By Shira Vide / NYT "On Tech" Newsletter
Less than a decade ago, Exxon Mobil was the most valuable company in the world. On Monday, it’s being kicked out of the Dow Jones industrial average after nearly a century of inclusion in the stock index.
I’m mentioning an energy company in a technology newsletter for two reasons: 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. Today all of Exxon is worth less than Jeff Bezos.
Exxon’s star faded because the world changed, and it didn’t. The question is whether what happened to Exxon is a warning about the potential vulnerability of today’s tech superpowers — or if it’s the opposite: a sign of how Big Tech is invincible in ways that Exxon wasn’t.
The 2012 book “Private Empire: ExxonMobil and American Power” described how the company at its peak helped steer U.S. foreign policy, supported sometimes authoritarian leaders in oil-rich countries and shaped people’s views on important issues like climate change to suit its interests. Its author, Steve Coll, called Exxon the world’s most powerful unelected force, and I’ve wondered for years whether big tech companies are the new Exxon.
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.
But not long after Coll’s book was published, Exxon’s influence and riches started to decline. The status of the world’s most valuable company shifted to Apple. Exxon and other oil giants mostly missed out on the fracking boom, and on the move away from fossil fuels. Exxon still has influence like it did in the old days, but it’s not the same.
“Time has marched on and these big companies have not been nimble enough,” Clifford Krauss, a New York Times energy correspondent, told me when I asked about the comparison between Big Oil and Big Tech.
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.
I’ve said here before that many tech executives live in fear of their companies dying or becoming irrelevant. They’re not thinking about Exxon but about 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 — maybe — it’s much harder to imagine the tech industry overall growing less potent or essential.
I’ll leave you with two notes of symbolism about Exxon giving way to a dominant tech industry. 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.