Commentary: Are tech giants becoming ‘too big to fail’?

"Up until the early 2010s, we had problems with “too big to fail” banks, which would, understandably, generate public uproar whenever financial markets or the global economy had problems and banks needed to be bailed out by taxpayer money. Yet we seem to be blind to another problem around the corner: “too big to fail” tech. The mentality is real: recently I talked to an investor that said that he perceived investing into Amazon bonds an excellent bet, because it was a quasi-sovereign. According to his perception, the government would not let Amazon die, so if Amazon ended in financial trouble, it would just be bailed out by the government anyways.

"And, to be fair, he isn’t too wrong. Recently we had a simple outage in some Google servers, and the entire economy paid: people couldn’t use banking services and public sector services were severely disrupted. That was just a simple outage, so do we really think any government will let Google fail?

"So this leads me to believe that at some point in the future we will have a repeat of what happened with Fannie and Freddie Mac, but this time with tech. No company is immune from failure; this is part of capitalism. A tech company will fail: it’s not a matter of if but of when. The society spent a huge effort to mitigate the impact of big bank failures through regulation, but that effort doesn’t seem to be there for tech. And, with current market worries on AI stocks being overpriced and AI companies overspending, such effort must start sooner rather than later. We don’t know what the catalyst will be, but we should know enough about life by now to know that there will be a catalyst at some point, and the catalyst might be just around the corner."