The article in the url below was prompted by the news that Exxon Mobil was being dropped from the Dow Jones Industrial Average after nearly 100 years of being on the list. This shift in the company's fortunes has been widely reported as a symptom of the oil industry's precipitous decline of late (see also Strategic CSR – Exxon):
"Less than a decade ago, Exxon Mobil was the most valuable company in the world. … Today all of Exxon is worth less than Jeff Bezos."
More specifically, the article discusses the possibility that the major IT companies, which are so dominant today, might be heading in the same direction as the tobacco companies of the past and the oil companies at present. The author presents two reasons motivating this assertion:
"First, as wild as it feels to have a handful of American technology superpowers rule the economy and the stock market and influence world events, oil superpowers like Exxon were in a similar position not very long ago. And second, while it's hard to imagine Big Tech losing relevance, most people didn't predict that demand for fossil fuels would start to wane, until it did. That's part of the sweeping changes that ushered out the era of Big Oil and started the Big Tech age."
Given the dynamic nature of the situation in which IT companies currently find themselves, are they able to adapt in a way that tobacco and seemingly oil have not been able to? The author argues there are multiple reasons to think they can:
"Apple wouldn't be the company it is today without its savvy diplomatic skills in the United States and China to advance its own business interests. Facebook is so influential that it's a tool used both against and by authoritarian governments. Google shapes how government regulators and the public think about antitrust laws. It's an imperfect comparison, but big tech companies are private empires in some of the same ways as the old Exxon."
Moreover:
"One fundamental difference is that Big Oil's fate relies on demand for a product that the companies can't control. The tech industry doesn't seem to have this essential vulnerability."
The clinching argument seems to be that, while individual companies may stumble, unlike oil, it is difficult to think that technology will become less important in our lives and the whole industry will disappear:
"[There is] a history of technology in which evolutionary changes have ruined seemingly invincible industry leaders. But while it's possible to imagine some of the individual tech powers losing relevance … it's much harder to imagine the tech industry overall growing less potent or essential."
Either way, the symbolism of the IT industry moving-in to take over from the oil industry is powerful:
"Exxon is being dropped from the Dow Jones index because of a technical change necessitated by Apple's stock getting too expensive. And Exxon's spot is being taken by a tech company: Salesforce.com."
Take care
David
David Chandler
© Sage Publications, 2020
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In Time, Big Oil Faded. Will Big Tech Follow?
By Shira Ovide
August 31, 2020
The New York Times
Late Edition – Final
B5
