Which of the mega tech stocks do you think will fail? None? Do you really believe that disruption is done? That big tech is too big to fail? One of them failing is inevitable. It might not happen overnight, but 10 years from now, one of the mega-caps will no longer be, well, mega. Exploring this contradiction can help me better understand the future. If you can understand why Google could fail, you can understand who could
When thinking about which mega-cap would be the first to fail, I first thought about switching costs. I think Google has the lowest switching costs for its core business. Amazon and Facebook come to mind as well, but I think simple arguments can lead to Google being the most vulnerable to switching costs.
Just Google It
Google is a search company. The majority of their profits come from their search. They have YouTube, cloud, etc… but that’s all in the periphery.
Search is everywhere. Google pays Apple billions of dollars a year to be their search provider. Yet, what is the moat? They do have some network effects, but are we sure these make a big difference at this point? When I search on different engines (Google, Bing, DuckDuckGo), I don’t see a difference that impacts the user.
The switching costs of search are astonishingly low. People might disagree with this, but I can much more easily leave Google’s core business than Apple, Amazon or Facebook. Bing is a joke, but it really isn’t bad. This isn’t a very in depth reasoning of why Google will fail, but in retrospect companies fail for obvious reasons. Google is ripe for disruption.
Why I’m Dumb for Saying this
Yet, 20+ years later, Google is still the king. Something is working very well… for now. Maybe I am crazy, but the low switching costs of their core business makes me believe they are the most likely to fail. Google has so many side businesses and bet projects that will have higher switching costs (i.e Gmail). If you think I’m an idiot, drop a comment below to let me know which mega-cap will fail first (and why!).