The evidence increasingly proves that Google, Apple, Facebook, and Amazon, companies collectively known as “GAFA,” are the dominant consumer-technology, “edge” platforms/incumbents in their respective communication sector markets of: information, smartphones, social media, and ecommerce.
The evidence below shows Google, Apple, Facebook, and Amazon to clearly be the emerging dominant communications incumbents of the 21st century communications sector ecosystem and that an apparent FCC assumption that “edge” companies cannot be a competition problem is both naïve and erroneous.
Despite the FCC’s “competition, competition, competition” policy mantra, this GAFA dominance reality has not kept the FCC from slavishly favoring the dominant GAFAincumbents, as “insurgent” upstarts deserving of special FCC treatment and protection, in all of the FCC’s current major communications policy revamps it is making without Congress: i.e. its Title II Open Internet Order; its Title II ISP-only privacy rules; its AllVid set-top box rules; and its implicit wireless policy of favoring spectrum sharing and unlicensed spectrum over spectrum auctions and licensing.
Consider this Top Ten List of evidence that the dominant GAFA incumbents are not needy “insurgents” deserving of FCC protection from competition or de facto regulatory subsidies worth many tens of billions of dollars.
- In 2011, Google Chairman Eric Schmidt was the first to publicly identify the four companies dominating consumer technology platforms as: Google, Apple, Facebook and Amazon, interestingly calling them the “Gang of Four.”
- Then the EU coined the term “Gafa” to describe the same four companies that the EU viewed most dominant: Google, Apple, Facebook, and Amazon.
- Note the top-visited sites in the U.S. as ranked by Alexa (owned by Amazon) are: #1 Google; #2 Facebook; #3 YouTube (Google); and #4 Amazon. Apple is #37.
- Note that by market capitalization these four companies are four of the top seven most valuable companies in the U.S. with: #1 Apple worth $541b; #2 Alphabet-Google worth $503b; #6 Amazon worth $339b; and #7 Facebook worth $334b.
- Note that of the top 15 smartphone apps per Comscore, 11 of the top 15 are from Facebook, Google, Amazon and Apple, with: Facebook #1 Google #3, #4, #5, #6, #7, & #14; Amazon #10; and Apple #11 & #13.
- Note that Google and Facebook are two of the world’s top five largest media companiesper Zenith Optimedia‘s annual ranking, with Google #1 and Facebook # 5.
- Note that recently, the inventor of the World Wide Web, Sir Tim Berners-Lee warnedthe NYT that: “The web is already decentralized. The problem is the dominance of one search engine, one big social network, one Twitter for microblogging. We don’t have a technology problem, we have a social problem.”
- Note that also recently, a top theme to emerge from Mary Meeker‘s influential annual Internet Trends report (p. 44), was that “Google + Facebook = 76% (& rising) share of Internet Advertising Growth, USA.” (If one straight-lined that relative growth, then Google and Facebook would command ~80% growth share in 2016, and ~83% growth share in 2017.) Ms. Meeker’s analysis also shows that Google alone commanded ~50% of the U.S. Internet advertising business in 2015.
- Note that earlier this year, Om Malik‘s candid analysis in his influential New Yorker op-ed entitled: “In Silicon Valley Now, its Almost Always Winner Takes All,” concluded “most competition in Silicon Valley now heads toward there being one monopolistic winner.” He also said: “Google is a winner that has taken it all.” “Facebook has created a near monopoly in social networking.” “Amazon has run away with online retail, leaving everyone else to fight for scraps.” “Google’s Android and Apple’s iOS are the two dominant players.” “There are two companies that dominate the public cloud – Amazon, followed by Microsoft’s Azure.”
- The New York Times technology columnist, Farhad Manjoo, strongly agrees with Mr. Malik’s overall competitive assessment in his column, “Tech’s Frightful Five Will Dominate Digital Life for Forseeable Future,” in which he concludes the five “inescapable” technology platforms are Google, Apple, Facebook, Amazon and Microsoft, which represent “the basic building blocks on which every other business, even would be competitors, depend.”
In sum, the evidence is overwhelming that Google, Apple, Facebook and Amazon are dominant 21st century incumbents in their respective communications sector markets of information, smartphones, social media and ecommerce.
To the extent that the FCC is claiming lack of competition as its rationale and justification for vastly more FCC regulation, the FCC can’t be consistent or credible if the FCC ignores the proverbial elephant in the FCC’s room — that Google, Apple, Facebook, and Amazon are vastly more dominant and have more potential for anticompetitive behavior than any traditionally regulated communications company.
Simply, if the FCC is sincere about wanting to “modernize” communications policy for the 21stcentury, it needs a more modern and accurate assessment of 21st century competition realities throughout the ever-expanding 21st century communications sector.