The multi-layered competition over the online space

Amazon, Google, Facebook and Apple have been currently ranked as top four giants that animate large parts of these networks molding them in different forms and shapes. (Al Arabiya)

In the digital age, the capitalist system is suffering a fundamental change in its functioning since the value it creates has intrinsically changed. This change is unfolding in social networks in which relationships between sellers and buyers are being transformed into a new and strange association between suppliers and users centered on search and information. Amazon, Google, Facebook and Apple have been currently ranked as top four giants that animate large parts of these networks molding them in different forms and shapes. Their business models commoditize the human time and experience in the form of content and Information in contrast to traditional commodification of goods and ownership of property. The service they provide has a merely informational nature and is driven by users’ activities.

Whether the digital experience consists on individual random search, booking flights, reading articles, buying books, writing comments, downloading music, or interacting with friends and colleagues, the user behavior is subject to data collection and analysis and is subsequently filtered, sorted, packaged and sold to businesses who are seeking marketing information, consumer attention and better product differentiation. These incommensurable historical accounts of personalized activities became the commodities over which these mega-techno-suppliers are competing.

The arms used in the competition to control and monopolize the digital sphere are ideas in the forms of patents, copyrights, trademarks, relationships and access. Each of the four giants is seeking to expand their supplier-user network and continuously inventing new services and technologies to lock users in, block the road on rivals and forcing the digital space to be fully dependent on their ideas. As a consequence of this highly intense and vibrant competition, their modus operandi to grow and survive has become highly complex and their strategic moves have become colossal and of unpredictable consequences.

The evolvement of these business models is somewhat phenomenal. Each of the four giants has originally started with a base-business-model yet they are all endeavoring to get into different business areas attacking each other from different directions. This is in fact blurring the classical boundaries that separate the industries.

Although they operate in the same environment, all four companies come up with completely different service propositions. Over the last five years they have been developing high sense of creativity, originality and uniqueness however, they have adopted the same key strategic doctrine that energies their business models; System Lock-In, a strategic option that has the widest scope, the extended enterprise comprising the firm itself, its customers, suppliers and complements (App developers, Handset Makers, Carriers etc.). A System Lock-In strategy has to start with a full corporate scope not just for one product and business. Also, it has to actively pursue the identification and incorporation of all the key external players to make them complementors (Android with Google, Intuit with Apple). The central focus will remain the customer but the enterprise is extended to the fullest. The richness and depth of complementors’ support lock the service into the system and lock-out competitors. This has to be achieved in two goals; to develop and appropriate the industry standards - that is what Google and Apple did when they became the number one search engine in the world and the global leader in the smart phone industry- and to own unique and vast distribution channels; both Google and Apple entered the mobile applications industry and currently leading it in a very rough competition.

Areas of competition

How the four giants are competing and in which industries?

Google has built a savvy and powerful search engine used in advertising and commercial promotions and developed advanced distributing and analyzing technologies that could make advertising more user friendly and laser-focused. Recently, it has stepped into the industry of mobile applications competing with Apple’s iOS with its Android software and partnership with Motorola. Google claims it is activating 1.3m Android devices a day. In fact, the partnership with Android allows Google to trace the browser history of mobile users enabling a better follow up on consumers’ taste and behaviors by combining two advertising media - the Internet and smart phones. Adding more ads and Android links is highly increasing the exposure rate of Android and its applications.

Google already has a number of popular applications in the market, like Gmail, Google Calender, GDrive, Youtube and others, which have been integrated into the Android phones. These apps have increased the willingness to purchase among consumers and encouraged developers to write nice and smart mobile applications. Android has developed an immense consumer and developer base and has reached a superior bargaining power towards carriers, handset makers and consumers forming an extremely strong circle of dominance. On another less tense however fast-developing forefront, Google is trying to get more market share in the interconnected industry of e-commerce and social media networks. It’s Google + platform is currently developing partnerships with retailers that compete with Amazon by helping them to reach consumers through the search engine. This could gradually squash Facebook efforts to develop the e-commerce business on its platform.

The latter has one billion users now and is in the progress of harnessing the most of their online interactivities and turns it into tradable market research information. E-commerce is also becoming a key area of interest for Facebook, notably with its recently launched Gifts business. The e-commerce platform enables users to send gifts to friends posing potential threat to Amazon, especially as Facebook is adding more retail partners with high conversion potential. The humongous social network is transforming into a mobile-centric business also. Its standalone messenger service is the tip of the iceberg of such transformation which could have the depth of building a Facebook phone in collaboration with HTC – another facet of the competition, with Google’s Android and Apple’s phones, to lock users in and gather more information on their internet-based activities.

Amazon has pioneered the e-commerce arena, digital content online and cloud computing. However, the threat coming from the smart phone industry mainly dominated by Apple and Google-Android has stimulated the desire of Amazon who has recently embarked with an Asian supplier and currently testing a smartphone which could be introduced early next year. With its Kindle Fire HD devices and its mushrooming app store – that has more than 60,000 apps running on Google's Android software- an Amazon smartphone would intensify the company's experience and increase its market share. Such a device could also represent a lethal risk to Apple's iPhone market share and put more pressure on the device producers who build Android smartphones, such as Samsung and HTC. Nonetheless, Amazon is blocking the road on Apple in the tablets industry also with the latest iteration of the Kindle Fire tablet that has scored high purchases.

Apple the producer of the best smart phones and sharp laptops chose to stay closed-source. Its iOS mobile operating system, which powers the iPhone and the iPad tablet computer, is under attack from Android’s operating system. To escape the pressure put upon by Google, Apple invented a new clever search engine -the Siri voice-activated personal assistant- that can provide answers to people on the fly. Not the least, earlier last year Apple removed Google Maps out of iOS 6 and replaces it with the company’s own. Apple was concerned that the version of Google Maps available on iOS was not nearly as up to date and modern as the version for Android. Yet, Apple’s ambitions have no limit as CEO Tim Cook mentioned another "intense interest" in television. It has been revealed recently, testing of a high-definition televisions and discussion of possible partnerships over set-top boxes with couple of cable companies, are on-going.

Software, hardware access and content are the battlefields on which rivals seek to impose their standards and master new territories. However the battlefields seem to get larger and hostile. Google+ is the latest attempt to circumvent Facebook’s dominance of social networking, and Facebook is thinking hardly how to convert the social network into ecommerce and has just dipped into smart phones, Apple dropped Google Maps and is entering the smart television industry, Amazon is also putting a foot in the smart phone industry and thinking how to get rid of Google’s search engine service since it represent the biggest e-commerce platform ever and customers can reach the website directly.

If we are to leave the technological development to the unknown as innovation is often radical and of unpredictable consequences, users activities over the interconnected networks is what represents the battle space where user behaviour may be ostensibly dictating the strategic moves of these four giants- something that has to be examined in depth.

(Ali Chamseddine (MSc Innovation for E-business) is an e-Payment and Online Fraud specialist working in the banking and financial service industry in UK. He is also an independent observer and researcher commenting on Information and Communication Technology (ICT) and its impact on businesses and information society.)

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Last Update: Friday, 01 March 2013 KSA 13:38 - GMT 10:38
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