Lately, there has been a lot of conversation about whether Google, Amazon, Facebook and others have too much power and know too much about everyone. It is as if these companies that have been around for more than 20 years suddenly changed the way they did business. Legislators and regulators ask “Who knew this would happen?” Well, I did. Along with my friend, Jeffrey Rayport, I explained how these companies would use cash, customer data and at-scale logistics to power through a wide range of businesses.
Here is the article that we published on the HBR blog in February of 2011. See if you think we got it mostly right or missed some things. Who Rules The Web Now?
I believe that we were definitely correct directionally.
>> These companies, along with Netflix, have market caps that roll up to $5 trillion dollars.
>> Over the past twelve years, they regularly represented four or five of the ten most valuable publicly traded stocks.
>> Apple takes 75% of the profits in the smartphone market despite only having a 13% share.
>> Collectively, they have claimed hundreds of billions of dollars in ad revenue.
>> Google controls more than 94% of the world’s search volume (97% on mobile). Google’s search volume is still growing 10-15% per year.
>> Although e-commerce is still less than 20% of total retail volume, it’s hard to deny that “the Amazon effect” has driven change throughout the entire retail sector. Consumers now expect a seamless retail experience and flawless logistics.
I think that we underestimated how quickly and fully these companies would transform the entertainment business.
Four years earlier than this blog post, I tried to explain to regulators from the FTC why Google’s acquisition of DoubleClick was so potentially powerful–and dangerous. I suggested that combining search data with ad serving could be the thermonuclear device of the ad market. They responded that they were not interested in the ad market–only the ad serving market. And, because Microsoft had recently bought Atlas and WPP had bought OAS, there was sufficient competition. Now they are shocked to discover that Google is a dominant force in internet advertising.
Now it might seem that these companies are in retreat, perhaps in decline. I don’t think so. Despite layoffs and rumors of layoffs, their work forces are still larger than they were in 2019 and possibly 2020. In the arms race that we forecast, they all pushed towards the frontiers of reason with investments in the metaverse and outer space. II believe that they were refocus on their core businesses and remain potent competitors for years to come.
Can they fail? Of course. Whether in geo-politics or business every seemingly invincible leader fails. There are potent new challengers such as TikTok and revived old challengers such as Microsoft knocking on the door of dominance. But don’t count out Apple, Amazon, Facebook and Google just year.
As a bonus, which demonstrates this last point, grab a cup of coffee and check out this wild time-lapse of the top internet sites from 1993 through 2020. You’ll the the rise and fall of many top companies.