This analysis was first published in SvD Näringsliv, in Swedish, on December 6th, 2021.

As classic conglomerates are being dismantled, the next generation is being built in Silicon Valley and China. Power ambitions are growing as the biggest tech companies now want to expand using established methods.

Being the CEO of a listed company is surely hard. Being the CEO of two at the same time is probably at least twice as hard. And if one of them has ambitions to become the next generation’s financial conglomerate — then it might get to be a bit much, even for the most diligent.

This was the situation Jack Dorsey faced this week. He stepped down as CEO of Twitter, and just two days later renamed the payments company Square — the other listed company he runs — to Block. Name changes are in fashion in Silicon Valley. A little over a month earlier, Mark Zuckerberg renamed Facebook’s parent company Meta. Search giant Google did the equivalent back in 2015, when it renamed its parent Alphabet.

Name changes may sound mostly like semantics and branding. But if you look past the new logos and graphic profiles, you can see something more interesting. It’s an expression of grander ambitions. These IT giants, often referred to as Big Tech, have established themselves so well in their home markets that they now consider themselves ready to take on entirely different fields and expect similar success.

At Block (formerly Square), you could see expansive tendencies even before the name change. This past spring, the company bought the music service Tidal from the rapper and businessman Jay-Z. That the company was for sale was widely known, but few expected that a payments company like Square would be the buyer. The company — which has the US as its main market — is best known for offering a point-of-sale system with related services to shops and restaurants. What would they do with a service that, essentially, mostly resembles Spotify?

A possible answer can be found in another part of the Block portfolio: Cash App. It’s an app where, like Swish, you send money between individuals, and you can also buy bitcoin. Part of Cash App’s success lies in its close relationship with the hip-hop world, where it has, for example, collaborated with the rapper Megan Thee Stallion to educate fans about bitcoin and cryptocurrencies. Back in 2019, Dorsey said that the company had, somewhat surprisingly, managed to get close to hip-hop culture, and described how beneficial that had been for them. Tying in Tidal in that context — and putting Jay-Z on its board to boot — is therefore perhaps not as strange as it might first sound.

The idea that the sum of the parts is greater than each company alone is a familiar one in the corporate world. But just as Big Tech accelerates its expansion plans, we’re seeing signs of how the previous generation is being dismantled. Last month, the conglomerate General Electric announced it would be split into three parts. The pharmaceutical company Johnson & Johnson and the hardware company Toshiba are also splitting up. In these cases, pressure from shareholders to focus the businesses has finally become too great, because the supposed synergies from the conglomerates haven’t been realised to a sufficient extent.

In China too, the power ambitions are visible, including among tech companies like Tencent. The company is best known for owning the chat app WeChat, but it’s also one of the world’s biggest investors and owners in gaming. They also have enterprise services, financial products, music streaming, and robotics development in their portfolio — to name only a few. The owner of TikTok, ByteDance, also sells, among other things, calendar and cloud services to businesses as well as a social media platform. The connection between those offerings and the popular video app isn’t entirely clear to an outsider, but it may not be entirely illogical given the power they hold.

The common denominator among the tech companies that have chosen the conglomerate path is a strong starting position in their market. Perhaps so strong that they are — or at least feel — almost unchallenged. That they want to expand with this as a foundation is therefore no surprise. But like the industrial conglomerates, shareholders’ patience won’t be infinite with the Big Tech companies either. If Jack Dorsey can’t sell more financial services with the help of a music streaming service — then in time, he too will have to start dismantling the building blocks of his new Block.