The Internet’s Fantastic Four

It’s an epic battle for control of the Net, and even of commerce and communications. We’ve never before seen the like of any of these companies: Amazon, Apple, Facebook, and Google. Together, they form a gauntlet preventing others from joining their ranks, even as they turn their sights more and more on one another. How should we think about this formidable four? Read excerpts from the discussion below, or download the full transcript.
Savitz: Four companies that increasingly are in each others' business: Google, Amazon, Apple, and Facebook. We're going to talk a little bit about why we're picking those four and then also about some of the ones we didn't pick. What makes them unique?
Ellison: That’s a great question. I think they are all four truly platform companies. To varying degrees they are playing in commerce, they are playing in media, they are playing in Web services. Most of them either have or are rumored to have a hardware product, either a smartphone or tablet to deliver media and commerce capability. And they have in¾not all cases, but most cases—a platform for developing applications. So that gives them a defensibility and also an offensive capability to continue to expand into other areas.
Savitz: Is there something unusual about this moment in time with this set of companies? Have we seen this kind of thing before, where you've got a dominant core set of players?
Mahaney:  I don't think there's anything unusual about this period of time. But at least three of them, probably the Apple too, have established very deep competitive moats around their business. The ability for a new company to start up now and go through multiple years of losing money to establish a distribution retail network like Amazon has, it's very hard to see replaced today.
Facebook is a network effects company. Now people may start trailing off of Facebook. They may become less enamored with it, but it's very hard to see a social network with a billion people recreated in the next five years. And Google, the amount of money that they spent developing search, perfecting and improving their search algorithms, yes, somebody could jump away from them with a click. But still, for somebody to come up with those kind of algorithms, spending in excess of almost $20 billion. Maybe Microsoft could do it. They haven't had much success to date.
So those three companies have really established themselves as at least for the next five years, which is as long as anybody on Wall Street can think, that's very hard to see undermined.
Savitz: Is there one or two places where the fight really—that we should be paying the most attention to, that matters the most?
Hasker: Yeah, Eric. Alec mentioned a couple areas that they're going at it, so to speak, from a competitive standpoint. I think the one that we focus most on is the consumer, and ultimately who will own the consumer. I think question number one is, does it need to be one of the players, or can all four continue to stake out significant territory, against consumer time and attention.
But within that, the one that we look at at Nielsen for a bunch of reasons is video. Logically, because of our position in television, but also because if you look, for example, in digital advertising and digital business models, almost always it's video that is the most compelling experience. So the player who ends up owning the video experience, if indeed there is one player to own it, will have a very compelling position as it pertains to the consumer.
Mananey: Think about the four companies. Who's got the most interesting data? Who's got the largest set of data?
I think the answer is Google, that they've got more data than anybody else in the group. And Facebook may come in second, but then I would push you a little bit further and think, well, who's got the most interesting data? Who's got the most commercially useful data, coming at it from a Wall Street perspective. People who know what you've purchased is one company. What you've searched for what you purchase is one company. Google has always tried to close that loop. They've never really been able to do that. Facebook is far, far from closing that loop. They only know you at the top of the funnel. Amazon gets you at the top of the funnel, they're watching you the whole way down, and then they get you at the end, or they understand you, what happens, at the end.
They're going to have the richest, I think, set of commercial data on consumers of all four companies. I think.
Ellison: If you add the four together, depending on the week, you've got 8 to 9 hundred billion dollars of market cap. So you're talking 6 percent, give or take, of the entire market cap in the U.S.