People have tried to control the Internet for decades now, and it never seems to quite work out.
The whiny founder of Pirate Bay claims that the Internet is lost - lost to the "big corporations" who are taking over and nothing can be done about it. Of course, that is loser talk from someone whose site is, well, still around like MySpace, but not quite what it used to be. When your former business model is based on Copyright Piracy, well, it is hard to feel sorry for him. You have to expect that sort of thing to be curtailed, over time.
Others claim that the "Big 5" or "Frightful 5" of the Internet will control things from now on.
Others claim that the "Big 5" or "Frightful 5" of the Internet will control things from now on.
But is it true that these few companies will control the world? Yes, until some new companies come along and take over from them. Remember that until 1980, IBM literally ruled the computer world. You wanted a computer, you had to go to IBM and buy a mainframe and their stupid Hollerith punch cards. Then IBM seem poised to take over this new startup thing called the Personal Computer. And the PC took over from the mainframe. But IBM sauntered off into, well, we are not exactly sure what they do these days, but they no longer own the computer world.
No, that mantle was handed off to Microsoft. And no, Apple is not a big player in the computer business. Smart phones? Yes - not the largest, but a player. Computers, a marginal niche player. But Microsoft's time in the sun may be fading fast as "computers" morph into something else and the tyranny of the operating system may come to an end. And every other product field that Microsoft has tried to enter, they have failed at. From MP3 players to smart phones (how could you fuck that up?) to gaming systems (sold at a loss) to, well, whatever. There is no guarantee Microsoft will live in perpetuity, anymore than IBM did - and we all thought IBM (and GM and GE and Westinghouse) would never, ever fail - right?
And of course, Bill Gates was the guy who said the Internet was a "fad". Called that one wrong, eh?
AOL-Time Warner tried to "own" the Internet first, and failed at it. At the dawn of the dial-up age, they tried to corral people into their own online playpen. It didn't work. Markets abhor proprietary hardware and software (listening, Apple?) and go with lesser quality public domain or open architecture solutions whenever possible. VHS trounced Betamax, 35mm trounced Polaroid, PC trounced Mac, and even the Android system has a bigger market share than iOS.
So quickly, people fled AOL - literally overnight - for the open architecture of the Internet. But it was a wild west, with ISPs on every corner, and websites popping up all over the place. Consolidation was inevitable. Sketchy ISPs running out of coffee houses (like the one I used in Alexandria) with nonexistent customer service, went by the wayside or were bought up by other companies. Cable modem and DSL wiped out dial-up ISPs overnight. Change is the only constant in technology.
Some "social media" sites started to become popular. Friendster, Myspace, Second Life - all had their brief day in the sun. Remember when Matt Laur and Katie Couric devoted an entire episode of The Today Show to Second Life, repleted with avatars? The ratings were horrible and the graphics primitive. Turns out, no one wanted to have a second life online. Or a MySpace for that matter. Facebook is the flavor of the month - and some say an unstoppable monster than will never go out of business or become irrelevant. But it can and will - everything does, eventually. Their success depends on millions of people logging on every day. If those people change their mind about this, the business will collapse.
We saw this back in the 1970's. When I was at GM, we had a 50% market share for automobiles. We sold refrigerators, locomotives, and all sorts of other stuff. We were "too big to fail" until a disruptor came along - small, fuel-efficient, quality made Japanese cars. If you are under the age of 40, likely you can't remember a time in this country when Japanese cars didn't exist. You also likely can't remember a time in this country when Japanese cars didn't predominate the auto market. Things changed, GM went bankrupt. Another unstoppable colossus, stopped.
Today, people say the "Big 5" - Apple, Amazon, Alphabet (Google), Microsoft, and Facebook, are now so entrenched that they will control tech for the forseeable future. Microsoft, we addressed above - an old-line legacy O/S company in an era where people are O/S agnostic. Microsoft is the IBM of the bunch.
Again, Apple is a niche player in the computer market, and quite frankly, nothing distinguishes its products from Android. The recent release of the Apple Internet speaker is a case in point. Reviewers note that it is pretty but basically the same as offerings from Google and Amazon. Apple sells status at this point - the apple logo is the new BMW roundel. But unlike a car, you can carry it in your hand. Apple is at least making money and actually has a rational P/E ratio. But whether it can deliver "out of the ballpark" products on a regular basis is troubling. Smartphone penetration is near 100% - there is no headroom here, other than replacement sales. And conquests are not likely. I would not trade my Galaxy for an Apple - the latter is too confusing to use (and impossible to replace the battery in!).
But what about Amazon? Surely they will take over retailing as we know it! And surely they are changing the retail world - for the better for the consumer. But with a P/E ratio of over 500, it is not very profitable - trading profits for re-investment to get more market share. And as the GM example shows, market share is a fine thing, when you are trying to establish a market and keep others out, but over time, you do have to make profits.
When I was at GMI, one saying we had was that we could make a million cars for a profit of $1000 each, or make one car with a profit of a billion dollars - the net effect would be the same. Even in 1978, many were questioning the wisdom of "market share" but perhaps that was because we were losing it so quickly. One of my classmates is today CEO of GM and seems to be taking this philosophy to heart - market share is fine and all, but it isn't worth losing money in a market just to have a presence or a share.
Other competitors, such as WalMart, are in Amazon's "space" and they don't have to invest in new warehouses or distribution centers or delivery systems - as they already own that infrastructure. WalMart could give Amazon a run for its money, and eventually there will reach a point where investors are tired of growth and want to see some return on investment. At that point, it could be a two-retailer world in the USA - Amazon and WalMart. And I'm not counting out WalMart, I go there every week for groceries. Which one gets more of my income?
But Alphabet - Google - they surely rule the world, right? They are one-stop shopping for all your Internet needs! Well, except social media, which they had about as much luck with as Microsoft did with it's Zune media player. It wasn't that Google+ or the Zune were bad products, they were just too little, too late in the "me too!" department, as Facebook and the iPod already had taken the majority of market share, and having dominate market share leads to more market share, which keeps out competitors, even if it doesn't equate to profits all the time.
There is lots of talk about Google's ancillary businesses, like self-driving cars. I suspect, however, that they will exit this business over time, or spin it off. It is way too capital intensive to get into the car business, and it is not part of their "core competencies". In fact, I suspect a tech crunch in the future could put a stop to a lot of that sort of thing. In fact, this is already happening - Alphabet has sold it's robotics division.
But what about their "core competency" - and what exactly is it? It is advertising, plain and simple. They put up content (such as this blog) and sell adspace and demographic information (all those search terms you use). And recently, this model has come under a lot of attack. Advertisers thought they were getting lots of eyeballs and promoting their brand name. But many are realizing that the clicks may be from bots, that people block the ads with ad-blockers. And worst of all, the company ads may appear on a right-wing Nazi site like Fox News - sullying the reputation of the company. Do you want your product advertised on Hannity? Only Amazon seems to think so, these days.
But what about their "core competency" - and what exactly is it? It is advertising, plain and simple. They put up content (such as this blog) and sell adspace and demographic information (all those search terms you use). And recently, this model has come under a lot of attack. Advertisers thought they were getting lots of eyeballs and promoting their brand name. But many are realizing that the clicks may be from bots, that people block the ads with ad-blockers. And worst of all, the company ads may appear on a right-wing Nazi site like Fox News - sullying the reputation of the company. Do you want your product advertised on Hannity? Only Amazon seems to think so, these days.
When advertising works, it generates sales and business. But to pay for an ad that doesn't work is just wasting money. And many advertisers may revolt when they discover that their ads are not working as promised, that people are not flocking to their company because they saw a banner ad or were SPAMMED in response to a search-term they entered a week ago. People are smarter than they look sometimes. Sometimes.
And is there a barrier to entry in this field? To be sure, Google is embedded into our brains at this point. Attempts at competing search engines has largely failed as it requires a LOT of capital to develop one and set up the servers needed. And then getting people to actually use it is the hard part - this is why Internet companies chase market share, hoping later for profits. But it is conceivable that a competitor could take away market share from Google - perhaps even a competitor among the "Big 5" - although Bing seems to be yet another example of Microsoft's list of failures outside of the O/S "space".
So that leaves Facebook. Surely they are unstoppable! You can't even go on the Internet without going on Facebook, right? Well, not exactly. I have been Facebook-free for over five years now, despite Facebook's attempt to drag me back in. Yes, you can live without Facebook, and in fact, live better as a result. People are discovering that Facebook is indeed addictive and can in fact, be very, very evil. Whether it is your teen daughter being bullied into suicide, or your best friend losing a job and career because of an ill-considered "joke" they posted, or some dude brainwashed into joining a terrorist group like ISIS or the Republican Party, there never seems to be much "good" that comes out of Facebook - or any social media for that matter.
And Facebook is desperately trying to fix this, just as Reddit is trying to toss out the "Donald" supporters - or so they claim. The problem is, once you try to suppress certain groups on a social media type site, you may start to lose users as well. That is the two-faced nature of social media. It represents the worst in human nature, and guess what? We are all pretty much horrible people. Yup, each one of us is a selfish bastard prone to acting, well, human. You try to police this, and people will flee in droves.
So I am not too worried about the future of the Internet or the Planet or whatever. The worst things to happen in this world last for only a few years, maybe a couple of decades at most. The 1,000-year Reich lasted maybe ten years. IBM's rule maybe four times that. The Soviet Union, not even a Century. Communism in China? Melted down in 30 years or so. This, too, shall pass.
Just as in four years, we'll likely have a new President. Maybe sooner.
And is there a barrier to entry in this field? To be sure, Google is embedded into our brains at this point. Attempts at competing search engines has largely failed as it requires a LOT of capital to develop one and set up the servers needed. And then getting people to actually use it is the hard part - this is why Internet companies chase market share, hoping later for profits. But it is conceivable that a competitor could take away market share from Google - perhaps even a competitor among the "Big 5" - although Bing seems to be yet another example of Microsoft's list of failures outside of the O/S "space".
So that leaves Facebook. Surely they are unstoppable! You can't even go on the Internet without going on Facebook, right? Well, not exactly. I have been Facebook-free for over five years now, despite Facebook's attempt to drag me back in. Yes, you can live without Facebook, and in fact, live better as a result. People are discovering that Facebook is indeed addictive and can in fact, be very, very evil. Whether it is your teen daughter being bullied into suicide, or your best friend losing a job and career because of an ill-considered "joke" they posted, or some dude brainwashed into joining a terrorist group like ISIS or the Republican Party, there never seems to be much "good" that comes out of Facebook - or any social media for that matter.
And Facebook is desperately trying to fix this, just as Reddit is trying to toss out the "Donald" supporters - or so they claim. The problem is, once you try to suppress certain groups on a social media type site, you may start to lose users as well. That is the two-faced nature of social media. It represents the worst in human nature, and guess what? We are all pretty much horrible people. Yup, each one of us is a selfish bastard prone to acting, well, human. You try to police this, and people will flee in droves.
So I am not too worried about the future of the Internet or the Planet or whatever. The worst things to happen in this world last for only a few years, maybe a couple of decades at most. The 1,000-year Reich lasted maybe ten years. IBM's rule maybe four times that. The Soviet Union, not even a Century. Communism in China? Melted down in 30 years or so. This, too, shall pass.
Just as in four years, we'll likely have a new President. Maybe sooner.