The Exponential Age will transform economics forever

It’s hard for us to fathom exponential change – but our inability to do so could tear apart businesses, economies and the fabric of society

IN 2020, AMAZON turned 26 years old. Over the previous quarter of a century, the company had transformed shopping. With retail revenues in excess of $213bn (£150bn), it was larger than Germany’s Schwarz Group, America’s Costco and every British retailer. Only Walmart, with more than half-a-trillion dollars of sales, was bigger. But Amazon was by far and away the world’s largest online retailer. Its online business was about eight times larger than Walmart’s. Amazon was more than just an online shop, however. Its huge businesses in areas such as cloud computing, logistics, media and hardware added a further $172bn in sales.

At the heart of its success is a staggering $36 billion research and development budget in 2019, used to develop everything from robots to smart home assistants. This sum leaves other companies – and many governments – behind. It is not far off the UK government’s annual budget for research and development. Tesco, the largest retailer in Britain – with annual sales in excess of £50 billion – had a research lab whose budget was in “six figures” in 2016.

Perhaps more remarkable was the rate at which Amazon had grown this budget. Ten years earlier, Amazon’s research budget had been $1.2 billion. Over the course of the next decade, the firm increased its annual R&D budget by about 44 per cent every year. As the 2010s went on, Amazon doubled down on its investments in research. In the words of Werner Vogels, the firm’s Chief Technology Officer, if they stopped innovating they “would be out of business in 10-15 years”.

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