📈 Big Tech's biggest bets

A collection of our favourite articles from the past week

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Equity Mates
June 11, 2023

Today’s email is sponsored by Milford

We’re introducing a new weekly email: Ask an Advisor

The state of financial advice in Australia is out of control. Recent data we came across really tells the story: in 2007, 3 million Australians received financial advice. Last year, it was just 1.8 million. 

And this isn’t because Australians don’t want financial advice. An ASIC survey in 2019 found that almost half of the Australians surveyed wanted financial advice. Last year, the Sydney Morning Herald reported that more than 12 million Australians have unmet financial advice needs. And this year the Australian Financial Review reported that almost 90% of Australians want their superannuation provider to offer free financial advice.

We love that the platform we’re building at Equity Mates has allowed us to connect the world of funds management with the next generation of everyday investors. And now we want to use this platform to connect you with financial advisors as well.

We may not be able to offer a 1-on-1 session with an advisor to receive personal advice. But we can give you a forum to ask your burning money questions to some of Australia’s best financial advisors and get their general advice in response.

So far on the podcast, we’ve put your questions to Charlie Viola and Jacob McCudden. Now we’re launching a weekly Ask an Advisor email to go alongside these podcast episodes.

If you have a question you would like answered or if you are financial advisor that would be open to sharing your knowledge with the Equity Mates community, email us at [email protected].

The first Ask an Advisor email will be hitting your inbox on Thursday. We hope it helps.

Rich nations are spending billions to fight climate change. The money is going to strange places.

As the world starts to face the challenge of climate change head on, wealthier nations have been asked to put their money where their mouth is and help fund the energy transition for developing countries. To date, more than $100 billion a year has been pledged. This investigation from Reuters took a look at where the money has been going.

Turns out, it has ended up in some surprising places:

  • Italy helped fund chocolate and gelato stores across Asia

  • The United States offered a loan for a hotel expansion in Haiti

  • Belgium invested in a film set in the Argentine rainforest

  • Japan financed a new coal plant in Bangladesh and an airport expansion in Egypt

Part of the problem, argue watchdog organisations, is that climate financing is entirely self-reported. So whatever a wealthy nations considers climate financing, is climate financing.

Beyond the criticisms, this article is a fascinating look at the way international financing works through government development agencies. France loaning millions to a Chinese bank for environmental initiatives, to Mexico to upgrade its metro system and to Kenya for port improvements. The United States giving millions in insurance coverage for a hydropower project in South Africa. Japan funding developments of power plants in Bangladesh.

There is plenty of money flowing around the world under the banner of climate financing. The big challenge is to ensure it is being used to fund a global energy transition rather than domestic development priorities.

What if we’re thinking about inflation all wrong?

The economy of the 1940’s looks a lot like the economy of today. High consumer demand for goods, record corporate profits and production bottlenecks in key areas. In 1940’s United States, the Office of Price Administration had some power to set prices and simply prohibited companies from raising prices over certain levels. Be careful if you suggest something similar today, as Isabella Weber from the University of Massachusetts found out.

Late last year, she published an article arguing for strategic price controls and the reaction was fierce. Like so many academic debates in 2023, the response was anything but academic. She was called “stupid”, “certainly wrong” and her article “the worst” of the year. Six months later, this article from The New Yorker tries to reckon with the substance of her argument. Should price controls be a tool in the policymakers toolkit in 2023?

We have seen early signs that western governments are open to price controls, particularly in the energy market. The EU is regulating the price of natural gas and the G7 is trying to enforce a global cap on the price of oil produced in Russia. It is a far cry from the World War Two era of government price controls across the economy, but it is a small break from the Keynesian idea that the cure for high prices is high prices.

At the same time, Weber’s critics in 2022 have come around to her views in 2023. The Nobel laureate Paul Krugman called her “truly stupid” when her article was published last year. This year, Krugman wrote in the New York Times that price controls may be a useful piece of inflation management after all.

Big Tech’s biggest bets (or what it takes to build a billion-user platform)

What separates Big Tech from its smaller peers is the ability to make big bets.

  • Since 2012, Meta (formerly Facebook) has spent $56 billion on Reality Labs (its virtual reality and metaverse division). So far, it has brought in $7 billion in revenue.

  • Estimates are that Amazon’s Alexa has lost the company at least $11 billion and maybe as much as $40 billion.

  • Google’s Cloud business has lost $35 billion, with the first quarterly profit only coming in the first quarter of 2023.

This article makes the case that those loses are okay. As these businesses scale into trillion dollar valuations, they need to be willing to make bets at a scale we can’t really fathom. Jeff Bezos explained this in his 2017 shareholder letter.

“As a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle.”




“We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs.”

This article from Matthew Ball considers the platform businesses that run so much of our lives today - Apple, Google, Amazon - and the bets that they are making to build their next billion-user product.

Why AI will save the world

Sick of the hot takes about how artificial intelligence will “change everything”? Well you haven’t seen anything yet. Marc Andreessen, the co-founder of Netscape and co-founder of VC firm Andreessen Horowitz, has written this article arguing that AI will save the world. Surely he wins hottest AI take of them all.

His core argument is that AI offers us an opportunity to augment human intelligence and solve some of the biggest challenge of our times - confront climate change, discover new medicine and develop technology to expand into space. He sees a future where every child will have an AI tutor, every adult will have an AI assistant/coach/mentor/trainer/advisor/therapist. As a result of these AI companions he believes we’ll see a golden age of economic productivity, scientific breakthroughs and creative expression.

It seems a lot to ask of AI models that are still hallucinating incorrect answers. (To hear more about hallucinations, check our explanation on The Dive: Apple | Spotify). And less than 12 months ago Marc Andreessen was making similar predictions in support of Web3. But it is interesting to consider his point of view and exciting to think of the possibilities AI may unlock.

This article is sponsored by Global X

Big Corporates to help drive CleanTech adoption

The past decade has seen ESG concerns and climate investing move from the fringes of business and finance to right in its centre. Now every company is asked about their climate policies and every investor considers their answer when allocating capital.

In fact, 40% of the world’s 2,000 largest companies have set net zero targets. Alongside the 133 countries that have also set net zero targets, 88% of global emissions are now captured by a net zero pledge.

But net zero pledges are just words. This decade is when these commitments will be tested and corporations and governments will be expected to turn their words into action.

This article from Global X looks at some of the early actions in this space. Many of the world’s biggest companies are working on procuring their electricity from renewable sources with Power Purchase Agreements (PPAs) and Amazon has also been investing heavily in hydrogen as well.

It is early days and there is a long way to go, but this is a look at some of the big companies driving clean energy adoption.

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