July 22 news, Financial Times, said the author, said the three major technology giant Amazon, Google's parent company and Facebook's financial results released next week is likely to highlight their market dominance, overshadowing the future development of the Internet.
A large part of the digital economy's latest performance will be revealed next week, when the three companies - Amazon, Alphabet and Facebook - will release their latest quarterly earnings.
It is no exaggeration to call these Internet giants the leaders of the new economy. The total market capitalization of these three leading Internet companies has reached a staggering 1.64 trillion US dollars, a sharp rise from the 450 billion US dollars a decade ago.
It is no wonder that the discussion of the new technology bubble has become louder. According to most valuation standards, these companies have risen to the upper limit of the recent fluctuation range. Fund managers generally believe in homeopathic investment and are also afraid of losing their investment opportunities (Fomo). Therefore, the short-term stock market crash in June was soon restored.
But what if the reassessment of the value of these companies reflects the deep changes in the advertising market and e-commerce market? The dominant platform has more and more cakes. Just as the struggles of Snap, Twitter and Yahoo have revealed, the scale benefits of the Internet industry are increasing.
The internet market has not shown any signs of slowing growth. In contrast, according to Goldman Sachs, the growth in the US digital advertising and e-commerce market has accelerated this year.
In this context, Google and Facebook's move into the mobile advertising market is a terrible move. A few years ago, the rapid rise of smart phones showed the potential to subvert the entire digital advertising market.
Today, the strong growth of mobile advertising has accounted for more than half of the digital advertising market, driving the growth of the entire market. Five years ago, digital advertising accounted for only 2% of the entire US advertising market. The share has now doubled. In order to maintain growth, Facebook and Google are now targeting the next major opportunity: TV advertising.
At the same time, Amazon continues to expand its territory in e-commerce. It is estimated that last year the company’s contribution to the growth of the US e-commerce market exceeded half, which was a further increase from the 40% contribution rate in 2015. Its great success in spurring more people to shop online has also aggravated the collective crisis of individual entity retailers.
Other great market opportunities have also begun to become more and more revealing. The cloud computing market is maturing. This market, which occupies a large part of the $1.5 trillion U.S. dollar IT industry, is bound to trigger fierce competition. Amazon is now in a leading position, Microsoft and Google are chasing after the market, the market seems to have only a few winners.
One sign that the Internet giants are brewing yet another round of growth is their capital spending in recent quarters showing an increase. This kind of thing has caused Wall Street companies to fall into chaos in the past. However, Internet investors have become more familiar with this and learned lessons from it. Therefore, they are more convinced that the current investment in the construction of new data centers will increase market share.
What are the possible problems in the Internet market? The rapid growth in recent years has advanced the time when the market saturation began to cause trouble. Pivotal Research analyst Brian Wieser pointed out that if digital advertising in the United States continues to maintain its current growth rate, it will devour the entire advertising industry in the next five years. Its growth must slow down. Facebook has reminded investors for a while: It cannot continue to add ads to user news feeds without compromising the user experience. But the stock market is still pushing up the share price of the social network.
The largest Internet companies began to feel that their main market was hit, so they also began to occupy their own territory. After the acquisition of Yahoo, Verizon may break Google and Facebook's double monopoly on the digital advertising market. Amazon also has such potential, and it is now eyeing the market.
The supervision of government agencies is another risk, and the European Commission’s recent fine of 2.4 billion Euros on Google is a good example - although the case took eight years to reach this end, the final result is still unknown. With the growing share of Internet giants in the consumer economy, the cyclical effects will become more pronounced.
However, some factors like this are unlikely to affect the performance of giants announced next week. For any company whose main business is a coincidence with these digital beasts, the days may not be better. (Lebang)
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