capital” is ever willing to buy the lore of vision and growth over profits! “The equity markets now believe what’s good for Amazon is bad for retail, and vice versa. It’s a situation almost unique in business history… The real hand-wringing is going to begin when people start asking if what’s good for Amazon is bad for society,” writes Mr Galloway.

Though less harsh on the other three horsemen, Mr Galloway doesn’t hold his punches either. So Apple’s runaway success is based on elevating a luxury product to a sacred cult brand that allows it the leeway not to follow the rules that govern and bind the rest of the business world. That coupled with a business strategy with scarcity (recollect long queues and months-long waiting period) and vertical integration as its cornerstone gave it an outsized and, for some, irrational profits. The Cupertino firm sold just under 15 per cent of smartphones bought globally last year, but its luxury-cult status allowed it to collect around 80 per cent of all profits in the industry.

Often, however, Mr Galloway sounds unconvincing, even frivolous, more so when he goes back to the evolutionary theory to explain these businesses’ hold on consumers. The reader may flinch at his explanation of Apple’s core as filling our “two instinctual needs…to feel closer to God and be more attractive to the opposite sex.” Really?

Or take this one on Facebook. Mr Galloway is clearly oversimplifying human nature when he writes: “…As a species, we are weaker and slower than a lot of our competitors. Our developed brain is our competitive differentiation. Empathy is what makes us more human. The explosion in images distributed on social media platforms has led us to more empathy.”

Even as the four jostle to “become the operating system for our lives”, Mr Galloway says the only safety for the world is in the hatred the four harbour for each other. As easy prey run out, they are competing directly with each other — Amazon in product search with Google; Apple and Amazon in voice assistants; Google and Amazon in cloud computing; Facebook with Google for share of the mobile traffic. Will Google get Amazoned? Or will Facebook get Googled? It is a Goliath versus Goliath battle, with stakes for not just businesses, but all the living and the unborn.