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Large Tech is Taking Over the Automotive Business 

Large Tech is Taking Over the Automotive Business 

There is little doubt that tech giants such as Alphabet (Google), Amazon, Apple, and Microsoft have been among the most successful American companies in history. They have consistently developed world-class products and services and established dominant positions in a number of critical industries.

Apple, for instance, accounted for 85 percent of global smartphone profits in Q2 2023 and has an active installed base of over 2 billion devices. Google, meanwhile, operates the world’s most popular smartphone operating system (OS) and search engine. Amazon, as we all know, is America’s largest e-commerce platform and cloud provider. Whereas, Microsoft holds an around 70 percent market share in desktop OS. 

If that wasn’t enough, in recent years, “Big Tech” has also established a considerable presence in the automotive industry, which is undergoing a rapid digital transformation owing to the rise of connected, autonomous, shared, and electric (CASE) mobility. By leveraging their existing platforms and proven expertise in software development, artificial intelligence (AI), and cloud computing, tech titans are eager to shape this transition. 

In fact, their vision has already been partially realized in the domain of car connectivity, with programs like Apple CarPlay, Android Auto, and Google Automotive Services enabling drivers to mirror their smartphone apps (e.g., Apple Music, Google Maps, and WhatsApp) on their vehicle dashboards. Apple claims CarPlay’s popularity is such that it is available in 98 percent of cars in the United States, and almost 80 percent of consumers will not even consider a vehicle without it. Similarly, Android Auto is supported in approximately 200 million cars.  

Interestingly, many automotive brands were originally hesitant to integrate these services, fearing that Apple or Google would take over the in-car user experience, along with the data and revenue opportunities that come with it. But they’ve had to alter their stand as car companies cannot provide the kind of interconnectivity that their digitally native customers have grown used to. “We kind of lost that battle 10 years ago,” Ford CEO Jim Farley acknowledged in an interview with the Wall Street Journal. Farley, however, also remarked that “you’re not going to make a ton of money on content inside the vehicle. It’s going to be safety/security, partial autonomy and productivity in our eyes.”

As yet, Big Tech’s automotive forays are not confined to infotainment either. They go far beyond that. Case in point: Apple, Alphabet, and Amazon are also working on autonomous systems, described by Tim Cook as the “mother of all AI projects.” Even though the scope of these ventures is limited, Big Tech has been fairly patient with its investments thus far. Some speculate that this is because self-driving cars are the ultimate vanity project for cash-rich tech companies. Others argue it is because autonomous vehicles can significantly reduce traffic accidents, which are responsible for 1.19 million deaths and 20 to 50 million non-fatal injuries every year (per the World Health Organization).

Nonetheless, for a company like Apple, developing autonomous technologies could lay the foundation for its own electric vehicle (EV) initiative. With the smartphone market saturating, the Cupertino-based firm is apparently looking for new growth opportunities, and automotive is one of them. Plus, its successful electronics business has given Apple a wealth of experience in design, batteries, and chips. 

Besides, Apple’s Asian counterparts, like Sony and Xiaomi, are also pushing into the EV space. Sony has formed a partnership with Honda, while Xiaomi has joined forces with BAIC Group, one of China’s largest state-owned manufacturers. Apple has reportedly held talks with a number of companies for collaboration too, but nothing consequential has yet materialised.

Some observers believe that Tim Cook and his team ought to steer clear of the car business due to its complexity and intense competition. However, a survey by consulting firm Strategic Vision revealed that 26 percent of customers would “definitely consider” an Apple-branded vehicle. Admittedly, this does not look like a very significant number, but in the context of the poll, only Toyota (38 percent) and Honda (32 percent) scored higher. 

“Of course, what Apple ultimately presents in terms of styling, powertrain, product, and other key features will finally determine the level of interest generated among car shoppers. However, their brand awareness and reputation provide a formidable platform that automotive manufacturers should brace themselves for accordingly,” said Alexander Edwards, President, Strategic Vision. 

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That said, we must also bear in mind that 68 percent of Americans feel that major tech companies have too much influence in the economy, while 44 percent support more stringent regulation for them (according to Pew Research). Hence, Big Tech’s far-reaching automotive ambitions could still face major public opposition, and it is pivotal for thesefirms to demonstrate that their growing clout will indeed result in better products and more satisfied stakeholders. 

Ultimately, the automotive ecosystem contributes 5 percent to the USA’s GDP (gross domestic product) and supports 9.6 million jobs (direct, indirect, and induced). It also has a crucial role to play in America’s transition towards net zero emissions by 2050. So the involvement of resource-rich tech firms could be a great blessing for the nation, especially since its legacy carmakers have lost much of their competitive edge in recent decades. However, nobody wants to live in a gloomy Orwellian world, and “Big Tech” will have to keep that in mind as it builds the car of tomorrow.

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Source: Luxuo

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