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16.03.2020

No. 458: Strategies of the most important internet platforms

 

No. 458: Strategies of the most important internet platforms (February 2020)

Authors: Andrea Liebe, Jonathan Lennartz, René Arnold

(full version only available in German)

Summary

Google, Apple, Facebook and Amazon (GAFA) have been the focus of public debate for some time. What these four companies have in common is that they operate globally and have expanded their business activities far beyond their original fields of business. Their strategic development has always been based on a profitable core business and not on random diversification. The successful internet companies are also distinguished by their ability to exploit the opportunities for economies of scale and scope that the data economy opens up. This discussion paper examines this strategic diversification and the integration of different steps of value creation within the data economy using the example of the four companies and also looks at probable future developments.

The analysis of the previous strategies of the GAFA companies using the Data Value Circle(DVC), which describes data-driven value creation as circular and not classically linear steps, has shown that all four companies have diversified across all steps. The former core business, which has close contact to the end customer, continues to account for the largest share of sales. It is therefore strategically important for these companies to sustainably occupy the customer interface with both end devices and services. The resulting gatekeeper position also enables the companies to monetize other user roles within their platform services.

Against this background, the third chapter analysed the patents of the GAFA companies with regard to the further development of direct customer interaction. It was possible to extract 283,978 relevant patents in the period from the respective company's foundation until today. In addition, 513 mergers and acquisitions of the four groups were also examined more closely. It could be shown that all four companies considered here have significantly increased their acquisition and innovation activities in the fields of voice assistants as well as AR and VR in recent years.

Subsequently, the developments in the field of voice assistance as well as virtual and augmented reality were examined on the basis of concrete examples of terminals and services in the mentioned technology areas. The different business strategies of the GAFA companies, which presumably serve to fill the core business in the long run, i.e. direct customer contact and thus also decisive customer positions, were shown and discussed. The analysis was supplemented by the inclusion of competing products and services.

Finally, the findings were classified into potential competitive and regulatory issues and fields of action.

Diskussion Paper is available for download.

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