I have written about the BigTech and examined the monopoly like behaviour of Big Tech firms including the AAFG in USA and BAT in China. We could analyse their market power through four perspective- Predatory Pricing; Vertical Integration; Threat to Customer Welfare AND Preservation of Open Markets.
You could read the analysis on unintended consequences of BigTech’s success- Size does Matter and 800 Pounds Gorilla Unleashed. Although AAFG plus Microsoft have become behemoths and thus are under tremendous scrutiny by regulators and governments across the world but yet they seem to get impacted at different scale owing to the nature of their business and perception of their harmful effects on business and society at large.
CEOs of Amazon, Apple, Facebook, and Google had testified before Congress in the tech antitrust hearing in July 2020. As you would see in the following video, even though each company is under antitrust lens for different reasons, policy makers used hearing to list similarities between all four, making the case for future regulatory reform to rein them in.
DTW
During the Week, Google parent Alphabet announced better-than-expected fourth-quarter earnings and revenue which led to more than 9% share pop in extended trading. In order to encourage retail participation, the company also announced a 20-for-1 stock split that will go into effect in July. Alphabet's stock market value peaked just above $2 trillion after the start of the trading session and may soon become a constant $2 trillion enterprise joining Microsoft and Apple in the elite club.
On the other hand, Facebook's owner Meta Platforms saw its market cap slump by more than $230bn on Thursday. It was perhaps a reflection of disappointment of investors with the quarterly figures. The shares fell 26.4% after Facebook's daily active users (DAUs) dropped for the first time in its 18-year history.
Now interestingly , both Facebook and Google derive majority of their revenue from advertising. 98% of Meta/Facebook's global revenue is generated from advertising, whereas only around two percent was generated by payments and other fees revenue. For Alphabet , about 80% of its revenue comes from adverting with web services contributing a significantly higher 8% of its global revenue.
Facebook’s lack of an operating system has put it in a very compromised situation vis-a-vis Apple and Google who own iOS and Android respectively. Mark Zuckerberg understands this predicament of Facebook and the company had already reflagged it in its IPO prospectus in 2012.
“We are dependent on the interoperability of Facebook with popular mobile-operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade our products’ functionality or give preferential treatment to competitive products could adversely affect Facebook usage on mobile devices.
Facebook’s $5 billion S-1 IPO filing
In April 2021, Apple pushed iOS 14.5 to its billion devices and made serious inroads into dismantling the ad driven social media platforms. According to a tracker run by flurry, about 96 % of iPhone users have opted out of app tracking.
This quarter results were the first time that the impact of ATT by Apple were seen. According to multiple reports and statements by Meta executives, these changes, which make it harder for brands to target and measure their advertising on Facebook and Instagram, could have an impact "in the order of $10bn" for this year.
Ten Billion Dollars in revenue LOSS in a year just because Apple turned off tracking feature for Meta Apps in their devices.
Of course, this could have also impacted Google but then they have their own very popular operating system and very popular browser coupled with world’s best search engine. In fact, the search engine is so good that Apple uses it as default in all its browsers and operating system. Recently, a lawsuit filed in California Courts alleged that Google is paying Apple to stay out of the search engine business.
According to the complainant,
the means used to effectuate the non-compete agreement included;
(1) Google would share it's search profits with Apple;
(2) Apple would give preferential treatment to Google for all Apple devices;
(3) regular secret meetings between the executives of both companies;
(4) annual multi-billion-dollar payments by Google to Apple not to compete in the search business;
(5) suppression of the competition of smaller competitors and foreclosing competitors from the search market;
(6) acquiring actual and potential competitors.
This is also reflected in the earnings report where Google is growing on the back of a 33% jump in ad revenue, compared to just 20% for Facebook. The secret might be YouTube!
It is interesting to note that a study of Android users found that in 2020 the average monthly time spent on YouTube was 23 hours (vs. ~6 hours for Netflix).Comparing it to Meta platforms, YouTube itself has more active users (2.3B) than any social site other than Facebook (2.7B).YouTube is also the 2nd biggest search engine in the world (Can you can guess the first!).
OTW
Over the Weekend, I was invited by Indian Society for Training and Development, Chandigarh Chapter to share my views on “Leveraging technology for learning and development in the post pandemic world”.
I believe that technology could have transformative influence over learning and development process for all the stakeholders including trainers and learners. We could leverage technology to drive operational efficiencies in training and development but the efforts should not end at just operational efficiencies and we should go beyond just operational benefits of leveraging technology. Of course, the pertinent questions related to meaning of learning and definition of technology as raised by my fellow panelist Jayashree are also important.
Jayashree was my guest for the monthly MountainSpeak session (watch the full recording on this Google Drive Link) where she shared her insights on leading a more mindful life while remaining connected with environment and purpose. She describes herself as Mother of an unschooler, co-creator of inner companion ecoversity , believer in the purpose of education to deepen connect with oneself, the community, and the environment.
You could read more about Edtech and Digital Transformation in my previous post
All of us felt a huge personal loss with passing away of Bharat Ratna Lata Mangeshkar on Sunday morning. Over last seven decades she had mesmerised us with her soulful voice when all of us could feel connected with her. Amongst thousands of songs, perhaps this one may capture voidness felt when Lata didi left us.
जीने के लिए सोचा ही नहीं , दर्द सँभालने होंगे
मुस्कुराये तो मुस्कुराने के , क़र्ज़ उतारने होंगे
मुकुराउं कभी तो लगता है, जैसे होठों पे क़र्ज़ रखा है
I Love You
Shailendra
PS- If you are reading for the first time, please subscribe for a weekly email discussing Running Platform Marketing Life and share your feedback on this newsletter if you have not done it yet.
Do share your thoughts on this newsletter by clicking on the link below.