Transmission of the Communication and the GAFA Companies: Coopetition of Monopoles.
Communication is old as human history and what makes human being so special amid other creatures, since, we have complex and intangible communication ways. Till the beginning human being always desired to communicate crowds. This is why every communicational revolution equals to development in the area of mass communication, it’s the ultimate goal which is still in process. All revolutionary improvement also comes with its settings that have an impact on every area of human life ranging from social to private area of human life. Nevertheless, mass communication term is a new concept in human history. It means each of the last decades has its unique way of communication pattern, meanwhile these constantly changing processes, all related things should have been changed as well. Thus, we need to analyze today’s medium’s and societies ‘musts’ to succeed in the marketing area. For instance, gathering data and making sense from it is crucial for today’s marketers. Data is the best way to see the context of the market so far; thus, huge and monopolized companies, which are in this case tech companies, dominating their market by the usage of the data. However, 50 years ago creating a general target audience (stereotyped) was fairly enough for marketers.
Data provides clear insights shots of the company, helps organizations to improve value-chain and business strategy. So, the article mostly covers these topics, tries to explain meanings, and proves some statics to draw a clear portray. Moreover, in order to make it clear, the GAFA (Google, Apple, Facebook, Amazon) companies are addressed since these companies; 1) are the monopoles in their market 2) are the tools of new media environment as well as policymakers 3) are not afraid of changes even they push necessary changes by foreseeing.
In the beginning of the article, we’ll see the transmission of mass communication and the impacts of each communication invention in terms of the human way of life and how explained these changes from some of the scholars like Marshal McLuhan,Neil Postman, Guy Debord, etc. This part of the article most likely to write in academic language. Besides the first part, the article aimed to explain today’s medium’s necessities by using the GAFA companies. Their data usage, creation of insight, and value-chain processes are described in this part. At last, the article covered all the GAFA companies’ business models (both B2B and B2C) as it’s important to understand how they cooperate and compete in the market (the birth of coopetition phenomena). However, rather than explaining what managers should and shouldn’t, we’ll have done indirectly managers attitude while checking out models of purchasing. In a nutshell, we’ll see the fastest, growing market’s components in the rest of the writ.
1. History of the Mass Communication
Despite the history of the communication as old as human history, mass communication and mass communication tools are not old as much as we think, it’s just about the 500 years or so. The last decade probably the fastest period in terms of the development of communication technologies. In against just thinking these developments- or inventions- just as a tool to communicate would be a failure perspective since each comes with their special skill set to the social lives of humans ranging from financescapes to ethnoscapes.
1.1 Script
As every one of us knows the first invention was of course script which leads humans to create his special way of thinking through the cumulative information rather than learning from ancestors’ experiences. The first example is going to as far back as 2400 B.C in Babylonia (central-southern of Mesopotamia) that is written and tracked for monetary transactions of agricultural products. Moreover, the first book is written in Egypt which is “The Book of the Dead”, however, we cannot talk about any mass communication until the invention of Gutenberg Press in 1456.
1.2 Gutenberg Press
Till the invention of the Gutenberg Press most of the books had been being from hand-copied, this doesn’t give any opportunity to reach for masses in those days. With the discovery of Gutenberg Press, one era was closed and the other one was opened: There are two major effects I’ll go over quickly. Throughout the 15th century, the Catholic Church was the main power holder across the European borders and they’ve seen the printing as a treat for their domination. Immediately, they took the response and printed their own Bible to keep control of the lands, however, they were totally unaware of the coming consequences of this invention. Except being part of the fall of the Catholic Church, the printing press also leads various reconstructions like rooting the capitalist economy and nationalism across Europe (since it showed them to differences of languages and cultures amidst European publics).
1.3 Telegraph
Another tool of communication is the telegraph which soon became after it produced a communication technology for both civilian and military for the first time. However, it was problematic for the reach across borders since states were trying to figure out the security of this system. After all, this pursuit had pushed to the idea of creating a global secure network system, that is, the transatlantic cable system which provides to the creation of present Internet infrastructure idea as well. With the invention of the radio, a new era of globalization has started in terms of broadcasting. Indeed, radio has accepted as the first mass communication device due to making it possible to broadcast for the places where you cannot go and reach.
1.4 Television
Throughout the 1950s colored Television had been thrown amidst the public which allows using of images and sound to be communicated. The impacts of the Television won’t be enough by explaining here, probably, it would take a hundred pages long if we began to scrutinize. For example, it arises the demand for consumer culture with advertorial broadcasting, hence, changed the consumption habit of the world as well as increased cultural exploitation, etc.
1.5 Transformation and Impacts
In a nutshell, besides all these mediums and their importance, we have witnessed the digitalization of things in the last decade. As we talked, each invention came with their unique practices and impacts on social institutions. Each revolutionary practice also has been affecting the content, perceiving of reality, etc. For example, some of the scholars like Harold Innis, Marshall McLuhan, Neil Postman have been arguing that observing the medium is the best way to understand social structures. According to the McLuhan’s famous “The Medium is the Message” argument is likely to be understood as the how the medium has changed the ability to perceive the message from the eyes of the individual- receiver-, whereas, he was not meant merely individual but society as well (Özçetin, 2018). Likewise, a given example by McLuhan itself via the using railway metaphor. When the railway line is laid between the two cities, it is not important that the transportation to the A and B points is accelerated. However, it is what the railroad does to A and B, and how the railway affects their relationship (Özçetin, 2018). So, rather than perceiving mass communication just as transmitting of messages, we need to admit that it creates a bound between different scopes of human life. Moreover, some of the scholars have been focusing on the explanation of the nature of mass communication, one of the notable researches is conducted by Denis McQuail, that, lays out three contemporary model in his work (Hanson, 2019). (Table.1)
Where I’m coming by saying all these things that is with the arise of each invention things started to evolve, change, and getting more complex. Afterall this development with the expansion of the World Wide Web (WWW) and advanced Internet Network, the world has started to change quicker than ever happened. Also, within the rise of digitalization- thus globalization- some of the technology companies have expanded enormously and started to be monopolized in the market they have placed. Neither the importance of usage nor impact of the mass media, Guy Debord stressed out the hazard of the monopolized communication technologies on the hand of states and how this power (!) keep the fraud system go on constantly (Debord , 1996). However, since it’s released, world is changed and monopolization is changed either, moreover, data mining, building insights and adaptation turned to the musts of the business- as well as social institutions. Thus, we’ll look relationship among data & insight & adaptation via scrutinizing the tech giants.
2. Well Adapted & Monopolized Technology Companies
In the conditions of the day, change is only a matter of moment, besides, companies that have the feature of being a medium do not hesitate to define themselves as a technology company, as Mark Zuckerberg (founder and CEO of the Facebook) did “Facebook is a technology company, not a media company” (Barber, 2016). There are well-known monopolized tech companies, so-called the big five, which also succeed in implementing their strategies. But why? Why these companies are successful as much as this? Indeed, they are able to gather data, read these data in real-time, and adapt themselves to the “musts” of the present. Moreover, handling such amount of data gives them to power either in the market, nevertheless, each of the tech giants or GAFA (Google, Amazon, Facebook, Apple) consist of a unique business model. Therefore, it’s crucial to talk them under the categories below to portray a clear shot.
2.1 Data is the Key
In the last decade with the increase of technology companies realized that the importance of gathering data to use planning, designing, adapting corporate strategies. Meanwhile, many data companies have established, the best-known one is the Cambridge Analytica due to the 2016 U.S Presidential campaign they conducted secretly. Genuinely, the Cambridge Analytica scandal revealed many hidden relations between politics, media companies, and huge corporates. However, I won’t explain the scandal with its detail but for more information, I suggest you watch Netflix’s “Great Hack” docuseries. Although everyone has blamed the Cambridge Analytica for what they did, Facebook didn’t take damage as much as this, whereas, a big part of the data has been taken through the Facebook and other tech giants in a point. After the scandal, lots of people began to ask how much data these tech giants collected without permission and some of them reached the information about their collected data (Jones, 2018). (Image.1)
At first glance, we realize the numbers are incredibly massive, however, the numbers are meaningless unless the companies can read them and adopt them. This is frankly what Cambridge Analytica has been doing, reading and making sense from data they bought from tech giants. As you can see everything brings us to GAFA, who is dominating the data sector.
2.2 Data & Insight
Each of the GAFA companies sells the data for marketing purposes as well as create insights for their benefits. Despite each of them has a different way of selling goods, at the end of the day the main purpose is creating meaningful data from users. Why is that matter to create insight? Since a company can’t live without making successful insights. It is the firm’s self-empathy. The organization can comprehend why it does what it does. For this situation, knowledge for the brand is the force and attention to understanding the client. Change is just a matter of moment in today’s conditions; hence, successful insight equals to being in the market as well as not being changed merely but being the way of changing constantly. GAFA companies in terms of both their model of business strategy and corporate strategy got it going on. Indeed, this is the reason why they are dominating the whole market since they quickly adapt to the new environment, meanwhile, they kept eating newcomers to the market. However, this growth strategy won’t enough to dominate the market unless they made new bright insights from the data they have.
“It’s the matter of life or death and change is just a matter of moment.”
2.3 Brand Marketing
Data means everything in today’s business world since it’s the only and best way to understand customer behaviour. It gives companies a chance to more flexibility and being who they are actually. Unlike, the presence of the data turns into a treat for customers after a point, it’s good for both sides, in essence, it’s nothing more than a win-win system. Customer finds easily what they want to get and until getting into the system they allow tech giants to sell other banners which is a real-time auction for marketers. Now we’ll look at what kind of approaches have been before digitalization and then the advantage of it.
In pre-digital times, marketers only have two options while determining their target audience either as a stereotyped, labelled mass, or as an individual. So, what does it mean stereotyped and individual in this case? Stereotyped approach likely to perceive a group of society as same in terms of attributes, backgrounds, habits, etc. (Harris, 2006). Nevertheless, some marketers find this nonsense due to complexity of the real relationships. In both cases, marketers will have a shallow output when comparing with the power of tech giants’ data. So, marketers realized the importance of reaching their target audience through stable channels. This is the major reason why Television-based marketing is neglected since it has been serving stereotyped masses, that is, seeing the audience as mass and mass as an audience.
On the other hand, the new marketing environment destroyed the audience phenomenon and gave them freedom of what they want to see, how, and why. By using a myriad amount of data, the tech giants had a chance to categorize users by both according to their attributes and stories at the same time, of course, with the help of technological developments and new usage patterns. Also, they can foresee where they should have been placed on their brand. This allows them to build a strict brand image as well as a sales strategy. Tech giants’ strategies also might be a benefit for the consumer in a way. For example, would you annoy when you see an advertisement on the banners of the website or watching something on the Television? Probably, you thought when you have watched the TV for the last time, beyond that, you remember an unrelated advertisement on the TV. However, tech giants are promising their clients and consumers only related things. While doing that, all these tech companies work collaboratively, whereas, they are known as rivals in the dominating data market. In order to explain these kind of situation scholars and researches made up “coopetition” concept which represent the competition and cooperation words. In other words, defined by the Bengtsson and Kock that is “companies desire to gain benefits that they couldn’t achieve alone, including risk and cost sharing, co-marketing, and collaborative innovation…” (Bengtsson & Kock, 2000). They arbitrarily got used to competition technique in the market. This is how Google, Facebook, Apple and Amazon work each other, even, their relationships between marketers could count as an example of cooperation in this case. At the final they described four coopetition-based business models for more see Table.2.
In a nutshell, despite the old way of perceiving consumers and marketing techniques, these tech giants have smashed it with the data they hold. Moreover, they proved that their client’s old ways won’t work anymore since the customers even don’t like them and they never liked it and showed the importance of coopetition- based business models by analysing the changed business environment. You can see in the Table.3, the changes in spending behaviour among years from the advertisers.
Right now, there is no reliable medium more than online media among measured media environment.
1. Surveillance & Value Chain
As explained each revolution in the sense of communication comes with its new environment as well. With the rise of technological revolution, corporate relations, using/sharing data, marketing and so forth has begun to a constant changing process. This also led to some doubts in the perspectives of the society. As a common understanding about these companies that is “they know us better than we do”. Although this is such a cliché word it’s true in many aspects.
Although it’s known that every data is collecting, users just keep sharing their data. Why is that? In here a bunch of theory aimed to explain it, for example, network theory[1], which says, users see social media as kind of world and all of their friends, social ties are there. This is why they can’t give up to use it, since it’s equal meaning to leave real (!) world, it’s just about to be or not to be in a way. We can sum up network effect below statements:
· A high number of people choose to use Facebook and Google services because they know they can find their friends.
· Imagine why people don’t prefer to use a new startup social media service? Answer is the none of their friends are on it…
Answer is the “Network Effect”
This surveillance also creates its value-chain as in UGC (User generated content) environment also boost the chances reach an enormous mass than other mediums. From the bottom everyone has chance to create its social ties, hence, build its brand (what actually influencers do). Publishers- in this case tech companies- collect data and serve it to the users instead of trading concrete goods. They build a relationship between users, creators and business, however, each GAFA companies’ market not overlap exactly they serve each other at the end of the day either. For example, Apple sells a concrete product with its unique OS system which enhance the demands to use Google products or these are the products that will prepare Facebook to get better content. You might realize that this example doesn’t fully express the truth since those companies also want to dominate other markets as well. Therefore, let’s take a deeper look toward models of purchasing of the companies.
4. Purchasing Models of the GAFA
In 2019, the tech giants were the top six (Facebook fall back to sixth) most valuable public companies in the world (Handley, 2019) .Understanding these companies in their proper business contexts makes it easier to understand their power in the marketplace and society at large. It also gives chance to asses competition and even changing habits itself.
4.1 Google v. Facebook -Online Advertisement
Google and Facebook are most regularly examined together, likely on account of their domination of internet advertising. In 2019, Facebook and Google occupy the big parts of the market together, 62,8% is collected by Google and the rest 37.2% is collected by Facebook (eMarketer Editors, 2019). (Figure.2)
We can predict that they have different business models either for the advertisers and users. Google’s first aim to help people to find things, genuinely, more than 3.5 billion searches per day in Google aren’t monetized at all (Lotz, 2018). Google also adopted the rule of get paid only if someone clicks on a banner or paid link. For instance, if you don’t pay the top three results, which are labelled as paid link, then no one gets paid from your search. This is also why advertisers love Google, since it doesn’t offer any non-interested consumers attention in against to Television based marketing. Moreover, Google is the place where consumers reach details about a product and buy, all these things could happen in a short period of time.
Every click means money and it’s a place where you can rapidly find things, search and buy.
Meanwhile, some businesses are not happy with the Google’s domination. They argue Google abuses dominance as search engine to give illegal advantage to “Google Shopping” where Google promotes it at the top of the page. In that section users only can see the products which are paid to be seen there, hence, rest of it shows much lower in results where consumers even don’t see them.
You might think about why we don’t talk about Facebook if they are the same here. This is because although Facebook has been competing in the same market with Google, there are still differences in terms of implementation. Since Facebook is not a search engine but a social media platform, indeed, it’s more like a traditional ad-supported media company. It includes several interesting contents that attracts an audience and sells their attention to marketers. In against Google, the paid doesn’t depend upon the clicks but per view like traditional media. However, the core principle and value of Facebook is being more consistent than traditional
*Figure.4: The total number of users across Facebook’s platforms far exceeds the number on any rival platform Source: The New York Times, 2019media in terms of the reaching target audience (Lotz, 2018)
Acquisition and mergers are another factor on dominating the market (also data) but this is more economics and business related, so I recommend you to review the graphics below instead of detailed.
4.2 Apple
Besides Google and Facebook means of product, Apple defines itself as a hardware technology company. In 2019 82 percent of their revenue consist of iPhone, iPad and Mac computers and etc. Apple’s 2019 annual revenue is 260,17 billion US dollars, if we had to get detailed it; iPhone sales were $55,96 billion, Mac $25,7 billion, iPad $21,3 billion and so forth (Delventhal, 2020).
You might think they are not even a media company then why we are evaluating them here. This is such a good and arguable thought, whereas, although Apple doesn’t count a media company, it’s clear that they are the dynamo of the new media environment. Since they are not only providing a place for marketers but also expand the demands towards new media tools. As well as, they provide a new and more luxurious place to marketers. For example, most companies reach Apple’s users through their advertisements since their users’ have no other chance to buy in the iOS ecosystem. This is why they use every event and related marketing strategies to catch Apple users.
Besides Google and Facebook means of product, Apple defines itself as a hardware technology company. In 2019 82 percent of their revenue consist of iPhone, iPad and Mac computers and etc. Apple’s 2019 annual revenue is 260,17 billion US dollars, if we had to get detailed it; iPhone sales were $55,96 billion, Mac $25,7 billion, iPad $21,3 billion and so forth (Delventhal, 2020).
You might think they are not even a media company then why we are evaluating them here. This is such a good and arguable thought, whereas, although Apple doesn’t count a media company, it’s clear that they are the dynamo of the new media environment. Since they are not only providing a place for marketers but also expand the demands towards new media tools. As well as, they provide a new and more luxurious place to marketers. For example, most companies reach Apple’s users through their advertisements since their users’ have no other chance to buy in the iOS ecosystem. This is why they use every event and related marketing strategies to catch Apple users.
Could we count an ecosystem[1] as a medium?
A big YES!
If we had to come back purchasing models to understand value-chain, Apple has been conflicting with all their retailers while having a good relationship with their consumers. They accused of unfair trades (see, Conflict Minerals & Apple) and about their manufactory in China. Despite their retailers who provide concrete material for them, they have been conflicting with contracted services and platforms such as Spotify. Apple wants its consumers
to use their services, so sometimes they put some obstacles to their unique OS systems for their rivals. Apple as it released always promised to privacy, however, it doesn’t mean either they don’t collect or use it to marketing purposes but doesn’t share with 3rd parties. A good example for that is, After the San Bernardino attack, the FBI requested Apple to break the encryption of an iPhone that belongs to one of the shooters and guess what happened; Apple refused that request. This approach resonated a lot and create an image as even they use Google or Facebook on their devices nobody gets their personal information. In a nutshell, this shows the power of Apple in terms of not just being a technology manufacturer but a media company as well. Also, in B2B side Apple is a tough company but in terms of B2C, it’s always a reliable platform.
4.3 Amazon
Amazon is initially a goods retailer; its annual revenue’s 63 percent came from there. Amazon’s share of the e-commerce market in the US is 37.7%, that is, underestimated and planned to real share (Richter, 2019). Amazon gathers all related data from 3rd party cookies and designs its contents according to websites. We have talked about Google’s and Facebook’s revenue models so far, here Amazon is buying banners in real-time from these tech companies and desiring to take the attention of potential consumers by doing that. Thus, we can say that they try to create a value-chain via marketing marketers’ products. This is a good example of adaptation to the new online business environment. They’ve created a crucial improvement in their business. Nevertheless, Amazon still wants to be in a concrete world, they bought Whole Foods company, which is an organic and fresh product retailer for, $13.7 billion in 2017. (see. Figure.7)
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