How Google, Amazon, Facebook and Apple control the global markets
The Gang of Four — everyone wants to be them, admires them, fears them — the Gang of Four are growing more strongly than any other businesses before them. Even classic company foundation has changed so radically that we aren’t really 100% sure anymore what Google is actually doing. These four companies are top dogs and are not acting the way we expect them to. Let’s find out why.
Google, Amazon, Facebook and Apple are revolutionizing both the economy and society. As Scott Galloway mentioned at this year’s DLD (Digital Life Design conference), in 2015 the four companies achieved a total market capitalization (or a market value) of approx. USD 1,785,000,000,000, which is the equivalent of Canada’s GDP.
Since Google founded the Alphabet Holding, it has no longer been only Europeans who have reacted with skepticism. Google always seems to be mysteriously changing course and surprising us with new technological advancements. Something can’t be right. Google Inc. (founded in 1998 by Sergej Brin and Larry Page) became world-famous thanks to its Internet search engine but is known for so much more today. The following image will give you an idea of what is encompassed by the Google holding Alphabet:
Social network, self-driving cars, virtual reality, smartphones, app stores, personal assistants, payment service — Google is not only involved in our search for information but seems to play a role in many more aspects of our lives. It still generates 80% of revenues through online advertising but invests almost every dollar in innovation labs, education, own universities and accelerators. The term “Internet service provider” is probably the closest description of the global group’s activities, as the Internet is a connecting element, but does not suffice to capture the essence of the group. In 2014 alone, Google bought companies associated with artificial intelligence (Deep Mind), satellite drone technology (Titan Aerospace) and an aerospace company (Skybox imaging). This group is about to significantly shape our future in terms of autonomous vehicles, virtual reality, (artificial) intelligent logistics and maps, or marketing. Economically speaking, Google is truly a giant.
If we compare, for example, Google’s influence on the media (in relation to the company’s market value), we will end up with the following image:
Two of the “gang” have basically left the rest of the world behind them in terms of marketing as well. According to Scott Galloway, professor of marketing at NYU Stern, and owner of L2 (business intelligence), notorious industrial advertising will no longer play a significant role for growing companies in the future. “Advertising is becoming a tax only poor people pay.” Examples for this include Urban Decay, Kiehl’s or Bobby Brown, groups that are growing strongly but are not being marketed with the help of traditional advertising measures.
Talking about Facebook: This company, in particular, still has enormous societal influence as the largest network since the dawn of time. It is one of the most versatile companies in the world: WhatsApp, acquired by Facebook quite recently, now has 900 million users after just two years while Facebook itself can boast a total of 3.6 billion users. According to Galloway, Facebook is now more popular than Buddha, Allah and the Kardashians combined.
This next image shows the areas in which Facebook is active or wants to become active. We see quite clearly that Facebook’s time as a campus network is long gone:
The areas in which Facebook is active are news services, video platforms, Internet trade, virtual reality and — somewhat nebulously — new emerging markets.
Galloway speaks of magazines becoming “facebooked” — in 2010, Facebook still generated USD 2 million through advertising (US consumer magazines, on the other hand, were generating 15.3). Today, in 2015, Facebook is generating 15.9 (US magazines 10.8). Mark Zuckerberg’s Facebook is growing faster than any other comparable company.
Let’s stick with the superlatives and discuss e-commerce: Amazon is the largest store in the world. As the image shows, Amazon generates almost half of all Internet trade revenues in the USA. Revenues are increasing by USD 14.5 billion annually!
Amazon is always precisely at the break-even point — it is very deliberately not making a profit. Once again, I would like to quote online guru Galloway: “Profits are heroin to investors — they love them and become addicted. And if for some reason they stop making a profit due to, for example, a change of course (e.g. Walmart’s endeavor), their share prices plummet. Markets don’t like the ups and downs.” Currently, 24% of retail trade in the US is handled by Amazon. “This company redefined the retail sector.”, so Galloway. If we look at Amazon Kindle, Amazon Prime, Amazon Web Services and their research into delivery drones we quickly notice that Amazon is no longer merely an e-commerce store.
Let us move on to number four in the gang: Apple. In comparison to the previous three groups, Apple (founded by Steve Jobs in 1976) doesn’t even need a proper slogan: we simply like their products (“Think different” is pretty abstract and suits the company). Therefore, a “flop” over at Apple — i.e. the Apple Watch — means that only 74% of the smart watch market has been conquered. Finally breaking into the “wearables” sector, Apple has registered share increases of 67 percent.
The smartphone market paints a similar picture. 92% of profits can be traced back to Apple.
While overall computer sales have declined, Apple is still registering 3% growth in revenue. Apparently, Apple is also working on a car (just like Google), or at least on something in the automotive field. In addition, the company is also taking over virtual reality companies (Faceshift), artificial intelligence businesses (Emotient) and expanding their portfolio with Apple Music, Apple Pay and iOS to overshadow other smartphone and computer retailers.
The Gang of Four have many things in common such as flexibility, their desire for innovation, unwavering curiosity about new emerging markets and their insistence to push for these markets. Does it really still surprise you that they have divided up the global markets between themselves?