The Secret Alliance Between the Top Four Tech Companies

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Aug. 5 2013 12:05 PM

Behind Frenemy Lines

We think of the top four tech companies as mortal foes, but they need one another in order to thrive.

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In various smaller ways, Facebook and Amazon make Apple better, too. Facebook is the most popular mobile app; about a fifth of the time we spend on mobile devices is spent on Facebook. To the extent that people’s addiction to Facebook fuels their desire to buy iPhones and iPads, Apple is better off with the social network. Facebook also functions as an easy sign-on system for many iOS apps, and Amazon’s cloud storage system has helped foster all the startups that populate that Apple’s App Store. Would Instagram have been such a hit without Facebook and Amazon? Maybe, eventually, but it likely would have grown more slowly than it did. And for many users, an iPhone without must-have apps like Instagram would be a much less useful device.

Now let’s look at Google. The search company makes all of its money from advertising. The fastest-growing slice of its business is ads displayed on mobile devices. Because most stats show that iPhone and iPad owners surf the Web much more often than Android owners do, a huge portion—and perhaps the majority—of the search company’s mobile ad revenue comes from Apple devices. So, take away Apple, and Google’s revenues shrink.

The Google-Facebook dynamic is more complicated, because they both compete for the same business: advertisers. Since advertising dollars are more or less fixed (the ad industry grows at single-digit percentages per year), you could make the case that both Google and Facebook would be stronger without the other around. Google, especially, would be pretty happy in a Facebook-less world—its workers wouldn’t defect and its ad rates would be higher. Yet I’d argue that Facebook has altered society’s attitude toward privacy in a way that ultimately benefits Google, too. Thanks to Facebook, sharing stuff online, everywhere, has become an accepted and even expected part of life. Google thrives off such data—and if it weren’t for the way Facebook has changed society, Google would have a lot less data to mine.

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Facebook is dependent on the others, too. Facebook recently reported that it now sees 819 million active users a month logging in through mobile devices. If Apple hadn’t kicked off the mobile revolution and Google hadn’t made smartphones cheap and plentiful, a lot of Facebook’s users wouldn’t have a way to get online—in other words, they wouldn’t be Facebook users. Earlier this year, Facebook released Home, a home screen that turns Android phones into Facebook phones. That’s an example of parasitism at its most blatant: Google built the OS, and now Facebook’s taking it over for its own ends.

Just like Facebook, Amazon took Android and redesigned it for its Kindle Fire line of tablets. Thus, no Google, no Android, no super-cheap Amazon hardware. Jeff Bezos’ retail juggernaut also gets a lot of search traffic from Google. From Apple, it gets Kindle readers and iOS app users, which indirectly fuel Amazon’s cloud business.

These are only the most direct ties between these firms. I haven’t even gotten to all the indirect ways they help one another—how, for instance, the growth in Android devices has led to an increase in the production of mobile phone components, which lowers production costs for Apple, too. Or look at what’s happened to mobile wireless speeds. Over the past few years, mobile carriers have built out their infrastructure, which has led to faster service at lower cost. Why did they do this? In order to service all the new smartphones people are buying—that is, in response to devices made by Apple and, indirectly, Google. But the increased data capacity helps everyone: The faster your smartphone surfs the Web, the more you surf Facebook and the more you shop at Amazon.

So, sure, it’s fun to imagine these companies fighting to the death. But that’s just fantasy. In real life, they’re all frenemies. They have to be. As smart as they all are, none of the four can make everything users want, from software to hardware to cloud services to e-commerce systems to social networking to apps to media and more. Instead they’ve all got to specialize, and we users get to pick and choose the best services from each of them. Like PB&J, they’re better together. 

Farhad Manjoo is a technology columnist for the New York Times and the author of True Enough.

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