Social media companies don’t want to be called “media” because the rules are different, but we have defined them in full to make it clear that several companies that started out as tech are now firmly in the media category.
Any company whose primary function is serving up content is a media company.
Any company whose primary function is hardware or software is a tech company.
Facebook, Apple, Amazon, Netflix, Google are referred to in one lump as the “FAANG,” particularly when discussing stocks. Companies in the FAANG grouping are blurring the lines between the tech and media categories despite their determination to remain tech-based organizations.
Why the desperation to be considered tech and not media? One word: regulations.
Media companies are held to a different standard because they are responsible for the content they create and distribute. However, FAANG companies that were founded to create/sell technologies and platforms are taking society into new territories indistinguishable between platform and content creation.
Whenever these companies make the tiniest movement, we all move with them whether we like it or not.
While FAANG companies may not be officially held to media company standards, it is up to analysts, talking heads on tv, Wall Street, and the public to reconsider what’s tech and what’s media.
One way we can make this distinction is how we treat FAANG stocks (and whether or not the acronym survives much longer).
One plaguing question is – if FAANG companies are slipping into areas of content creation and media, are their investors being misled?
The most prime example is Facebook. The past two years have shown us there is federal and international interest in regulation discussion after the issues of privacy and fake news. We’re feeling the consequences of social media, and whether or not judiciary bodies take action, Facebook will be forced to take a good hard look at itself. And where will this leave investors in the long-term?
Apple is, by definition, a tech company. No question.
Amazon is no media company, and while some may argue their primary function is retail (despite offering AWS, Echo, etc.), we would still classify them as tech.
Netflix is quite clearly a media company, a platform that serves up content (a glorified cable network only available off of cable).
Google ranks content based on an algorithm and decides what is most relevant and important to you, which is another way of saying they serve content. Alphabet is a tech company (for now), but just Google, the search engine, is not.
The FAANG stocks are based in strong ecosystems. They’ve grown exponentially in one or two decades. Are we going to overestimate their relevancy in the next 5-10 years? Is it possible that, in the future, FAANG investors will have their money in very different versions of these companies? As the discourse shifts towards regulation, the investment risk shifts as well.
FAANG stocks certainly have their appeal—like being a invited to the global party. Perhaps investors and cable news analysts will continue riding the hype train. But like in technology and economics, certainty isn’t guaranteed. It is better to look ahead and hold ourselves accountable as we’d like/hope these tech giants will do on their own.