Join Hafta-Ichi to Research the article “A Lesson in Tech Survival”
This article is part of the On Tech newsletter. You can sign up here to receive it weekdays.
One of the technology industry’s dullest companies offers lessons in how the superstars like Google and Facebook might manage to outlast government lawsuits and other existential threats.
I’m talking about the computer chip maker Qualcomm, which appointed a new boss on Tuesday and seems to have weathered endless crises that many people — myself included — thought could take the company down.
Qualcomm may point to a path for other tech companies that are now facing what it went through: threats from sweeping litigation, potential new regulations, uncertain finances and the howling of many business partners.
The company showed that with enough patience, money, lawyers, luck and products that people really need, it’s possible to stay the course and emerge relatively unscathed from years of drama.
This is either a heartening tale of survival or a depressing lesson that rich companies can skate past their problems. Maybe a little of both?
If you’re unfamiliar with Qualcomm, just know that there would be no digital life as we know it without the company. Qualcomm’s technology is responsible for connecting smartphones to the internet, and for years it has been one of the most important tech companies that you probably never think about.
But Qualcomm has also constantly been on the edge of a cliff, because it makes money in a way that has won it few friends. Most of its profits have come from charging fees to smartphone companies like Samsung and Apple to use technology that Qualcomm has patented.
Smartphone makers typically have to pay Qualcomm for its patents whether or not they buy its chips. The fee tends to be based on the eventual sales price of the phone.
Many of Qualcomm’s biggest customers — including Apple — and so many governments that I lost count have said that Qualcomm’s pricing and business tactics were unusual and that the company unfairly bullied customers and mowed down competitors.
All of those fights could have forced the company to split apart or maybe even go broke. Qualcomm maintained through all of this that its conduct was fair and appropriate. And the company has mostly been vindicated.
The company’s new chief executive is taking over with much of the litigation behind it and Qualcomm poised to be a winner from the next generation of smartphones with 5G cellular connections.
My colleague Don Clark, who knows more about computer chip companies than 99.9 percent of humans, also said that he was surprised Qualcomm had overcome its challenges.
“I think Qualcomm is sitting pretty,” Don told me. He added the caveat that he has been wrong about Qualcomm many times before, and the company still is fighting some lawsuits and faces competition from smartphone companies, including Apple, making more of their own computer chips.
Business & Economy
What happened to Qualcomm is in some ways unique to that oddball company, but it also has echoes in the fights picking up now over tech giants like Google, Facebook and Apple. Like Qualcomm, the question dogging those superpowers is whether they’re successful because they’re good at what they do or because the companies have rigged the system.
Qualcomm also showed a snowball effect of controversies. Once one government or business partner started to question Qualcomm’s fees and business tactics, that emboldened other regulators, customers and critics to pile on, too. We’re seeing that with the tech giants now.
I’m not predicting that Big Tech will, like Qualcomm, emerge mostly unharmed and unchanged from antitrust lawsuits and other fights. But that company is a reminder to me that sound and fury about whether a company cheats to win might in the end amount to not that much.
How much tech workers are paid
With a group of Google employees announcing this week that they had formed a union to have more muscle to negotiate workplace issues like sexual harassment and tech ethics, I thought it was a good time to check out the employee pay at America’s tech powerhouses.
The figures show both the considerable fortunes of some tech workers compared with most Americans and the wide divergence between the companies. There’s also a lot these numbers leave out.
These are the most recent yearly compensation figures for the typical worker at these companies, from documents released for annual meetings of shareholders:
Alphabet (Google’s parent company): $258,708
Amazon: $28,848 ($36,640 for full-time workers in the U.S.)
For comparison, the typical pay for full-time, year-round workers in the United States was about $52,000 in 2019. Apart from Amazon, these companies only disclose the pay calculated from their global work forces.*
One thing that jumps out is Apple and Amazon’s relatively low compensation compared with the rest of Big Tech. (Amazon has more information here on the workplace benefits that aren’t counted in the compensation figure.)
A big reason for this is the composition of the companies’ staff. Apple has a large number of employees at its retail stores. And a big chunk of Amazon’s rapidly growing global work force of more than 1.2 million are people who are working in warehouses and package sorting centers. Google and Facebook’s employee ranks are mostly office workers in relatively highly paid jobs like engineers.
The big omission from these compensation figures is the shadow work force of contractors at pretty much all the Big Tech companies. At Google, for example, direct employees are outnumbered by temps and contractors, who tend to have lower pay and less opportunity for advancement than the company’s full-time workers.
How the tech giants pay and treat their contract workers is going to be a big issue in 2021, and it’s something my colleagues and I will continue to follow closely.
*These figures are all medians, which means numerically half of employees make more and half make less.
Before we go …
Tech that will be big in 2021: My colleague Brian Chen has more predictions for tech that will invade our lives this year, including smarter Wi-Fi that could improve our home internet surfing.
The drama over Big Tech in China: One of China’s most successful tech companies, Ant Group, is under fire both at home and in the United States. China’s government wants Ant to feed reams of people’s financial data into a nationwide credit-reporting system, The Wall Street Journal reported. And the White House ordered a ban on Ant’s mobile payment system in the United States.
Please do not steal cars: But it is wild that technology like key fobs that was intended to eliminate car thefts is now contributing to a spike in stolen vehicles, my colleague Sarah Maslin Nir wrote. In part, that’s because we have a tendency to leave the key fobs inside our cars.
Hugs to this
Five school buses in Utah synced their lights in time to the “Dance of the Sugar Plum Fairy” from the Nutcracker ballet.
We want to hear from you. Tell us what you think of this newsletter and what else you’d like us to explore. You can reach us at email@example.com.
If you don’t already get this newsletter in your inbox, please sign up here.
Source: The NY Times
Keyword: A Lesson in Tech Survival