The long inactivity behind closed doors caused by the pandemic around the world quickly had its winners: the technology companies that made it possible to continue with work, commerce, study or even social contact. But the dynamics of the global market is far from being linear and since the closing of the quarterly balance sheets last September there was a crisis that dragged down several of those who were undoubted winners during the pandemic.
OTHER TIMES. Perhaps the paradigm of that vertigo was Zoom, which became so popular that it became generic. During the first year, the number of “calls” increased 30 times and its share grew almost five times, but then it fell as other innovative solutions appeared. In November it was trading only 20% higher than five years ago. Another undisputed winner had been Netflix, the audiovisual giant whose price grew more than three times: but from the peak of US$ 710 in July 2021 it fell and is currently trading almost the same as in February 2020. What happened to this apparent Covid bubble? ?
There are many mixed effects, the result of a depletion of the business model that had been so successful, on the one hand; the appearance of new competitors who wanted to take part in that appetizing market, on the other, and the recession into which the global economy fell as a price for the monetary and logistical imbalances of the pandemic.
The rapid success achieved by those who jumped on the edge, taking advantage of a competitive advantage, was very similar to the “Schumpeterian” model of growth (by the famous Austrian-American economist Joseph Alois Schumpeter): whoever innovates obtains an initial income similar to that of a monopolist, which will last until others can imitate it or even surpass it and then, its profits return to those of any competing entrepreneur.
For example, last August, one of those who had been relegated in the streaming race, Disney, reached the number of subscribers to the then leader, Netflix: 221 million users thanks to its platform Disney+ and Star+, in addition to having withdrawn from its catalog many of the productions that are now exclusively for its subscribers. On the other hand, the Google YouTube platform will launch 35 third-party channels in the United States (including Paramount Plus, Showtime, Starz, Acorn, among others) setting the course to become a streaming “aggregator” in a single Interface. The competition burns.
THE CRITICAL EYE. In the opinion of IAE Business School professor Roberto Vassolo, this year the international crisis that forced the application of tough monetary policies to appease inflation (between 6% and 10% per year in OECD countries) was combined “with the brake on growth in the number of users that Meta had, as happened before with Netflix and somewhat less with Google: I see it more as a phenomenon of market saturation, which from now on could only grow demographically”, he explains.
The case of Meta (the corporate name to which the Facebook platform belongs) is more symptomatic. At the end of September it reached 2,958 million registered users worldwide. However, his financial health seems unable to keep up with the effort of his omnipresence. Its price is almost 4 times lower than at the peak of 2021 but it even fell on the previous levels of 2019. The commitment of its managers to explore the virtues of the metaverse still does not yield the expected returns and it is estimated that it causes almost US$ 9,400 million annual losses (-US$ 3,560 million in the third quarter of this year). The graphs also clearly show that its growth curve has stopped and it is urgent to find new ways to monetize its activity before other competitors erode its market.
TWEET. Finally, the other great movement of the year was produced by billionaire Elon Musk, an eccentric South African innovator who, since this year, alternates the place of the richest in the world with the founder of Microsoft, Bill Gates. The last move of the, for many, great but misunderstood creator of Space X and Tesla, was the purchase of Twitter. A platform for which he was already a leading actor, but as a media star: his account currently has 115 million followers (double that of his rival on the podium of abundance Gates and 20 times more than another high-profile cultivator, Jeff Bezos, founder of amazon).
For the consultant Enrique Carrier, author of a key report in the industry, “since Twitter is a propitious field for disinformation, it is contradictory that Musk wants to charge for verified accounts, when they indicate that a person, institution or brand speaks. I think that in these cases there is more the impact of having hit a ceiling: from now on there would only be demographic growth”.
Roberto VASSOLO IAE Business School really by itself. The equation does not close because it is very little that they could collect at the cost of losing legitimacy ”, he elaborates. Far from these concerns, Musk, arguing that the company already loses US$4 million a day, set out for major surgery: 50% fewer employees, which was equivalent to removing 3,700 people from the structure in his first week in office. Even with some regrets involved, but the signal he issued was sharp: the business model that the company had led to bankruptcy.
SAFE DELIVERY. The other internet giants are, without a doubt, the online sales platforms. Amazon, which during 2021 sold for US$602,000 million, however, is not the largest in the world. China’s Alibaba doubled it for that period (US$1,249 million), leaving our Mercado Libre (the Argentine company with the highest turnover and market capitalization) in a decent ninth place: US$28.4 million in annual sales (30 times less than Amazon ). In these cases, the drop from the peak of COVID was not so abrupt, perhaps because the inactivity was creating new purchasing habits and overcoming logistical barriers to adapt to the new format.
