In April 2018, I wrote that no person or government can effectively break Facebook. In my opinion, breaking a platform-business within the same mindset of the industrial age companies is waste of time: one part of that company will grow and dominate just as the previously broken one.

If you decide to break Facebook apart, one part will grow and dominate others. This is possible because of the positive continuum of network effect where the biggest keeps getting bigger and also better. I explained that in a recent piece in the Harvard Business Review. You can regulate Facebook but another company will come to take over its position because in this sector, it is winner-takes-all. Yes, the best wins.  Why? The scalable advantage improves with lower marginal cost.

In a piece in Bloomberg, the Editorial Board made the same point:

Market forces would also likely impede such an effort. The main way Facebook and its fellow tech behemoths have grown so powerful is through network effects: The more people who join Facebook, the more useful it becomes; the more useful, the easier to attract more users. Breaking it up wouldn’t reverse this dynamic. One of the new MiniBooks would in all likelihood emerge as better than the rest — bringing in disproportionate users, data, and advertising dollars, and thus achieving dominance just as Facebook has.

Simply, only markets can put these companies in order – not dead regulations. And markets are working: Facebook lost $119 billion yesterday over its problems.

Facebook lost about $119 billion of its market cap today. Technically, it made history: it recorded the largest loss in a single day in stock market history. But Facebook is lucky: it did not lose because of competition; it lost because of correcting its past. Yes, User Privacy won even as Facebook temporarily lost.

Governments need to focus on policy and standards, and allow these companies to compete. Provided they do no harm, consumers will be fine. We are already used to the best search, best social media, best micro-messaging, etc and even if governments engineer many versions at the end, only one or two would survive. Simply, the best will win because of the positive continuum which drives these businesses.  As the Bloomberg editorial noted, governments need to be on alert to check abuses from platform companies.

Regulators must keep a close eye on this sort of thing, and shouldn’t hesitate to intervene when it’s being abused. The Federal Trade Commission should ensure that Facebook isn’t collecting such data under false pretenses — Onavo, audaciously, markets itself as tool to “keep you and your data safe” — and any new Facebook acquisitions should be greeted with due skepticism by antitrust officials.

Google unveiled a new vision for Nigerian tech sector yesterday with the launch of Google Station. In my practice, we now think that our 2022 target year of immersive connectivity may even come earlier. Many things are connected to this BOLD initiative by Google.

This is a catalytic industry-defining project in Nigeria: our web sector is ON. If Google follows through [there is no reason why it should not, it has the cash], Nigeria will have free high speed Wi-FI in 200 locations. This would affect 10 million people – think of a nation in a country.

Google Station will be rolling out in 200 locations in five cities across Nigeria by the end of 2019, bringing Wi-Fi to millions of people. Sites will include markets, transport hubs, shopping malls, universities and more. Nigeria is the fifth country in which we’re launching Google Station, after India, Indonesia, Thailand and Mexico. (Source: Google newsletter)

Nigerian Telcos

It is looking increasingly challenging for telecom operators in Africa. I can predict that African telcos have past their best moments. Yes, MTN, Glo, Airtel Nigeria and 9Mobile will struggle as Nigerians are provided with these new options to connect to the web. It is not just Google; SpaceX is coming along with amalgam of satellite players. Add the pains from OTT solutions like WhatsApp, you would understand why the telcos will have sleepless nights.

Simply, the future will look increasingly challenging for terrestrial operators. Because from internet balloons to satellites, telcos will be under-serve competition and many of them will die. By 2025, I do expect the top four telcos in Nigeria to merge to become two. The four telcos are now more than necessary with all the evolving options.  If they do not merge, they will lose value and that will hurt investors. The world is changing rapidly and the competition will be extremely ferocious that telcos as we have them will continue to see massive loss in ARPU. These GSM players disrupted CDMA players. Now, they need to find ways to survive.

All Together

The web sector in Nigeria is here. This is a new era. Do not wait any longer. The time has come because internet connectivity is going to become ubiquitous, unlocking new business models. Nigeria needs to get in touch with Amazon to help with logistics. I do not care who does it; we need to have these infrastructures. I am very confident Amazon can help.

As we explore support from ICT utilities like Facebook and Google, I do think we need to find ways to get Bezos to show interest. He is among the few that can invest in hard infrastructure to unlock more values in the continent. Think of establishing a solid logistical system that will help in the economic integration of Africa. He has done it before and he can do it here. African Union should explore that opportunity with him.

Meanwhile, well done Google – this is brilliance at best. But it would be painful season for Nigerian telcos because if 10 million people connect to free Google internet, I do not know who the profitable customers would be. Call it a double whammy: OTT like WhatsApp on one side depressing revenue, Google Loon, etc on the other side pivoting new paths. Simply, for most telcos, the best days are past. I am not sure how they could get over this, unless they decide to become Google, SpaceX, etc vendors.

I noted weeks ago that Amazon has built a solid advertising business and could challenge Google in the merchant ad spending. Yes, just like that Amazon has built another solid unit in the empire.

 Amazon now runs a serious advertising business. And there are many companies putting money in that ecosystem. If companies think that advertising on Amazon is a better deal than promoting their websites on Google, it simply means that Google has a major problem in its hands.

This may explain why Google is not showing friendly handshake to Amazon these days. Amazon is not just attacking  Google, it is going to the heart of its business which is advertisement.

Now, the numbers have started coming. In its latest quarter, this week, the e-commerce giant recorded $52.9 billion in revenue, a 39% year-on-year increase. Profits hit a new record, reaching $2.5 billion for the first time, while Amazon Web Services posted a 49% jump in sales to $6.1 billion.

“A big contributor to the quarter and the last few quarters obviously has been strong growth in our highest profitability businesses and also advertising,” Brian Olsavsky, Amazon’s chief financial officer, said on a call with media. “We’ve seen a greater-than-expected efficiency in a lot of our spend in things like warehouses, data centers, marketing.”

[…]

The company is working to automate tasks for advertisers and to help media buyers measure the results, Olsavsky said.

Key to its allure has been that advertisers’ placements result directly in sales, reaching customers on Amazon with an intent to shop. That contrasts with ads reaching users who are on industry leaders Facebook and Alphabet Inc’s (GOOGL.O) Google for a range of purposes.

Simply, Amazon advertising delivers better results than Google’s. If Amazon begins to automate that process, it could pose a huge challenge to Google. When you search on Amazon.com, you are actually in the process of spending money. Google delivers traffics to websites of merchants; Amazon is delivering revenue in dollars to them. That is why this is exciting for this company, and investors like the Amazon Advertising vision.

The One Oasis Strategy

Ecommerce remains the best product for Amazon. It is the oasis in the one oasis strategy. The advertising, just as the cloud business is helping the oasis, the ecommerce.

Every product is like the animal that returns to the oasis for water. Every product is like the humans that depend on the oasis for habitat. Provided that the oasis is there, and doing well, their survivals are guaranteed. Yet, as those new products do well, they could find new customers, beyond the first customer (that best product). That means, you can introduce them to the markets for other customers to buy, even when they are supporting the best product, which is the most important reason the original investments were made.

[…]

Amazon: Amazon is an ecommerce company with massive user base. It supports billions of transactions in a year and needs computing resources to keep its portal functioning well. Amazon could have called IBM to rent a cloud infrastructure for its ecommerce. Rather, Amazon decided to build one in-house knowing that the future of its ecommerce will be driven by the capacity to offer great experiences to clients. The cloud infrastructure investment is necessary as growth in the ecommerce keeps going up. It does not make sense to be sending that money away. So, Amazon went and invested in cloud. The ecommerce is the oasis and the cloud is like the animal that finds habitation from the oasis. Provided the ecommerce is doing well, the investment in cloud has minimal risk. The first customer to the cloud business was ecommerce and that means Amazon does not have to worry if there is any external customer for the cloud services. Amazon does not need to check market dynamics to invest in cloud provided its ecommerce business is doing well.

All Together

Amazon is building a solid business using the one oasis strategy. The advertisement, just as the cloud business, is now heavily making the ecommerce unit better. The Amazon search was initially engineered to make the ecommerce better. Now, it is earning revenue because it has become an advertising business.

The Vice President of Nigeria, made this comment during a Google event in Nigeria. He noted that Africa’s fortunes will shape the world, and democratization of technology will be a quantum leap for Africa’s development. Google has launched an initiative to provide free internet access in Nigeria.

“This Century is Africa’s Century. Why? Because Africa will, for good or ill, play the defining role in global development.  Africa’s fortunes will matter across all the trends shaping the world. I say for good or for ill because either scenario is possible. If Africa fails on these important development issues, because of our sheer size, the global impact will be catastrophic and if it succeeds the global impact will be incredible.”

“Technology has put great power into our hands, as individuals, but more importantly as co-creators and collaborators, to positively and dramatically change the course of human existence. With it, we can solve many of the problems that confront us.” – Prof Yemi Osinbajo, Vice President of Nigeria.

Just yesterday I revisited my model that by 2022 Nigeria would have immersive mobile connectivity that would enable new categories of web-based businesses at scale. I noted efforts which would catalyze that future. Today, Google launched Google Station in Nigeria to roll out public Wi-Fi  in 200 locations.

The VP also presented a keynote which is shared below.

Keynote Address by his Excellency, Prof. Yemi Osinbajo, San, Gcon, Vice President, The Federal Republic of Nigeria, at The Google for Nigeria Event in Lagos, on Thursday, July 26, 2018

LAGOS, Nigeria, July 27, 2018/ — Keynote Address by his Excellency, Prof. Yemi Osinbajo, San, Gcon, Vice President, The Federal Republic of Nigeria, at The Google for Nigeria Event in Lagos, on Thursday, July 26, 2018:

PROTOCOLS

I am delighted to be to be here with you today at this year’s Google for Nigeria event. Just couple weeks back, it was a special pleasure to be welcomed to the Googleplex by Google CEO, Sundar Pichai and his great management team. We all have very warm memories of that visit, and I am truly grateful for your kindness and warm hospitality.

About three months ago, I spoke at an event at the Warwick University on the subject “The African Century.” The substance of that speech was that this Century is Africa’s Century. Why? Because Africa will, for good or ill, play the defining role in global development. Africa’s fortunes will matter across all the trends shaping the world. I say for good or for ill because either scenario is possible. If Africa fails on these important development issues, because of our sheer size, the global impact will be catastrophic and if it succeeds the global impact will be incredible.

In at least four important respects, Africa will hold the balance of world development. First is in world population (demography). Second is environment and climate change. Third is productivity. Fourth is social exclusion (or inclusion as the case may be) and its implications for global security.

Let’s take population, by 2035, Africa will have 1.2billion people. Nigeria is Africa most populous country; she will become the 4th most populous nation in the world. Over 50% of that number will be young persons under the age of 25. Today 60 percent of the unemployed in Africa are young people. If we do not change the trajectory of socio-economic development, we would have millions of jobless young people in the prime of their lives, and as we will see, largely illiterate and /or poorly trained. The workforce will be ill-equipped to man any industrial revolution or take advantage on scale of technology. The anger, disillusionment, and hopelessness of these young people will drive social unrest, compel more desperate migration northwards and present a fertile recruiting ground for extremist groups. If social conditions remain tenuous, even the well-educated will be tempted into migration and contribute further to the brain drain.

How about the environment and climate change? So, it is generally agreed that although Africa has contributed least to global warming, it is and will suffer most from its consequences. Indeed, we are already seeing extreme weather events such as flash floods, drought, and desertification.

So to cut a long story short, Africa is confronted with existential challenges, and there is simply no time to waste in resolving these problems. The answer that providence has given us is technology. The great purveyors of technology such as our hosts today Google, and their collaborators – 21st Century Technologies Limited and Backbone Connectivity Network (BCN), are not mere corporations in search of profit and some social good, they literarily hold the future of generations of humanity in their hands.

In Nigeria, we cannot train our nearly 200million young people by 2045, in classrooms alone. It is impossible! We must use the internet and even mobile telephony. We must connect our young people to knowledge and innovation all over the world. Co-creation efforts of innovators and inventors require broadband to be consummated.

So without connectivity, the development trajectory of our nation and continent is truncated. Today, it is also becoming increasingly clear that the availability of food and healthcare for the huge numbers of our people will depend on how democratized the technology becomes. We simply cannot provide enough food, drugs or vaccines in Africa without the availability of innovation in agriculture, and technology in farming and the production of drugs and vaccines. So democratizing Artificial Intelligence as we heard Marvin Chow, Google’s VP Product Marketing, describe in agriculture and the medical sciences, will change the human development story.

Indeed every step that is taken to democratize technology is a quantum leap in the African development story and a major contribution to Global stability and growth. This is why the launch of Google Station here in Nigeria, is an enormously significant event.

First, it means that Google and 21st Century, will be providing free WiFi access in several public spaces in Nigeria, more exciting is that several of our markets will benefit from this free internet access.

This partnership is particularly important to us, because we have in the past one year, in our energizing markets project, been providing solar power to markets and economic clusters across the country. We have done extensive work in Ariaria market in Aba, Sabongari in Kano, Gbagi market in Ibadan, Sura here in Lagos, and we are starting out in Iponri, and Balogun markets.

But the most profound implication is that internet access is becoming available to some of the poorest in society. What access to information, tools of education, business or commerce means is that gaps of inequality and exclusion are bridged. Jobs are created and in many important respects, there is a real chance of better quality of life for large numbers of our people.

Millions of Nigerians have personal stories of how the Internet has transformed their lives, their hustle, as today’s theme alludes to, in positive ways. And Juliet Ehimuan, Google’s Country Director Nigeria, has showed us, with stories of real people like Adaobi, how Google has featured prominently in many of these stories.

In 2016, working with the Office of the Senior Special Assistant to the President on SDGs, I launched the Google Digital Skills Training Programme with the target to train 400,000 Nigerians on basic Digital Skills, working with Google and local Nigerian Tech Training companies.

We have since surpassed those numbers and trained over a million Nigerians in basic digital skills in the last 24 months.

To scale up our support to private sector players in the technology space, I recently inaugurated the Technology and Creative Advisory Group, a subset of our National Industrial Policy and Competitiveness Advisory Council.

This group brings together, young private sector players in the technology and creative sectors and relevant government agencies, working jointly to formulate policies, programmes and projects for the Technology and Creative sectors of our economy.

Some private sector members of the Advisory Group and relevant government agencies like NITDA, NEPC and the Bank of Industry, went with me on the trip to Silicon Valley. Also on that trip, I met with the creative sector in Los Angeles and showcased Nigeria’s readiness and preparedness for investment, and the work we are doing with our Ease of Doing Business Secretariat, to provide an enabling environment for business in Nigeria, and which helped Nigeria rise 24 places on the World Bank’s Ease of Doing Business Index in 2017.

Through the GEM Project of the World Bank, the Federal Government has given out over $2million to 79 startups across the country. Apart from this, our National Social Investments Programme is working with the National Information Technology Development Agency (NITDA) to support the private sector to establish technology and innovation centers across the country.

We have established and launched these Innovation Hub projects across the nation. From the Ventures Platform in Abuja (Ventures Park), to the Marydel Hubs and the Edo State Government’s Edo Innovate project in Benin, Edo State, and the Humanitarian Innovation Center in collaboration with the North East Innovation Hub and the International Committee of the Red Cross (ICRC) in Yola, Adamawa State, we are committed to building an ecosystem to drive innovation.

The Federal Government is now investing in training 5,000 developers as part of our N-Power Tech program, just as we are catalyzing a whole new sector of animation production by training 3,000 young people with scriptwriting, storyboarding, voice acting, animation and post-production skills. Not only will we develop their skills, we are providing an initial support of the hardware and software tools that will help them function economically after they are trained. We also believe that starting earlier with our students helps to solve tomorrow’s challenges, today. The Federal Government is lending support to initiatives such as the Civic Lab’s Student Innovation Challenge, and the Campus Innovation Challenge by Union and CC Hub, Nigeria’s pioneer Tech Hub in Yaba, Lagos State, to discover and support student entrepreneurs in our tertiary institutions.

Next week, I will launch a Climate Innovation Center in partnership with the Enterprise Development Center at the Lagos Business School. This forms part of our ICT roadmap, in which the private sector is an important stakeholder.

The challenge remains connectivity, extending broadband reach, making data cheaper – National Broadband Policy. As a first[1] step, the Federal Government, through the Nigeria Communications Commission (NCC), has since licensed a number of Infrastructure Companies (Infracos), who will invest in rolling out broadband infrastructure across Nigeria.

I believe we can extend broadband reach significantly in a year or two. We will partner in whatever way we can with Google and Nigerian broadband providers like 21st Century Technologies Limited and Backbone Connectivity Network, to quickly achieve extensive broadband coverage.

Our goal is to create a data-driven digital economy; one that will lead the way not just in Africa, but globally as well. And I believe strongly that Nigeria is on the right path. We have the people, the talent, we have a government that sees the potential very clearly, and is showing the determination to unlock that potential.

Technology has put great power into our hands, as individuals, but more importantly as co-creators and collaborators, to positively and dramatically change the course of human existence. With it, we can solve many of the problems that confront us.

In addition, we can connect people, grow businesses, influence good governance, and create better lives, and a better country for ourselves and for the future.

Thank you