Eric Schmidt predicted that tech industry giants will become stronger after the COVID-19 pandemic subsides.
Former Google CEO Eric Schmidt has a prediction about what the tech industry will look like after the coronavirus outbreak subsides: Big Tech will be even bigger.
“The strongest brands and the strongest companies will recover more quickly,” he said, during a video call with reporters on Tuesday. He added that “the industry leader, if it’s well managed, tends to emerge stronger a year later.”
Schmidt, who was Google’s CEO from 2001 to 2011 and executive chairman of Google or its parent company, Alphabet, until 2017, channeled the lessons he learned during the Great Recession for his coronavirus-era predictions. His comments came while participating in a speakers series, called Forecast, hosted by Collective[i], an analytics company that works to help businesses increase their sales.
Although Schmidt wouldn’t discuss Google specifically—he still owns more than 4 million shares—Schmidt did describe Amazon as a prime example of his “get bigger” thesis. Because brick-and-mortar stores are closed, and people are afraid to venture out in public, the online retailer is handling a massive increase in orders. After the outbreak ends, those new customers will most likely stick around, Schmidt said.
Prior to the coronavirus outbreak, federal and state regulators were putting big tech companies like Google, Amazon, and Facebook under increasing scrutiny for their business practices. Officials worried that Big Tech was getting too powerful, that they squashed smaller competitors, and that they mismanaged user data.
To those concerned about the growing power of these companies, he said there’s a simple response: Invest in companies that may eventually rise to compete with the Goliaths. For example, videoconferencing company Zoom is quickly becoming a heavy hitter that may be able to challenge Big Tech.
“My general answer on this question about technology and the concentration of power is more investment and more competitors,” he said, contradicting critics who say that it’s futile for a small fry to take on a company like Apple, which has more than $200 billion in cash.
Whatever the case, the current tech leaders will have a huge advantage in the post-coronavirus world, Schmidt said. Unlike many traditional companies, they don’t depend on large group gatherings for revenue. They also have some of the most well-known brands and plenty of money to make it through tough times like today.
“I learned a rule a long time ago…do not run out of cash,” Schmidt said. “Many of the tech companies I’m quite familiar with are sitting on large cash positions. They’re going to be fine.”
Amazon, for example, had $36.1 billion in cash and cash equivalents at the end of 2019. Facebook had $19.1 billion while Alphabet had $18.5 billion.
Still, Big Tech is feeling some pain. Online advertising, on which Google and Facebook depend, is widely believed to have cratered during the pandemic. Meanwhile, Apple has had to shutter its stores.
While big tech companies are expected to recover faster and become stronger after the pandemic, according to Schmidt, they’ll also emerge with a greater understanding of their corporate responsibility. For example, YouTube and Facebook are feverishly working to delete misinformation about the coronavirus that’s disseminated on their services.
“There was this belief 10 years ago that it was okay to have open networks and have free speech from anyone, including idiots,” Schmidt said. “What you see now with the pandemics, is you see every tech company is aggressively going after the liars, the manipulators, and the people who are harming other people by denying the existence of the disease and spreading misinformation.”
Schmidt likened the shift to a “phase change”—from Big Tech leaving it to society to sort out what’s true and false to Big Tech accepting a “moral responsibility” that they must ensure public safety.
“That’s a big change,” he said. “And that’s a change that’s likely to continue.”
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