[Annotated] Tech firms are suddenly the corporate world's biggest investors

Apple's new headquarters has created 13,000 new construction jobs

A common way to describe the history of the technology industry is by product cycles^[각주:1]. The 1990s was the era of the PC; then came the internet and related services, followed by mobile; and now artificial intelligence looms. But there is a different way to think about tech: it is switching from an era of hoarding profits^[각주:2] to one of reinvestment. Take a crude^[각주:3] yardstick of spending^[각주:4]: the physical footprint of^[각주:5] the five most valuable American tech firms. A decade ago if you added up all the land they occupied, you got to an area one and a half times the size of Central Park. Now an ongoing splurge means^[각주:6] they use ten times more space, or 600m square feet^[각주:7] (55m square metres), roughly the size of all of Manhattan. This shift to redeploying profits is^[각주:8] seismic^[각주:9]. 

Amazon accounts for two-fifths of^[각주:10] that space - the equivalent to anything south of^[각주:11] Grand Central. Way back in 1998^[각주:12], its boss, Jeff Bezos, had a different message, telling his shareholders that its business model^[각주:13] was "cash-favored^[각주:14] and capital efficient^[각주:15]". The capital-light approach was in vogue in^[각주:16] China, too, until recently. At the end of last year Alibaba's market value was similar to the total for China's biggest 700 industrial firms^[각주:17], yet it had 12% of their assets. Investors loved tech firms' ability to crank out huge profits with^[각주:18] tiny balance-sheets^[각주:19], but economists were alarmed by it. Two years ago Lawrence Summers fretted that^[각주:20] tech might depress overall investment^[각주:21]. Digital disrupters^[각주:22] would sap incumbent firms' confidence to^[각주:23] invest while spending little themselves. This was part of a wider malaise^[각주:24] he called "secular stagnation^[각주:25]". 

But over the past two years it has become clear that tech firms no longer skimp^[각주:26]. Mr Bezos's firm had capital expenditure of $25bn^[각주:27] last year (including leases), making it the fourth-biggest spender in^[각주:28] the world, just above Gazprom, a Russian energy monster with 172,000km of pipelines. America's national accounts^[각주:29] take a broader view of^[각주:30]investment than company accounts do, by including research and development (R&D) and content creation. Using this definition, total investment by a sample of the ten biggest American and Chinese tech firms has tripled over five years^[각주:31], to $160bn. If you include acquisitions and stakes bought in^[각주:32] smaller firms, this rises to $215bn. Of this figure, two-fifths was spent on intangible assets^[각주:33], a third on physical plant, and the rest on deals. Overall^[각주:34], these firms now have the same propensity to^[각주:35] reinvest as other listed companies^[각주:36]. 

It is not just the giants. Xiaomi, a Chinese smartphone company, spent $2bn over the past three years. WeWork, an office-rental operation that is viewed by some as a technology play, invested a billion dollars on physical assets in^[각주:37] 2017. In America, if you include all firms, public and private, tech accounts for an estimated fifth of^[각주:38] all investment across the economy and at least half of the absolute growth in investment. 

The boom has four causes. First, tech firms are undertaking activity^[각주:39] on behalf of other companies. Instead of building data centers, non-tech companies lease capacity from cloud-based providers such as Amazon Web Services (AWS, the giant's cloud arm^[각주:40]) and Microsoft, and in China, from Alibaba and Tencent. AWS is investing $9bn a year, or about the same as General Motors. Second, the online and physical worlds are blurring^[각주:41]. Chinese consumers roam between^[각주:42] e-commerce sites and shops, so tech firms there are building retail outlets^[각주:43]. Alibaba has a chain called Hema. Amazon bought Whole Foods last year. As tech sprawls into the old economy^[각주:44], it is acquiring more heft^[각주:45]. Alphabet's "other bets division", which includes its self-driving cars, contains over $2bn of physical assets. 

A third trend is that tech firms are acquiring access to technology and data. Microsoft bought LinkedIn for $24bn in 2016. Chinese firms are obsessed with taking non-controlling stakes in startups^[각주:46]. Alibaba and Tencent have spent $21bn in the past five years, making them dominant in China's venture-capital^[각주:47] scene^[각주:48]. A final probable cause of^[각주:49] the investment boom is sheer^[각주:50] indiscipline^[각주:51]. One warning sign is a rash of^[각주:52] flash^[각주:53] property activity^[각주:54]. Apple's new headquarters in California reportedly^[각주:55] cost $5bn. Finalizing^[각주:56] the doorknob designs^[각주:57] took a year and a half. 

For investors, tech's pivot^[각주:58] is a conundrum^[각주:59]. Monopolies that crank out profits on^[각주:60] little investment are very valuable. If they can reinvest those profits at high returns^[각주:61] they are even more so. But the danger is a loss of focus. For the sample of ten big tech firms each dollar of fixed assets^[각주:62] cranks out five dollars of sales, half the level of a decade ago. The more diverse firms get, the more ordinary the returns may be. Longtime big spenders such as Shell and Intel are experts at allocating capital^[각주:63]. Compare that to Facebook. Its annual investment (including R&D) has gone from $3bn to $14bn in five years. Based on its approach to customer privacy, it is easy to imagine that behind the scenes^[각주:64] things are slapdash^[각주:65]. 

Hey big spenders 

For the economy, tech's pivot has plenty of benefits. Apple's headquarters has created at least 13,000 full-time construction jobs, according to Reuters. And the big tech firms' savings are no longer rising as a share of the economy. Take Alphabet, Amazon, Apple, Facebook, Microsoft and Netflix. Their free cashflow^[각주:66] (the cash they have left over after investment^[각주:67]), has dropped slightly as a share of American GDP, to about 0.6%. Some blue-chip firms such as Ford Walmart are fighting back by investing heavily in new technologies, too. The last tech craze^[각주:68], in 1998-2001, created a glut of^[각주:69] network capacity that ultimately boosted productivity^[각주:70]. 

In the long run the drawback is^[각주:71] that the more the tech giants reinvest, the larger they will get, amplifying^[각주:72] an already glaring^[각주:73] antitrust problem^[각주:74]. In the short run the catch is^[각주:75] that the tech boom, which is already frothy^[각주:76], could burst^[각주:77], and a sudden cutback in^[각주:78] capital spending^[각주:79] could hurt the economy more deeply than most people realize. Tech is already integral to^[각주:80] America's news cycle, its political cycle and the rhythms of its stockmarket. Now it may have a large sway over^[각주:81] the investment cycle, too. 

1. product cycle ; (정치학) <정치사상/이론>프로덕트사이클 ;; 1966년 미국의 경제학자 버넌(Raymond Vernon)에 의해 제시된 개념으로, 공업제품(product)에는 라이프사이클이 있으며 그것이 제품생산의 공간적 이동, 기업의 행동에 큰 영향을 미친다는 이론이다. 새로운 공업제품은 기술이 있고 수요가 있는 지역에 의해 개발된다. 처음에는 고도의 생산 기술이 필요하고 또한 기술이 확립되어 있지 않아 다양한 시행착오가 이루어진다. 그러나 시간이 경과되어 많은 제품이 생산되면 기술이 표준화되어 생산 비용이 내려간다. 그렇게 되면 생산의 거점은 원래 그 제품이 개발된 지역 이외의, 기술이 그다지 높지 않고 임금이 낮은 지역으로 이동한다. 버넌은 이러한 현상을 미국의 국내에서 관찰하였지만 그것은 다국적 기업이 왜 해외로 투자하는지를 설명하는 가설로서 제시 되었다. 다국적 기업의 행동에 대한 하나의 가설로 또한 그 개념은 무역에 관한 안행(雁行) 형태론과 통하는 점이 있다. [본문으로]
2. hoard ; [자,타동사][V, VN] (특히 비밀리에 많은 돈・식품・귀중품 등을) 비축[저장]하다 [본문으로]
3. crude ; 3. (작품·제품 따위가) 불완전한, 미완성의, 투박한. ;; 4. (사실 따위가) 있는 그대로의, 노골적인, 무뚝뚝한. ;; 5. (생각·사상 따위가) 미숙한, 유치한; 《고어》 (과일 따위가) 덜 익은. [본문으로]
4. yardstick ; 2. 판단·비교의 표준[척도] ;; standard [본문으로]
5. footprint ; 1. [주로 복수로] (사람·동물의) 발자국 ;; 2. (무엇이) 차지하는 공간 [본문으로]
6. splurge ; [UC/]구어 1. 과시, 자기 선전 ;; 2. 물 쓰듯 돈 쓰기, 산재(散財) [본문으로]
7. square feet ; [명사] 제곱 피트, 평방 피트 ((略 sq. ft., ft²)) [본문으로]
8. redeploy ; [타동사] (군사) 〔부대 따위〕를 이동[전진]시키다; 〔자본·노동자 등〕을 배치 전환시키다. [본문으로]
9. seismic ; 2. (영향·규모가) 엄청난 ;; 미국∙영국 [ˈsaɪzmɪk] [본문으로]
10. account for ; 3. (부분·비율을) 차지하다 [본문으로]
11. equivalent to ; ~와 같음, 상응함 [본문으로]
12. way back (in... ) ; 오래 전 [본문으로]
13. business model ; 기존의 비즈니스와 어떤 점에서 차별화 되고 어떤 방식으로 사업을 할 것이며 언제, 어느 시점에서 수익을 만들어낼 것인가에 대한 벤처기업의 총체적인 마스터플랜을 말한다. 일정한 사업기반과 자본을 가지고 출발하는 일반기업과 달리 벤처기업은 대부분 무에서 유를 창조하기 때문에 창업단계에서의 모델 정립이 가장 중요한데, 특히 인터넷 비즈니스를 선점하기 위한 국가차원의 특허지원과 경쟁이 심화되면서 BM특허 출원이 두드러지고 있다. 단순한 사업아이템이 아니라 정보통신시스템과 결합한 영업방식의 발명이라 할 수 있는 BM특허는 사업성모델, 프로세스모델, 데이터모델 등 3요소를 모두 만족해야만 인정이 된다. [본문으로]
14. -favored ; 3. [복합어를 이루어] 얼굴이 …한, 용모가 …한. [본문으로]
15. capital efficiency ; The relationship between how many expenses are incurred by the company to how much money is used to manufacture a good or service. [본문으로]
16. be in vogue ; 유행하고 있다 [본문으로]
17. industrial firms ; 산업 기업.그들이 구입한 제품 또는 서비스를 재가공하여 다음 구매자에게 판매하는 기업. [본문으로]
18. crank out ; to produce something in large amounts, like a machine does: [본문으로]
19. balance sheet ; [NOUN] A balance sheet is a written statement of the amount of money and property that a company or person has, including amounts of money that are owed or are owing. Balance sheet is also used to refer to the general financial state of a company. [본문으로]
20. fret ; [타동사] (-tt-) 1. …을 (…으로) 애태우다, 괴롭히다, 고민[초조]하게 하다[about, over, at, for]. [본문으로]
21. depress ; 2. [타동사][VN] (사업·거래 등을) 부진하게 만들다[침체시키다] ;; 3. [타동사][VN] (물가·임금을) 떨어뜨리다[하락시키다] [본문으로]
22. disrupter ; [명사] 혼란에 빠뜨리는 사람[것]; 분열시키는 사람[것]. [본문으로]
23. sap ; [타동사][VN] (-pp-) ~ sth | ~ sb (of sth) 약화시키다, 차츰 무너뜨리다 [본문으로]
24. malaise ; [U, sing.,] (격식) 1. (특정 상황·집단 내에 존재하는 설명·규명하기 힘든) 문제들[불안감] ;; 미국∙영국 [məˈleɪz] [본문으로]
25. secular stagnation ; (경제활동의) 장기적 침체 [본문으로]
26. skimp ; [자동사][V] ~ (on sth) (돈·시간 등을) 지나치게 아끼다 [본문으로]
27. capital expenditure ; [NOUN] expenditure on acquisitions of or improvements to fixed assets [본문으로]
28. spender ; 돈(시간 따위)을 쓰는 사람, (특히) 낭비가, 방탕아(spendthrift). [본문으로]
29. national accounts ; [명사] 국가 회계: GNP 개념 [본문으로]
30. take a view of ; …을 관찰[시찰]하다 ;; 흐름상 " ~에 대해 ~방식의, 태도를 가지고 보다" 정도의 의미 [본문으로]
31. triple ; 3배가 되다; 3배로 만들다 ;; 동의어 ; treble [본문으로]
32. stake ; 3. [C] 지분(持分) [본문으로]
33. intangible asset ; 무형 자산 ((특허권·영업권 등)) [본문으로]
34. overall ; 1. 전부, 종합[전반]적으로 ;; 2. 대체로 (보아) [본문으로]
35. propensity ; (pl. -ties) 1. (보통 나쁜 뜻으로) (…의/…하는) 경향, 성향, 성벽(性癖), 성질[toward, to, for/to do, for doing]. [본문으로]
36. listed company ; (증권·금융) 상장회사 [본문으로]
37. physical asset ; [명사] 물적자산, 유형자산 [본문으로]
38. estimated ; 견적한, 어림잡은, 추측한 [본문으로]
39. undertake ; (under·took[-ˈtʊk], under·taken[-ˈteɪkən]) (격식) 1. [타동사][VN] (책임을 맡아서) 착수하다[하다] [본문으로]
40. arm ; 6. [주로 단수로] ~ (of sth) (조직의) 부문 ;; 동의어 ; wing [본문으로]
41. blur ; 1. (시야 따위가) 흐려지다, 침침해지다; (의식 따위가) 희미하게 되다[with]. ;; 2. 더러워지다, 번지다. [본문으로]
42. roam ; [자동사] 1. (정처없이) 걸어다니다, 돌아다니다, 거닐다, 배회하다 ;; 동의어 wander [본문으로]
43. retail outlet ; [명사] (메이커의) 소매판매점, 소매판매처 [본문으로]
44. sprawl ; 2. [자동사] 제멋대로 퍼져 나가다; 넓은 지역에 걸치다 [본문으로]
45. heft ; [U] 1. 무게, 중량 ;; 2. [미·구어] 중요성; 세력, 영향력 [본문으로]
46. non-controlling stake ; Non-controlling interest (NCI), also known as minority interest, is an ownership position whereby a shareholder owns less than 50% of outstanding shares and has no control over decisions. Non-controlling interests are measured at the net asset value of entities and do not account for potential voting rights. [본문으로]
47. venture capital ; [U] (상업) 벤처 자금(벤처 기업에 투자되는 자금) ;; 참고 working capital [본문으로]
48. scene ; 5. [sing.] the scene, the… scene (비격식) (활동의) 분야[-계(界)] [본문으로]
49. probable ; [형용사] (어떤 일이) 있을[사실일] 것 같은, 개연성 있는 ;; 참고 ; improbable [본문으로]
50. sheer ; (sheer·er; sheer·est) 1. [한정용법] 완전한, 순전한, 절대적인. [본문으로]
51. indiscipline ; [U]훈련[자제심] 결여; 규율이 없음, 무질서; [C]무질서[무절제]한 행동. [본문으로]
52. a rash of ; (사건 등이)빈발하는 [본문으로]
53. flash ; (英, 비격식, 못마땅함) (크고 비싼 것 등이[등으로]) 눈이 부신[번드르르하게 차린] [본문으로]
54. property activity ; Property management is the operation, control, and oversight of real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its useful life and condition. This is much akin to the role of management in any business. [본문으로]
55. reportedly ; 전하는 바에 의하면, 소문에 의하면; 보도에 따르면 [본문으로]
56. finalize ; [타동사][VN] 마무리짓다, 완결하다 [본문으로]
57. doorknob ; [NOUN] A doorknob is a round handle on a door. [본문으로]
58. pivot ; 2. (가장 중요한) 중심[중심축] [본문으로]
59. conundrum ; [NOUN] A conundrum is a problem or puzzle which is difficult or impossible to solve. ;; 미국∙영국 [kəˈnʌndrəm] [본문으로]
60. crank (sth) out ; (특히 질 낮은 물건들을) 빠르게 만들어 내다[쏟아 내다] [본문으로]
61. return ; 5. [U, C] 수익 ;; 동의어 ; earnings, yield [본문으로]
62. fixed asset ; [NOUN:PLURAL] Also called : capital assets nontrading business assets of a relatively permanent nature, such as plant, fixtures, or goodwill Compare current assets [본문으로]
63. allocate ; 1. (주식·토지 따위를) 할당하다, 분배하다, 배정하다(assign). ;; 4. (수입 따위를 특정한 일에) 충당시키다(set aside and assign) [본문으로]
64. behind the scene ; 무대 뒤에서 / 이면에서 / 은밀히. [본문으로]
65. slapdash ; [형용사] 저돌적인, 무모한, 성급한; 되는 대로의; 깔끔치 못한, 허술한. [본문으로]
66. free cash flow ; FCF (경제) 잉여현금흐름 ;; 기업이 사업활동에서 벌어들인 현금에서 각종 비용과 세금, 설비투자 등을 빼고 남은 잔여 현금흐름을 말한다. 잉여현금흐름은 기업의 실제 자금 사정이 얼마나 양호한지 확인하는 지표로, 재무제표상 영업활동으로 인한 현금흐름(영업활동현금흐름)과 투자활동으로 인한 현금흐름(투자활동현금흐름)을 합산해 산출한다. 여기서 영업활동현금흐름은 양수(+), 투자활동현금흐름은 음수(–)로 나타나는 것이 일반적이다. [본문으로]
67. leave over ; 1. …을 남겨두다; …을 사용하지 않고 놔두다 [본문으로]
68. craze ; [명사] ~ (for sth) (특히 일시적인) 대유행[열풍] ;; 동의어 ; fad [본문으로]
69. glut ; [주로 단수로] ~ (of sth) 과잉 ;; 동의어 ; surfeit [본문으로]
70. productivity ; [U] 생산성 [본문으로]
71. drawback ; 1. 약점, 결점 ((in)); 장애, 고장 ((to)) [본문으로]
72. amplify ; [타동사] 1. 확대[증대]하다(enlarge); <장소 등을> 넓히다, 확장하다(extend) [본문으로]
73. glaring ; 1. [주로 명사 앞에 씀] (좋지 않은 것이) 확연한, 두드러진 ;; 동의어 ; blatant [본문으로]
74. antitrust ; [ADJ] In the United States, antitrust laws are intended to stop large firms taking over their competitors, fixing prices with their competitors, or interfering with free competition in any way. [본문으로]
75. catch ; 4. [C, 주로 단수로] (숨은) 문제점[애로점] [본문으로]
76. frothy ; 2. 허황된, 실속 없는 ;; 미국식 [ˈfrɔːθi] 영국식 [ˈfrɒθi] [본문으로]
77. burst ; [자동사] 1. 파열하다; 폭발하다(explode) [본문으로]
78. cutback ; [명사] ~ (in sth) 삭감, 감축 [본문으로]
79. capital spending ; [명사] 자본지출, 설비투자 ;; 동의어 ; capital expenditure [본문으로]
80. integral ; 1. ~ (to sth) (전체를 구성하는 일부로서) 필수적인, 필요불가결한 [본문으로]
81. sway ; [U] 1. (전후좌우로) 흔들림[진동] ;; 2. (문예체) 장악, 지배, 영향 [본문으로]