America’s technology giants are drawing on their huge cash stockpiles to make big bets on investments and acquisitions that could prove to be visionary or fall flat on their faces.
Companies such as Amazon, Facebook and Google have been on a spending spree in the past year, pouring money into an array of companies, programmes and technologies amid concerns that if they do not keep innovating they will be left in the dust.
“It’s the only way these technology companies can maintain their leadership position,” said Trip Chowdhry, analyst at Global Equities Research.
“The future doesn’t belong to companies who are riding yesterday’s technologies and yesterday’s investments. They may end up being what has happened to HP (Hewlett-Packard) or IBM,” he said, referring to two American tech firms that have failed to reinvent themselves to keep up with competitors.
Some of the investments appear to be outside the companies’ normal trajectories.
Facebook, for example, has invested some $20 billion in the messaging platform WhatsApp and $2bn in the virtual reality maker Oculus.
Google has also invested in virtual reality, pumping cash into a little-known start-up called Magic Leap, and has been investing in robotics, self-driving cars and schemes to provide Internet access via high-altitude balloons.
Online retail giant Amazon has been pushing its own line of smartphones and tablets.
“If I were a shareholder, I’d like to see more governance involved in investment decisions, not (Facebook’s) Mark Zuckerberg snapping his fingers and saying: ‘I want to pay $19bn for WhatsApp because I think it’s the next big thing.”
