This Finance Act Wants to Kill Big Tech

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Yesterday we posed the idea that the American Empire is nearing the end of its reign.

No empire lasts forever. And in modern times, most empires have a life span of around 100 years. Well, the American Empire is about 100 years deep and the way we see it, their time is running out.

But while the obvious successor would be China, perhaps the New Empire isn’t actually a nation-state?

This is, after all, a battle for power and control. Every empire is. And when it comes to modern power and control, there’s a transition taking place. This transition is rooted in finance and the individual. And the way we see this War for Power playing out, it’s not good news for the American Empire.

This idea of a non-governmental entity controlling parts of the world isn’t one we just pulled from thin air. It’s a long standing theory we’ve had extending back more than half a decade.

In a Money Morning article from 31 May 2013, I wrote:

Maybe there’s a better way to run the world? Imagine a world where leadership is egalitarian. A world with decentralised boundaries and borders. Probably the best way to describe it would be The Great Global Liberation. Essentially a world where there’s no ‘government’ per se.

I may be the ultimate optimist, but imagine…a world free from central control and economic mismanagement? Throw the concept of a nation state away; it won’t be the way the world works in the future. Multinationals are poised to wrestle control away from government.

Back then the big players of the tech world, Apple, Microsoft, Amazon, Google and Oracle, were all financial giants.

They had combined revenues of $372.6 billion. And compared to the GDP of global countries across the globe, that put them as the 31st largest country in the world.

Bigger than Columbia, Denmark, Singapore and the United Arab Emirates.

Apple had enough cash on its books to eliminate the total external debt of Cyprus and Singapore.

Today, those numbers are just a little bigger. With 2018 figures and substituting Oracle with Facebook, combined total revenues were over US$801 billion. And in terms of cash, Microsoft, Apple, Amazon, Alphabet and Facebook, are sitting on a war chest of US$96.2 billion. And that’s just cash. That’s not including the hundreds of billions they have in ‘short term investments’ that exist on their balance sheets.

In short, if you were able to pool together the might, power and influence of the world’s biggest tech companies and their combined networks, arguably, you’d be looking at the most powerful group on Earth.

And I’m talking more powerful than the US government. It might seem like the regulators and authorities have the upper hand. But all they can really do is try and build a fence around the growing might of ‘Big Tech’.

You see, the US is terrified of Big Tech. Why? Because Big Tech poses an immediate threat to the most powerful dangerous weapon the US has.

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Big Tech is a danger to the American Empire

Big Tech is a clear and present danger to the American Empire. More specifically, it’s a threat to the most successful weapon the US has in their global empire arsenal…banking and finance.

The US has a strong Army, a fearful Air Force and a powerful Navy. They’re the most significant global player in nuclear armament. But these aren’t as powerful as the might of the US financial system.

Take Wall St away from the Americans and the empire will crumble. The idea that Wall St could have its power taken away might be hard to fathom. But that’s what’s happening right now.

And it’s put the fear of God into US regulators. And at the epicentre of this, is Big Tech. The US is so fearful of Big Tech entering banking and finance and wrestling away power, influence and control, there’s now a draft piece of legislation flowing around to prevent it.

This legislation is known as: ‘Keep Big Tech Out Of Finance Act’.

Now, we should add, this Act hasn’t been publicly endorsed by US regulators. And it is only a draft. But it’s clear that if this is legitimate, there’s a distinct push to stop the likes of Google, Apple, Amazon and Facebook, from entering the financial arena.

And the Senate and House Committee on Finance’s grilling of Facebook over the last two days, also shows how resistant the US is going to be to the global dreams of Big Tech and their global power grab.

We know there’s interest in Big Tech getting a hand on consumer dollars. And not just as revenue, but as a branch of financial services. This historically has come in the way of consumer friendly applications like Google Pay, Apple Pay, or credit provision that you can get through Amazon.

More recently though, it’s come in the form of Apple’s Apple Card and then, of course, the giant elephant in the room, Facebook’s Libra and Calibra project.

It’s all about network effect

This isn’t accidental. These companies have been gunning for financial services for years, but they haven’t had the means to really make a dent on the power of Wall St.

But what Big Tech has going for it is something no one else on Earth has, network effect. These companies combined, span the entire globe (except for China) with their network reach. They have a global distributed network of users that no other entity on Earth can compete with.

They’ve built their companies on the power of the consumer, and now they’re looking at way to redistribute the power of Wall St and government amongst themselves as a new global power.

Facebook’s Libra is the first direct foray into this. It’s the first time the US has stood up and said we’re actually afraid of what you might build here. And that’s going to have repercussions across the entire global financial system, whether Facebook goes ahead with Libra or the project is shut down in its tracks.

So the question is: What happens next? Does the, Keep Big Tech Out Of Finance Act succeed? Does Libra get shut down? Do Wall St and the US retain power? Or are we on the cusp of a change to the status quo that’s going to result in one of the world’s biggest wealth creation opportunities we’ve ever seen?

Keep a look out for Friday’s Money Morning to find out…

Until then,

Sam Volkering,
Editor, Money Morning        

PS: RIP Commonwealth Bank? The Aussie fintech stealing CBA’s credit card profits. Click here to find out more.

About Sam Volkering

Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’…

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