Digital platforms are now more dominant than ever before. Facebook, Google, and Amazon increased their share of the digital-ad market from roughly 80% in 2019 to around 90% in 2020.
Competition within the ‘triopoly’ is intense. Amazon is fast encroaching on Google and Facebook, with its “other” business segment (mostly ad revenue) growing 77% y/y in the first quarter of this year.
Apple is seeking to boost its advertising business too. This coincides with Apple’s significant data privacy changes that came into effect at the end of last month. The privacy battle reflects the race for market share.
In the short-run, Apple’s data privacy changes are less likely to hurt the major tech platforms such as Facebook, Google, and Amazon. The big three retain more first-party data and can track users through their own apps. Each will try to create their own “walled garden”. Network effects will be even stronger.
The ramifications for smaller companies, that rely on targeted advertising to reach customers, may not be so benign. This could pose a presentation problem for the Democrats, and their claims to be supporting small businesses.
