Rage Against The Machines
Cards on the virtual table - I'm not a huge fan (like many) of the way that 'Big-Tech' have gone about their business. I've spent a hell of a lot of time researching and trying to understand their methods - away from the headlines and knee-jerk commentary. Indeed, that's how Firesmoke.co came about - and drives much of its work and (I'm glad to say) baby steps of growth.
So, the recent Anti-Trust (this is different to regulation at this stage) hearing in the US are a kind of guide to what may happen in the future. I spent six hours running through the session...(come on I love cricket so have the mindset...). Anyway once, I got past the senators rambling on for four minutes and thirty seconds of their allotted five minutes to ask questions, even in the miniscule time to answer - Bezos, Zuckerburg, Pichai and Cook - let slip some assumed, but never before confirmed facts.
Actually, they let slip quite a few - and many at first glance are not surprising - but dig a little deeper and join some dots (which is my job I suppose) and some significant points are revealed. Anyway, to save your sanity - a few specific ones stood out;
1) Amazon have consistently sold the Echo product range below cost.
2) Facebook have ignored Anti-Trust laws by purchasing Instagram and WhatsApp
3) Google forcibly embedding its search advertising platform across other areas of digital marketing. Using this to create (in their own words) an 'unfair advantage'.
4) Apple actively restrict third party products on the app store. Because they own the trainset -everyone plays by their rules.
See what I mean - nothing 'surprising' right?
So - Amazon sell stuff below cost - so what? We all know that - I mean that's how they cannibalise many sellers on their marketplace. But selling Echo below cost - putting the device in homes (over 50% of US households have one) - is a little more sinister - are they ‘learning’ from us or ‘training’ us? Bezos admitting this has in effect opened up the reshaping (or at least additional investigation) of their pricing methods - this includes their own products - FireStick, Echo etc.), the marketplace, Prime, AWS, logistics - the whole shooting match.
Facebook ignore Anti-Trust to 'kill' competition. Again, so what? But in the US this is a serious charge - stemming from the days of Standard Oil/Rockefeller and Zuckerberg admitting this - well, that is a bit of a game changer. Facebook are the most 'at risk' immediately - this could be the beginning of the end for them in their current form and have the biggest impact on social marketing strategies across the world. But Marky Mark is an arch 'greaser of palms' and of course, Facebook will influence the US election (they haven't got the processes, rigour or desire internally to do anything about it) - and that buys him time and gives him power. Regulation could be their saviour - if Trump gets in - they'll be left alone, (remember FB did help the Trump campaign in 2016) if Biden gets in - they may well offer themselves up to be regulated.
Google admitting that they have ensured that they are the 'only choice in town' for digital advertising by using the strength of their core search function and embedding it within YouTube, Chrome, Android and giving it free to Third Party vendors - is again nothing new. But this hidden reliance has provided it with complete control over a number of 'verticals' in the digital marketing space - verticals of both market and channel type. This is a problem for competition, privacy and data collection (although not directly linked to anti-trust a 'dependant' influence) and a potential limit on the growth of third party vendors. Additionally, Pichai was (in my opinion) incredibly scripted in his answers and seemed genuinely surprised at the fact that anyone would be concerned about Google. We could see a split of the Google portfolio - specifically in advertising tech.
Good old Apple - well, they are now the most trusted of the four by public consensus. iOs is the most 'locked- down' of the platforms - I mean it only records 200 data points rather than the 1200 Android does, but they do make it really hard for businesses to succeed in the App Store. From the 30% charges they take from every download (which as an example slows Spotify's - a direct competitor - growth). Now, is this purposely stifling the competition and therefore a breach of anti-trust - yes potentially. But Apple, more than the others, are seen as a more 'wholesome' US business - they make stuff, ok in China and the Far East (which could become a serious issue), for very low pay (which will become an issue) - and they have been around for longer - they are not a teenager, like the others they are moving into middle age. Much of the potential restrictions out on Apple I think will be dependent on the success of their other services (content, cars, home goods etc.) - but we could see the app store charges being quietly reduced over the next 12 months.
Independent of any specific scenarios I do believe that significant changes are ahead for at least some of the big tech companies, changes that will affect all of us and all of our businesses. Maybe not for 12-24 months, but the game has begun. Some rough predictions to whet the appetite;
· Microsoft buy TikTok, there value increase exponentially then drops when they discover they are not sure what to do with it.
· Amazon are first asked to sell AWS, but then negotiate an opening of their monopoly on logistics, marketplace and to an extent AWS.
· Facebook agree to be ‘regulated’ and are treated as a news provider. They have to sell (most likely) WhatsApp.
· Shopify (Amazon’s #1 competitor for retail) buy Pintrest, FedEx (or both) and create an end-to-end engagement and fulfilment platform for business.
· Twitter develop a subscription model
· Due to the above;
Google move into the education space – using YouTube as a platform and increase exposure in the healthcare space (primarily in the private US market) using their data strength to increase reliance
Apple create a search engine (once Google have been split up)
Facebook either a) whither a little – like Twitter, lick their wounds and return or b) Go big and try and buy PayPal (Social purchasing and underpinning their slow move with Libra)
Amazon take control of the ‘last mile’ delivery completely, provide access to their logistics for the public sector and squeeze competition out (hence FedEx and Shopify).
Amazon release a voice platform that is fully integrated with a car manufacturer – VW is a likely partner which takes them into the wider transport market (building on their recent delivery business investments).
For my clients I'm working on some specific considerations and outcomes that may affect them directly - because well - they are my clients and I've spent months (if not years) developing ideas, solutions and thoughts.
I'm also developing a wider 'game theory' piece looking at the potential impact of a reshaping of Big Tech for individuals and businesses you can sign up to get this by the end of August and if you'd like me to do a similar detailed, specific piece for your business - give me a shout.
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