Keeping up with the latest technological innovations is fundamental to business success and laws to protect diversity in the technology market are crucial, ensuring businesses have plenty of choice.
The dominance of the four technological giants is somewhat curbed by a European Commission statute, stating that Microsoft, Apple, Google and Amazon are obliged to provide consumers with the option to use alternative technologies, to prevent them from stifling the competition. These rulings are designed to “protect innovation and consumer choice and ensure equal opportunities to compete.”
The sanctions for breaking EC rules on technological dominance are severe. Microsoft were billed £485m earlier this month after a ‘technical error’ in an update of its Windows operating system, channelled consumers to use the built in Internet Explorer without suggesting other browsers. This fine brings the total bill to the firm for monopoly abuses over the last decade to almost £2bn.
Even with the backing of the EC, the battle for small technical start-ups to establish themselves as competitors to the giants can seem like a fight between a pack of wolves and a rabbit. The Government’s Tech City initiative should have evened the fight somewhat, aiming to develop a group of technological companies in ‘Tech City,’ East London. He wanted technology, not financial services, to form the base of the UK economy. But technology start-ups, who desperately need a head-start to survive against the giants, describe the process to access Tech City funds as bureaucratic, laborious, lengthy and unclear.
The pot of money to invest is large, to the sound of £450m. The Technology Strategy Board (TSB) is the player tasked to invest the sum. So the scope to invest in small start-ups should be broad.
However, entrepreneurs say the money isn’t filtering through. In 2012, the TSB funded 133 companies, giving away £20.8m via its SMART grant. It estimated that just 5.5% of around 2,400 applications received were successful – a tiny proportion. The sister TSB scheme based in Tech City – ‘Launchpad’ – had £1.2m in their budget to give away. It was slightly more successful – of the 233 companies who applied for this scheme, 18 or 7% received funding. So the vision is good but the sticking point remains accessing the funds.
Even the giants of the industry are by no means invincible, and where technology is concerned, it is a case of adapt or die.
In the early 2000s, when the EU began discussions about regulating Microsoft’s domination over the internet, Internet Explorer accounted for 80% of all browsers. In 2009, when they made the five-year commitment to offer users a choice of different browsers, this share had decreased to a still huge two-thirds of the global market, according to web traffic analysis company StatCounter. This domination fell to one quarter in January 2013, as Microsoft found itself overtaken by Mozilla (29%) and Google Chrome (35%), competitors with a slicker customer interface.
Perhaps as a response, Microsoft announced last month that it would be shutting down Hotmail, one of the first free web-based email providers, to replace it with Outlook, a rival to G-mail with built in office apps and connections to social media platforms.
Usability is the key.
A study by scientists at the Swiss university ETH Zurich, examined the rise of Facebook over other social media platforms launched at the same time. It found that success was hugely impacted by whether the difficulty of using the site came to outweigh the perceived benefits to users. And companies who wish to outrun their competitors are responding to this: RBS and NatWest have both launched Visa-based mobile transfers – apps, to give users faster access to their accounts.
Cameron is right in thinking the future lies in technology. The money is there for new start-ups to flourish and regulation is keeping the giants in check. All that’s needed is an overhaul in the accessibility to funds, and we could have the beginnings of our own Silicon Valley.
Paul Hunt is managing director of Phoebus Software