Maturity, competition and regulation
Large technology platforms are dealing with three key challenges: maturity, competition and regulation.
Maturity: how long can companies like Google and Microsoft sustain premium growth rates? The law of large numbers is a concern for investors.
Competition: big tech companies increasingly play in each other's sandboxes. If Amazon Web Services’ growth slows down, it could well be because Microsoft Azure or Google Cloud are taking market share.
Regulation: the level of scrutiny from the public and government on platforms such as Microsoft, Amazon, Google, Facebook and Apple has risen materially in recent years, leading to fines in the EU and the U.S. and increased regulation in countries as diverse as Australia, Germany, France and the U.S. There is much greater regulatory uncertainty around these names than ever before.
Entertainment
The single most interesting and dominant theme in entertainment is streaming and it impacts all forms of entertainment from video (Netflix, Apple, Amazon HBO, Disney and others) music (Spotify, Apple, Google and YouTube), and now game streaming. Early signs point to a move beyond dedicated gaming devices and consoles to streaming via every-day devices including phones, laptops and computers.
Olympics and Elections
In 2020 two big events, the Summer Olympics in Tokyo and the US presidential elections, could have positive implications for global investors. The Olympics will be fascinating in terms of how people will view it. Indeed, they may be the most streamed rather than watched Olympic Games ever. And then there’s the election. The 2016 US presidential elections demonstrated the power of social media platforms. While there will be a heightened focus on the integrity of the elections and the behaviour of social media platforms, an enormous amount of advertising dollars will likely be spent online and on social media platforms during the campaigns.
Learn more: Extended interview with Mark Mahaney by the ABC.
