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The Gap Between the Haves and Have-Nots of Tech Widens


Gene Munster, a managing partner at Loup Ventures, a venture capital firm in Minneapolis, said it was harder than ever for new challengers because the top incumbents were so effective at “incremental evolution,” like Apple’s building subscription offerings to go with its hardware or Google’s branching out into cloud computing. The big tech companies skillfully move into new markets with lower prices and more money for marketing than their new competitors. In time, they take over.

The outsize nature of the profits at some of these companies has driven an explosion of wealth on the stock market.

The total value of Microsoft shares has risen nearly 70 percent over the last year, adding more than half a trillion dollars to the company’s market cap. Apple tacked on more than $550 billion in an 85 percent surge.

Alphabet’s rise of more than 30 percent has added more than $200 billion to its market cap. Amazon, which had a 20 percent jump, has been something of a laggard but still added roughly $200 billion to its market cap.

The large technology firms that dominate the public stock markets are at the extreme edge of a broader trend in American corporate life. Over the last half-century, the biggest American companies have captured a fatter share of profits produced by public companies, according to research from Kathleen M. Kahle, a University of Arizona finance professor, and René M. Stulz, an economist at Ohio State University.

In 1975, the top 100 public companies snared about 49 percent of the earnings of all public companies. By 2015, that share had jumped to 84 percent, their research showed. They have not updated their numbers since then, but Ms. Kahle, in an email exchange, said she doubted the numbers had decreased.

“There are a lot of small, unprofitable firms and a handful of large, very profitable ones,” Ms. Kahle wrote in an email.

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