GAFAM Companies & Stocks: The Tech Giants That Dominate Our World

The Threats to GAFAM's Supremacy

Facebook boasts over 2 billion active monthly users, meaning more than one in four people globally are on the platform. Apple, with its staggering $130 billion cash reserves, could easily acquire companies like LVMH, the luxury brand titan on France’s CAC 40.

Despite their massive influence, dark clouds began to form over the tech heavyweights in 2018. Could the golden age of GAFAM be nearing its end?

A Rocky End to 2018 on the Stock Market

In August 2018, Apple made history as the first publicly traded company to hit a $1 trillion market cap. However, by December, its stock had plummeted by over 30%, reducing its valuation to under $700 billion. Having enjoyed the top spot for months, Apple was overtaken by Microsoft ($765 billion), Amazon ($747 billion), and Alphabet (Google’s parent company, valued at $730 billion).

Slowing iPhone sales due to a cooling Chinese economy have hurt Apple. However, all GAFAM companies now face rising competition from Chinese counterparts, including the BATX group—Baidu, Alibaba, Tencent, and Xiaomi.

The second quarter of 2018 was particularly rough for GAFAM members on the NASDAQ, which opened more than 20% down.

The Gold Mine of Data

Beyond their cash reserves, GAFAM companies have another lucrative asset: data. From artificial intelligence to user analytics, these tech giants thrive on massive amounts of personal and public data. It’s this data that fuels their algorithms and powers their growth.

Over the years, GAFAM companies have diversified far beyond their initial industries, leveraging their user base and wealth. But with great power comes great responsibility. One of the biggest challenges they face is how to manage and protect their users’ personal data without risking profitability.

Facebook, in particular, has struggled with this balance. After the Cambridge Analytica scandal in early 2018, it became clear that data management could be its Achilles heel.

Could 2019 Signal the End of Tax Avoidance?

Starting January 1, 2019, France introduced a new tax targeting GAFAM companies. Known as the GAFAM tax, it imposes a levy on sales revenue, and France’s finance minister, Bruno Le Maire, estimates it could bring in €500 million from their activities in France alone. The goal? To close the gap between the tech giants, who have paid as little as 9% in taxes on sales, and traditional businesses, which often pay up to 23%.

Plans are underway to expand the GAFAM tax across the European Union. Supported by both France and the European finance commissioner, the initiative could be finalized in the coming months.