How does he view the threat of technological change to the economic moats of traditional industries?

Warren Buffett's Views on the Threat of "Technological Change" to Traditional Industry Moats

Buffett has repeatedly expressed caution toward technological change in his shareholder letters, believing it often erodes or destroys the economic moats of traditional industries—though not all face existential threats. His key perspectives are:

1. The Destructive Power of Technological Change

• Buffett emphasizes that technological progress can rapidly undermine competitive advantages. For example, in his 1999 letter, he cited Kodak, whose film business once boasted a strong moat (brand dominance), but digital photography swiftly dismantled this edge, leading to bankruptcy.
• He argues that moats in traditional sectors (e.g., newspapers, retail, manufacturing) rely on economies of scale, brand loyalty, or network effects. Yet technological shifts (like the internet and digitalization) lower entry barriers, enabling disruptors (e.g., Amazon) to overthrow established models.

2. Moat Durability Is Crucial

• Buffett favors "timeless" industries with moats resistant to technological disruption, such as consumer staples (Coca-Cola, Gillette razors). In multiple letters, he notes these moats stem from unchanging human needs and habits, not volatile technology.
• He warns investors to avoid sectors reliant on rapid tech innovation, as "the pace of change threatens moats’ permanence." For instance, in his 2000 letter, he avoided tech stocks during the bubble, unable to predict winners amid upheaval.

3. Exceptions and Adaptation

• Despite caution, Buffett doesn’t wholly reject tech-influenced investments. Post-2016, he invested in Apple, viewing its moat as rooted in brand ecosystem and user loyalty rather than pure innovation. This reflects his selective stance: if technology strengthens existing moats (e.g., Apple’s iOS ecosystem), it merits consideration.
• In his 2020 letter, he discussed pandemic-accelerated changes (e.g., remote work, e-commerce), acknowledging threats to traditional retail (including some Berkshire holdings) but stressing adaptation (e.g., boosting online channels) to preserve moats.

4. Investment Advice

• Buffett advises focusing on "simple, predictable" businesses while avoiding high-tech-risk areas. He often invokes the "circle of competence" principle: avoid investments if technological impacts on moats are unclear.
• Overall, he sees technology as a double-edged sword—it creates opportunities but primarily threatens traditional moats. Thus, value investing should prioritize companies with "wide and enduring moats" less vulnerable to disruption.

These views, scattered across Buffett’s letters from the 1980s to present, embody his conservative investment philosophy.