Google Apple & Facebook Battle for Internet Experience Case Study 4 Questions Case Study 4: Google, Apple, and Facebook Battle for Your Internet ExperienceTextbook (Laudon & Laudon, 2019), Pages 267-269.Answer all the 5 case study questions listed on Page 269. BUSINESS PROBLEM SOLVING CASE
Google, Apple, and Facebook Battle for Your Internet Experience
Three Internet titans-Google, Apple, and Apple has more than 1 billion active devices in circu-
Facebookare in an epic struggle to dominate your lation, creating a huge installed base of users willing
Internet experience, and caught in the crossfire are to purchase services and a source of new revenue
search, music, video, and other media along with the streams. Apple’s services business, which includes
devices you use for all
of these things. Mobile devices the App Store, Apple Music, and Apple Pay, has
with advanced functionality and ubiquitous Internet been growing at a double-digit rate and delivered
access are rapidly overtaking traditional desktop $7.04 billion in revenue in the first quarter of 2017
machines as the most popular form of computing, alone. According to CEO Tim Cook, Apple has
Today, people spend more than half their time online become one of the largest service businesses in the
using mobile devices that take advantage of a grow- world. This service-driven strategy is not without
ing cloud of computing capacity. It’s no surprise, worry because both Google and Facebook offer stiff
then, that today’s tech titans are aggressively battling competition in the services area. Google continues
for control of this brave new online world. to be the world’s leading search engine, accounting
Apple, which started as a personal computer com- for over three-quarters of the world’s web searches.
pany, quickly expanded into software and consumer About 90 percent of Google’s revenue comes from
electronics. Since upending the music industry with ads, most of that on its search engine. Google domi-
its MP3 player, the iPod, and the iTunes digital nates online advertising. However, Google is slipping
music service, Apple took mobile computing by in its position as the gateway to the Internet. New
storm with the iPhone, iPod Touch, and iPad. Now search start-ups focus on actions and apps instead
Apple wants to be the computing platform of choice of the web. Apple has also become a mobile search
for the Internet.
competitor. Its iOS mobile operating system software
Apple’s competitive strength is based not on its gives iPhone and iPad users the ability use Apple’s
hardware platform alone but on its superior user own search engine for searches of music, apps and
interface and mobile software applications, in which local services, bypassing Google.
it is a leader. Apple’s App Store offers more than In 2005, Google had purchased the Android open
2 million apps for mobile and tablet devices. Applica- source mobile operating system to compete in mobile
tions greatly enrich the experience of using a mobile computing. Google provides Android at no cost to
device, and whoever creates the most appealing set smartphone manufacturers, generating revenue indi-
of devices and applications will derive a significant rectly through app purchases and advertising. Many
competitive advantage over rival companies. Apps different manufacturers have adopted Android as
are the new equivalent of the traditional browser. a standard. In contrast, Apple allows only its own
Apple thrives on its legacy of innovation. In 2011, devices to use its proprietary operating system, and
it unveiled the potentially market-disrupting Siri all the apps it sells can run only on Apple products.
(Speech Interpretation and Recognition Interface), Android is deployed on over 80 percent of smart-
a combination search/navigation
tool and personal phones worldwide, is the most common operating
assistant. Siri promises personalized recommenda- system for tablets, and runs on watches, car dash-
tions that improve as it gains user familiarity-all boards, and TVsmore than 4,000 distinct devices.
from a verbal command. Google countered by Google wants to extend Android to as many devices
quickly releasing its own Al tool, Google Now. as possible
Apple faces strong competition for its phones and Google’s Android could gain even more market
tablets both in the United States and in developing share in the coming years, which could be prob-
markets like China from inexpensive Chinese smart- lematic for Apple as it tries to maintain customer
phones and from Samsung Android phones that have loyalty and keep software developers focused on the
larger screens and lower prices. iPhone sales have iOS platform. Whoever has the dominant smart-
started to slow, but Apple is not counting on hard- phone operating system will have control over the
ware devices alone for future growth. Services have apps where smartphone users spend most of their
always played a large part in the Apple ecosystem, time and built-in channels for serving ads to mobile
and they have emerged as a major revenue source. devices.
Part I: Information Technology Irastructure
In 2017 Google accounted for 94 percent of the will increasingly come from mobile smartphones and
mobile search market in the United States. Although tablets. As of mid-2017 Facebook had 1.74 billion
Google search technology can’t easily navigate mobile active users. Facebook ads allow companies
apps where users are spending most of to target its users based on their real identities and
their time, Google is starting to index the content expressed interests rather than educated guesses
inside mobile apps and provide links pointing to derived from web-browsing habits and other online
that content featured in Google’s search results on behavior
smartphones. Since more than half of global search At the end of the first quarter of 2017, 98 percent
queries come from mobile devices, the company of Facebook’s revenue came from advertising, and
revised its search algorithms to add “mobile friendli- 84 percent of that ad revenue was from mobile
ness” to the 200 or so factors it uses to rank websites advertising. Many of those ads are highly targeted
on its search engine. This favors sites that look good by age, gender, and other demographics. Facebook
on smartphone screens. The cost-per-click paid is now a serious competitor to Google in the mobile
for mobile ads has trailed desktop ads, but the gap ad market and is even trying to compete with emerg-
between computer and mobile ads fees is narrowing ing mobile platforms, having purchased Oculus VR
Google instituted a design change to merge PC ads Inc., a maker of virtual reality goggles, for $2 billion.
and mobile ads and present a cleaner mobile search Together, Facebook and Google dominate the digital
ad industry and have been responsible for almost all
Seven Google products and services, including of its growth.
Search, YouTube and Maps, have more than a billion In March 2013, Facebook overhauled its home
users each. The Android operating system software is page to increase the size of both photos and links
installed on more than two billion devices. Google’s and allow users to create topical streams. This move
ultimate goal is to knit its services and devices gives advertisers more opportunities and more
together so that Google users will interact with the information with which to target markets. A “per-
company seamlessly all day long and everyone will sonalized newspaper” with, for example, an op-ed
want to use Google. Much of Google’s efforts to feed featuring followed commentary pages, a sports
make its search and related services more powerful section tailored to preferred events and teams, and
and user-friendly in the years ahead are based on a hometown news feed will enrich Facebook’s user
the company’s investments in artificial intelligence database. Facebook has its own personalized search
and machine learning. These technologies already tool to challenge Google’s dominance of search.
have been implemented in applications such as voice Facebook CEO Mark Zuckerberg is convinced
search, Google Translate, and spam filtering. The that social networking is the ideal way to use the web
goal is to evolve search into more of a smart
assis- and to consume all of the other content people might
tance capability, where computers can understand desire, including news and video. That makes it an
what people are saying and respond conversationally ideal marketing
platform for companies. But he also
with the right information at the right moment. Allo knows that Facebook can’t achieve long-term growth
is a smart messaging app for iOS and Android that and prosperity based on social networking alone.
can learn your texting patterns over time to make During the past few years Facebook has moved into
conversations more expressive and productive. It sug. virtual reality, messaging, video, and more. Face-
gests automatic replies to incoming messages, and book is challenging YouTube as the premier desti-
you can get suggestions and even book a restaurant nation for personal videos, developing its own TV
reservation without leaving the chat. Google Assistant programming, and making its messages “smarter”
is meant to provide a continuing, conversational dia- by deploying chatbots. Chatbots are stripped-down
logue between users and the search engine.
software agents that understand what you type or
Facebook is the world’s largest social networking say and respond by answering questions or executing
service, with 1.9 billion monthly users. People tasks, and they run in the background of Facebook’s
use Facebook to stay connected with their friends Messenger service. Within Facebook Messenger,
and family and to express what matters most to you can order a ride from Uber, get news updates,
them. Facebook Platform enables developers to or check your flight status. A new standalone app
build applications and websites that integrate with will allow users to stream videos in their news feed
Facebook to reach its global network of users and through set-top boxes such as Apple Inc.’s Apple TV
to build personalized and social products. and Amazon.com Inc.’s Fire TV as well as Samsung
Facebook has persistently worked on ways to con- Internet connected TVs. Zuckerberg has said that he
vert its popularity and trove of user data into adver- intends to help bring the next billion people online
tising dollars, with the expectation that these dollars by attracting users in developing countries with
Chapter 7: Telecommunications, the Internet and Wireless Technology
affordable web connectivity. Facebook has launched Sources Dovid Streitfeld, “Gandle Wants to he liverywhere with Every
several services in emerging markets, such as the
” New York Times, May 17, 2017. Tim Bujari. “Learning This Thing
Helped Me Understand Apple Strategy. Time, April 3, 2017 Mathew
Free Basics service designed to get people online so Ingram, “How Google and Facebook Have Taken over the Digital Ad
they can explore web applications including its social Industry, January 4, 2017. Deepa Seetharaman, “abook
Announce Launch of Television App Wall Street Journal, February 14,
network. Facebook wants to beam the Internet to
2017, Tripp Mickle. “Apple Continues its Comeback Campaign, but iPhone
underserved areas through the use of drones and Worries Persist,” Wall Street Journal, May 2, 2017, David Ingraham, “Pace
satellites along with other technologies. Zuckerberg
book Near Ad-Only Business Models Game Revenue Falls. Reuters,
May 3, 2017, Dan Reninger, “How Mark Zuckerberg Is Shaping the Future
thinks that Facebook could eventually be an Inter- of Facebook Social Media.”, May 16, 2016, Robert McMillan,
net service provider to underserved areas. If Face-
“Facebook Hopes Chatbots Can Solve App Overload.” Wall Strwarna
book can match Google on this front and succeed in
April 17, 2016, Erie Emin Wood, “la Shift to Being a Service Provider in
Apple Future IT World Canada, May 3, 2016. Yoni Meisler, “Apple
making itself synonymous with mobile access, the Growth Strategy Is Hiding in Plain Sight.” BGR.com, January 28, 2016
company could very well compete for global adver-
Alistair Bar, Mobile Devices Upend Google Search, Wall St Journal
February 25, 2016, and How Google Aims to Delve Deeper into the
Live Wall Street Journal, May 28, 2015
CASE STUDY QUESTIONS
7-13 Compare the business models and core compe-
tencies of Google, Apple, and Facebook
7-14 Why is mobile computing so important to
these three firms? Evaluate the mobile strate-
gies of each firm.
7-15 What is the significance of search to the suc-
cess or failure of mobile computing? How have
Apple and Facebook attempted to compete
with Google? Will their strategies succeed?
7-16 Which company and business model do you
think is most likely to dominate the Internet,
7-17 What difference would it make to a business or
to an individual consumer if Apple, Google, or
Facebook dominated the Internet experience!
Explain your answer.
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