Amazon
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REV: APRIL 26, 2013
JOHN DEIGHTON LEORA KORNFELD
Amazon, Apple, Facebook and Google
The Internet had not been designed as a marketing platform. On the contrary, until about 1995 commercial firms were banned from using its main data routes.1 It had begun as a defense project in the 1950s to create a nuclear bomber early warning system, and evolved into the Department of Defense’s Advanced Research Projects Agency Network (ARPANET.) It eventually expanded to become a global system, but with membership restricted to universities and scientific research laboratories. Congress effectively privatized the Internet in 1995. The result was an explosion of innovation, much of it focused on four core marketing tasks: lead generation, transaction, information sharing, and persuasion. Premature optimism about the Internet’s potential to revolutionize marketing practice led to the so-called dot-com bubble from 1997 to 2000, but by 2013 Internet-based platform companies were taken-for-granted parts of marketing infrastructure. Four companies in particular, capitalized at close to $1 trillion (Exhibit 1), ruled four sectors of Internet marketing. Online advertising was dominated by Google, online retailing by Amazon, social engagement by Facebook, and Apple set standards for the interface devices that were being called “the remote controls for many people’s digital lives.”2 But there was no orderly division of the spoils of market-making among the four. Each hoped to be the one to claim its soul and skirmishes were fought on each of the sector boundaries as well as in new sectors (Exhibit 2). Google and Facebook competed for dominance of online advertising. Apple’s iTunes and Google Play challenged Amazon over retailing of digital content. Apple and Google fought to run the smartphone. Digital television was contested by Apple, Google, and Amazon. Google seemed to have a head start in payment systems and potentially banking, but Apple was likely close...
REV: APRIL 26, 2013
JOHN DEIGHTON LEORA KORNFELD
Amazon, Apple, Facebook and Google
The Internet had not been designed as a marketing platform. On the contrary, until about 1995 commercial firms were banned from using its main data routes.1 It had begun as a defense project in the 1950s to create a nuclear bomber early warning system, and evolved into the Department of Defense’s Advanced Research Projects Agency Network (ARPANET.) It eventually expanded to become a global system, but with membership restricted to universities and scientific research laboratories. Congress effectively privatized the Internet in 1995. The result was an explosion of innovation, much of it focused on four core marketing tasks: lead generation, transaction, information sharing, and persuasion. Premature optimism about the Internet’s potential to revolutionize marketing practice led to the so-called dot-com bubble from 1997 to 2000, but by 2013 Internet-based platform companies were taken-for-granted parts of marketing infrastructure. Four companies in particular, capitalized at close to $1 trillion (Exhibit 1), ruled four sectors of Internet marketing. Online advertising was dominated by Google, online retailing by Amazon, social engagement by Facebook, and Apple set standards for the interface devices that were being called “the remote controls for many people’s digital lives.”2 But there was no orderly division of the spoils of market-making among the four. Each hoped to be the one to claim its soul and skirmishes were fought on each of the sector boundaries as well as in new sectors (Exhibit 2). Google and Facebook competed for dominance of online advertising. Apple’s iTunes and Google Play challenged Amazon over retailing of digital content. Apple and Google fought to run the smartphone. Digital television was contested by Apple, Google, and Amazon. Google seemed to have a head start in payment systems and potentially banking, but Apple was likely close...