One of the most memorable political advertisements that helped to put President Obama ahead of Mitt Romney during the 2012 U.S. presidential election was the Stage. It was an iconic, memorable, and believable ad. Mitt Romney and his men had bought a company, asked the workers to make a podium for a major announcement. They came on D-Day for the announcement. Standing on the stage with the workers looking, hoping for a promised better future, he told them that they were all fired.
Men cried. Women wept. Families broke apart. But the worst was this: why must they build a special stage for a fund manager to stand upon to fire them. Mitt Romney was defined. He never recovered from that image in the minds of many Americans.
Today, we have a stage. Google had pulled out YouTube from Amazon Echo. Google used to support Amazon but suddenly has noticed something: Amazon wants to build a world that does not depend on smartphone. It wants an alternative computing paradigm at homes and offices. From Bloomberg newsletter:
The way-more-than-a-retailer unveiled several new or revamped versions of its Echo voice-activated home speakers, including one that serves as a digital alarm clock, and it cut the price of its flagship gadget to $100 from $180. All are Trojan horses rolling Alexa, the voice-commanded brain of the Echo devices, into your home.
Alexa can already help you watch web videos, turn on kitchen timers, listen to music, shop on Amazon and do other tasks people do with smartphones run by Amazon arch-rivals Google and Apple Inc.
Amazon is eager to have Alexa do much more. Want it to be your television remote control? Sure! Or Amazon promises with a single command, Alexa can take over your morning routine of flipping on the lights, turning on the coffee pot and firing up your wake-up jams.. Want Alexa to control the 1990’s novelty gift “Big Mouth Billy Bass”? Alexa can do that too, and it won’t question your taste in home decoration.
If you check most of these new products, Amazon is not building them on smartphone. It wants its own ecosystem where it can dominate. It wants to be totally decoupled, unfettered from the smartphone world. It wants to own the home and possibly offices. Google is not happy.
So, like Mitt Romney, Google wants to fire Amazon, making it harder to tap into some of its services. But unlike those workers, Amazon can fight immediately and not waiting for a future political campaign. The Amazon Fire smartphone was a failure, but the new Amazon any-platform-but-phone strategy is winning with many companies adopting the Alexa. This is a challenge Google did not prepare for. Amazon wants to own the home and elevate computing beyond the phone screen. It pioneered voice computing which I have noted will be exciting not just in U.S. but also in Africa. For doing what it is doing now, Amazon has many enemies right now. The company has annoyed shipping companies, grocery chains, book publishers and you name them.
There is a clear alliance against Amazon these days. Google and Walmart have formed one. They want to ensure that Amazon does not disrupt their businesses. Walmart wants to stay relevant in the age of Amazon. Google wants to protect its text-based computing. That is the reason why both got together to battle Amazon with Google Assistant, Google Express and other tools to challenge the extremely brutal Amazon.
This is not new. When that happens, it means you are winning markets.
While Amazon is working to navigate what Google is throwing at it, Uber is also seeing a major alliance against it. Every car company is running to its main competitor for partnerships. From Google to car companies, everyone wants Lyft. Why? Uber is so hot that no one wants to further arm it.
When a company experiences what Amazon and Uber are feeling, see it as a badge of honor. It only happens to successful companies. Uber and Amazon just have to return the fire. Otherwise, they will be crushed.
What is happening in technology is the very reason why antitrust people will struggle to regulate these firms. If you break Amazon, another company will take its position. If you do same to Google, another will assume to be Google. We have moved into the post-core competency era where anyone can do anything because cloud computing and the other technology pieces make it far easier to branch into new technology areas. Anyone can compete in any sector and that is an advantage, but also a huge challenge for antitrust people.
Google might not have started Google Cloud a decade ago, even though it had all the necessary pieces to offer cloud services to the public. Now, it does so, offering a competing cloud solution to Amazon. The transition was not herculean: it put a sales button to rent some datacenters to the public. Datacenter was already an infrastructure it understood very well. That is why these companies can continue to grow as they have many pieces in-house to expand to new sectors.
Yes, they enjoy network effect and when you break one company, say for antitrust purposes, the winning one will take over the benefits of the new network effect. You will need to be breaking the resultant winners continuously to succeed. Unlike the old industrial giants, digital companies are unique. They get better with more users. Which means that breaking Google or Amazon will not fix the heart of the problem, new ones will emerge to fill the vacuum left.
For the players, the nature of the rivalry makes it very hard to know the real competitors. Google might not have seen Amazon as a competitor few years ago. But today, Amazon is after the business of Google as it works to diminish text-based computing and elevate anything but smartphone at home. It is a new basis of competition which can be disruptive if Google does not fight.
Customers and users will win. That is the good part of this. The rivalry will improve value. Yet, it will make it extremely hard for future new technology titans to emerge. As these companies own and build new empires across industrial sectors, they have moats everywhere. They become utilities which you must deal with as alternatives will be limited. We, the consumers will be happy, but among these tech empires, they will be trading stages as they fight civil wars to win markets.
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