Ted Gioia compares the modern market power of the Google behemoth to the only commercial enterprise in human history to control half of the world’s trade — Britain’s “John Company”, or formally, the East India Company which lasted over 250 years growing from an also-ran to Dutch and Portuguese EICs to the biggest ever to sail the seas:
No business ever matched the power of the East India Company. It dominated global trade routes, and used that power to control entire nations. Yet it eventually collapsed — ruined by the consequences of its own extreme ambitions.
Anybody who wants to understand how big businesses destroy themselves through greed and overreaching needs to know this case study. And that’s especially true right now — because huge web platforms are trying to do the exact same thing in the digital economy that the East India Company did in the real world.
Google is the closest thing I’ve ever seen to the East India Company. And it will encounter the exact same problems, and perhaps meet the same fate.
The concept is simple. If you control how people connect to the economy, you have enormous power over them.
You don’t even need to run factories or set up retail stores. You don’t need to manufacture anything, or create any object with intrinsic value.
You just control the links between buyers and sellers — and then you squeeze them as hard as you can.
That’s why the East India Company focused on trade routes. They were the hyperlinks of that era.
So it needed ships the way Google needs servers.
The seeds for this rapacious business were planted when the British captured a huge Portuguese ship in 1592. The boat, called the Madre de Deus, was three times larger than anything the Brits had ever built.
But it was NOT a military vessel. The Portuguese ship was filled with cargo.
The sailors couldn’t believe what they had captured. They found chests of gold and silver coins, diamond-set jewelry, pearls as big as your thumb, all sorts of silks and tapestries, and 15 tons of ebony.
The spices alone weighed a staggering 50 tons — cinnamon, nutmeg, cloves, pepper, and other magical substances rarely seen in British kitchens.
This one cargo ship represented as much wealth as half of the entire English treasury.
And it raised an obvious question. Why should the English worry about military ships — or anything else, really — when you could make so much money trading all this stuff?
Not long after, a group of merchants and explorers started hatching plans to launch a trading company — and finally received a charter from Queen Elizabeth in 1600.
The East India Company was now a reality, but it needed to play catchup. The Dutch and the Portuguese were already established in the merchant shipping business.
By 1603, the East India Company had three ships. A decade later that had grown to eight. But the bigger it got, the more ambitious it became.
The rates of return were enormous — an average of 138% on the first dozen voyages. So the management was obsessed with expanding as rapidly as possible.
They call it scalability nowadays.
But even if they dominated and oppressed like bullies, these corporate bosses still craved a veneer of respectability and legitimacy — just like Google’s CEO at the innauguration yesterday. So the company got a Coat of Arms, playacting as if it were a royal family or noble clan.
As a royally chartered company, I believe the EIC was automatically entitled to create and use a coat of arms. Here’s the original from the reign of Queen Elizabeth I: