Editor's letter

The tech disrupters are about to be disrupted

The next prime candidate for disruption is the industry we think of as being the biggest disrupter – big tech.

I was asked at the FT Weekend Festival a few weeks ago which industry I most expected to be disrupted next. There are many obvious answers to this finance, energy and the like. But the prime candidate for disruption is the industry we think of as being the biggest disrupter big tech.

For years the likes of Amazon, Facebook and Google have had most things their own way. We mostly saw them as the good guys and any concerns we had about their cash piles, data control and filters were less relevant than the joys we were getting from one-click shopping, funny animal videos and the odd Twitter bicker. That's changing. Why? Terrorism and taxes. It has gradually dawned on all of us that there might be no "virtual caliphate" without Twitter and Facebook, that we need big companies to contribute to state coffers in a way that this lot just don't, and that taken as a whole, big tech might just be taking more than it is giving. It isn't using its power to crack down on extremism and it isn't using its wealth to pay much in the way of taxes. That makes the sector ripe for disruption by governments.

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Theresa May is demanding that Facebook, Twitter and Google get all terrorist content down in two hours or face fines. The UK public-accounts committee is having a go at Amazon for "profiting from the tax evasion" of overseas sellers who aren't paying VAT on their sales. Then, of course, there is corporation tax: more or less everyone agrees that big tech isn't paying its "fair share" and ten of Europe's leaders have now signed a letter demanding an "equalisation tax" (a tax on easy-to-find revenues rather than hard-to-find profits).

This sounds boring. But it matters for the simple reason that in the end it will hit bottom lines and then share prices. But it should also work as a reminder that when governments are broke they will always find a way to go where the money is. Tech is the obvious target, but the complacent might also look to the big pharma companies operating in the US. There states are reacting to the rising cost of their opioid crisis by looking for big pharma to finance it. At least 30 states are taking legal action against drugmakers and distributors, says the FT, and some lawyers reckon the settlements could end up "as big as tobacco" (a $200bn settlement back in 1998). Investors beware. We are entering a new age of intervention one that could end up very expensive.

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On the matter of disrupters, please read Charlie Morris on bitcoin. The huge price rises this year represent a mania rather than a fraud, he says. Don't buy bitcoin. But definitely don't dismiss it either.

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