Why it has never been better to be a big company

For all the unwieldiness it entails, scale has always brought enormous benefits in business.

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Fixed costs are set against more revenue, raising profits and supporting investment. Heft brings bargaining power with suppliers and financiers. From the early 2000s, the advantages of scale became more pronounced.

Intangible assets, including software and intellectual property, gave the upper hand to companies that could afford to invest in them. Globalization provided big companies with more room to grow, as well as access to larger—and cheaper—pools of labor. In America, the gap in profitability between big and small firms widened. Economists began to speak of "superstar" firms racing further ahead of the competition.

Now size is conferring advantages in new ways. Artificial intelligence (AI) is reinforcing the dominance of big firms over small ones. So is Donald Trump's trade war, which raises the importance of resilience and political sway. Yet these same disruptions could spell danger for America's corporate giants. Already companies from Apple to Walmart are discovering how their size can make them a target of the president's wrath.

Start with AI. You might imagine that lumbering leviathans would be too tied up in bureaucracy to make use of the technology. In fact, their scale allows them to invest far more in it than smaller rivals. According to a survey in December by Bain, a consultancy, American companies with more than $5bn in revenue had an average annual budget for generative-AI projects of $27m, five times the level in the preceding February. Those with between $500m and $5bn in revenue, by contrast, had set aside $9m, up by two-thirds over the same period (see chart 2). JPMorgan Chase, America's biggest bank, says that it has rolled out AI tools to most of its 320,000 employees. UnitedHealth, the country's biggest health insurer, claims to have 1,000 different applications for the technology.