It Will Be Google And Amazon In The End

Call it GAFA or FAGA or throw in Netflix for the "N" to be a FANG person, but the big four have been Google, Apple, Facebook, and Amazon. All four of them are competing for ever increasingly overlapping territory. Think of this as a Venn diagram of 4 circles getting larger and larger until they almost completely overlap.

But in the end, it will be Google and Amazon left standing. The two leaders will dramatically outpace the rest of the pack, while Apple and Facebook will see diminished growth and slow into their own niche markets. It is not likely that either will be going to the Blockbuster graveyard any time soon, but the clear winners will permanently change the acronym and we will probably call them GAm or be truly lazy and land with just GA.

Apple and Facebook Slow

Facebook, despite blips in the market, is still growing and expanding. Their ad revenues continue to climb. But a few trends are showing cracks in their future growth. Edison Research shows that percentage of people who use social media is down over 3%, with Facebook usage down 5%. They are losing younger visitors at an alarming rate, with 12-34 year-olds down over 12%

The young are leaving for alternative platforms and those that are staying are using it far less and less often. 

Still, just a blip on the radar.

The biggest issue for Facebook is the core idea that this is an experiential platform for us to engage with our friends. Advertisers and marketers then make sure that your experience is enhanced by the goods and services they provide. But younger people are leaving the site or going through a social cleanse, and overall growth is slowing as people become disheartened by the anxiety created on the site. One of the biggest (of many) problems Twitter faced was their inability to hinder hate speech. As trust wanes on Facebook and as this becomes a platform for negative experiences, the social experiment that was social media begins to fail, to falter.

Their business model is getting you to buy, but competitive platforms, waning interest, and a new generation of buyers looking elsewhere doesn't seem like the best recipe to stay one of the biggest and best organizations on the planet.

Apple's stock price continues to grow but the company is just failing to innovate. Their dominant lead in the smartphone has been minimized by Samsung and a host of providers who have almost-as-good-as services (if not better-than, in some cases). Worldwide tablet ownership is down 3% and smartphone growth has slowed by half. The Watch, TV, and home automation maneuvers have failed or come very late in the game. Their current approach appears to be feature/function enhancements to their current product lines. 

Apple is still an amazing company, but like many massive organizations has lost their way forward without any exciting innovations. Their biggest issue is that they are a brand founded on innovation. They will continue to get squeezed by competitive pressures and their lack of innovation will keep new markets closed to them.

Google and Amazon Grow

Google continues to test, experiment, and expand into new markets. For every failure (i.e. - Google Glass) there are new successes like Google Home. Google mitigates their risk by expanding into new markets and industries. By comparison, both Facebook and Google make money by ad revenue. Google could have just focused on enhancements to this model but has built a company on growth beyond ads. It stumbles and falters along the way, but steady growth while muting risk is a great business model. 

They also know when to course correct. Nest is now back from parent company Alphabet because of a distance created from the Nest product line and Google's complimentary automation products. The model wasn't working and they were losing their innovative advantage, so they changed their structure.

There is plenty wrong with any company this size, but their ever-expanding footprint will set them up as a dynastic organization.

Amazon is just killing it. Even dismissing the frenzy over bidding for their 2nd location, they continue to innovate and expand into complementary markets. Physical books became kindle e-books; movie rentals became a movie studio; online shopping became voice-controlled home automation.

Amazon could have stopped by becoming the world's largest online marketplace, but they continue to grow while staying true to their core brand. 

In the end, unless Apple rediscovers their innovative roots, or Facebook expands beyond ad revenue, we will see Google and Amazon take over the race for world domination.

I think the acronym will be GAm.