Before the year 2014, there were many people using Google, Facebook, and Amazon. Today, there are still many people using services from those three tech giants (respectively, GOOG, FB, AMZN). Not much has changed, and quite literally the user interface and features on those sites has remained mostly untouched. However, the underlying dynamics of power on the Web have drastically changed, and those three companies are at the center of a fundamental transformation of the Web.
What has changed over the last 4 years is market share of traffic on the Web. It looks like nothing has changed, but GOOG and FB now have direct influence over 70%+ of internet traffic. Mobile internet traffic is now the majority of traffic worldwide and in Latin America alone, GOOG and FB services have had 60% of mobile traffic in 2015, growing to 70% by the end of 2016. The remaining 30% of traffic is shared among all other mobile apps and websites. Mobile devices are primarily used for accessing GOOG and FB networks.
Another demonstration of GOOG and FB dominance can be seen among media websites. The most popular web properties that don’t belong to GOOG nor FB are usually from the press. For instance, in the USA there are 6 media sites in the top 10 websites; in Brazil there are 6 media sites in the top 10; in UK it is 5 out 10.
From where do media sites get their traffic? Prior to 2014, Search Engine Optimization (SEO) was a common practice among Web Developers to improve their site for Google searches, since it accounted for approximately 35% of traffic, while more than 50% of traffic came from various other places on the Web. SEO was important, while Facebook presence was nice-to-have. Over the next 3 years, traffic from Facebook grew to be approximately 45%, surpassing the status that Search traffic had. In 2017, the Media depends on both Google and Facebook for page views, since it’s the majority of their traffic.
...During 2014, FB apparently reorganized itself to focus on social only. In February, it bought WhatsApp, for 11 times the price GOOG bought YouTube. In December, it canceled its Bing partnership with MSFT. User retention on Facebook.com grew steadily (see chart below). Through its four simple products, Facebook, WhatsApp, Messenger, and Instagram, FB had become the social superpower.
Similarly, GOOG in 2014 started reorganizing itself to focus on artificial intelligence only. In January 2014, GOOG bought DeepMind, and in September they shutdown Orkut (one of their few social products which had momentary success in some countries) forever. The Alphabet Inc restructuring was announced in August 2015 but it likely took many months of meetings and bureaucracy. The restructuring was important to focus the web-oriented departments at GOOG towards a simple mission. GOOG sees no future in the simple Search market, and announces to be migrating “From Search to Suggest” (in Eric Schmidt’s own words) and being an “AI first company” (in Sundar Pichai’s own words). GOOG is currently slightly behind FB in terms of how fast it is growing its dominance of the web, but due to their technical expertise, vast budget, influence and vision, in the long run its AI assets will play a massive role on the internet. They know what they are doing.
These are no longer the same companies as 4 years ago. GOOG is not anymore an internet company, it’s the knowledge internet company. FB is not an internet company, it’s the social internet company. They used to attempt to compete, and this competition kept the internet market diverse. Today, however, they seem mostly satisfied with their orthogonal dominance of parts of the Web, and we are losing diversity of choices. Which leads us to another part of the internet: e-commerce and AMZN.
AMZN does not focus on making profit.
Instead, its mission is to seek market leadership, crushing competitors in the USA.
Isn’t GOOG trying to guarantee the open Web stays alive? Not necessarily. GOOG’s goal is to gather as much rich data as possible, and build AI. Their mission is to have an AI provide timely and personalized information to us, not specifically to have websites provide information. Any GOOG concerted efforts are aligned to the AI mission.
GOOG is a huge company where employees have autonomy and multiple projects and efforts are occurring. Big efforts, though, are coherent, concerted, and well aligned with its mission: to be an AI-first company, an AI that is closed and lives in their cloud.
...Similarly, while AMZN’s business still relies on traffic to their desktop web portal (accounting for 33% of sales), a large portion (25%) of their sales happen through mobile apps, not to mention Amazon Echo. Like Google Home, Amazon Echo bypasses the Web and uses the internet just for communication between cloud and end user. In these new non-web contexts, tech giants have more authority over data traffic. They can even directly block each other, like GOOG recently cut support for YouTube traffic in Amazon Echo devices.
The Appleification of tech giants
GOOG, MSFT, FB, and AMZN are mimicking AAPL’s strategy of building brand loyalty around high-end devices. Through a process I call “Appleification”, they are (1) setting up walled gardens, (2) becoming hardware companies, and (3) marketing the design while designing for the market. It is a threat to AAPL itself, because they are behind the other giants when it comes to big data collection and its uses. While AAPL’s early and bold introduction of an App Store shook the Web as the dominant software distribution platform, it wasn’t enough to replace it. The next wave of walled gardens might look different: less noticeable, but nonetheless disruptive to the Web.
The common pattern among these three internet giants is to grow beyond browsers, creating new virtual contexts where data is created and shared. The Web may die like most other technologies do: simply by becoming less attractive than newer technologies. And like most obsolete technologies, they don’t suddenly disappear, neither do they disappear completely. You can still buy a Walkman and listen to a tape with it, but the technology has nevertheless lost its collective relevance. The Web’s death will come as a gradual decay of its necessity, not as a dramatic loss.
The internet will survive longer than the Web will. GOOG-FB-AMZN will still depend on submarine internet cables (the “Backbone”), because it is a technical success. That said, many aspects of the internet will lose their relevance, and the underlying infrastructure could be optimized only for GOOG traffic, FB traffic, and AMZN traffic. It wouldn’t conceptually be anymore a “network of networks”, but just a “network of three networks”, the Trinet, if you will.
...ISPs would recognize the obsolescence of the internet and support the Trinet only, driven by market demand for optimal user experience from GOOG-FB-AMZN.
... On the Trinet, if you are permanently banned from GOOG or FB, you would have no alternative. You could even be restricted from creating a new account. As private businesses, GOOG, FB, and AMZN don’t need to guarantee you access to their networks. You do not have a legal right to an account in their servers, and as societies we aren’t demanding for these rights as vehemently as we could, to counter the strategies that tech giants are putting forward.
The Web and the internet have represented freedom: efficient and unsupervised exchange of information between people of all nations. In the Trinet, we will have even more vivid exchange of information between people, but we will sacrifice freedom. Many of us will wake up to the tragedy of this tradeoff only once it is reality.Read more here.
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