Book Review – The Iv: The Hidden Dna of Amazon, Apple, Facebook and Google

The Four The Hidden DNA of Amazon Apple Facebook and Google

Four companies are at the superlative of the pyramid for applied science and digital media: Amazon, Apple, Facebook, and Google. Each 1 is very dissimilar, but in that location are many similarities that have helped these companies become so dominant.

Amazon'south reach is boggling, with 64 percentage of people in the United States being subscribers to Amazon Prime. Apple, while far from being the leader in smartphones, commands i of the highest turn a profit margins in the tech sector, currently around 38 percent. Facebook has two billion users, and 4 of the five well-nigh popular mobile apps are endemic past the company. And Google owns 92 per centum of the search market.

Much has been written about the successes of these companies, and of the unique qualities of their founders: Jeff Bezos, Steve Jobs, Mark Zuckerberg, and Google'south Sergey Brin and Larry Page. And much has likewise been written about how these companies strategically created or took advantage of sectors where they could disrupt existing companies.

Scott Galloway, professor at the New York University Stern School of Business, and longtime entrepreneur, looks at these "four horsemen," as he calls them, in his volume The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google. In his book, he highlights many of the negative aspects of their business models, and their furnishings on club.

Not all is rosy in Silicon Valley (and Seattle)

Much of this book is a screed well-nigh the things the author feels these companies exercise wrong. Apple's focus on loftier cease (luxury) products; Facebook's refusal to except the mantle of being a media visitor, with the responsibilities that go along with that; Google'south appropriation and affiliation of data; and Amazon'south destruction of retail infrastructure and distribution.

As I write this review, the stock markets have undergone the nearly serious correction in years, and Apple just announced its outset turn a profit warning in fifteen years, with its stock plummeting near x percentage. Facebook has merely had a year with dozens of scandals nearly how it uses its customer data. Amazon has been criticized for its approach to and selection of a second (shared) headquarters. And Google is, well, spying on us and using our data to create profiles that it sells to advertisers.

Gone are the days of the mottos "Don't be evil," and "Think different." We're living in a period of unique concentration where four companies tin control so much of what nosotros do. And it's not just the public faces of these companies; Amazon's AWS holds around half of the public deject market share (this is virtual servers that run much of the Internet); and Facebook, who looks like a homey identify to share photos and videos, has around xx per centum of the online advertising market (though Google all the same reigns supreme at effectually 35 percent).

How do we measure success?

We measure the success of a company by its market capitalization, and if you lot await at the four in this mode, they await more like three and a half. Apple was the first trillion dollar company, but at the time of this writing is worth less than $700 billion. Amazon, who hit that magical number presently afterwards Apple tree, is now worth about $740 billion, followed by Google at effectually $720 billion. But Facebook, in spite of its attain, comes in at well-nigh half the market cap of the big iii, or around $380.

The only ane of these iv companies that makes most of its coin from hardware is Apple tree, and the story of the visitor's rise and fall and rising is well known. Galloway criticizes Apple for its aspiration to go a luxury brand, maintaining loftier prices for its devices, and controlling much of the sales channel through the brilliant conclusion to open up its own stores in order to accomplish an astounding profit margin. Just Google is taking the opposite tack, becoming more of a public utility. Search isn't sexy; it'southward similar electricity and water, and, given Google'due south authorisation, Galloway suggests that "Congress and the Justice Department might just make up one's mind the search engine is a public utility and regulate the business firm as such."

Is it fourth dimension for a modify?

Amazon's ravaging of the retail section is another well-known story. But who among united states of america doesn't use the company to buy things that you won't detect on Primary Street or in your local mall? In society to increase efficiency, Amazon has invested heavily in the last mile, that fragmented commitment system that gets your packages to you on time. Galloway says:

It's pretty clear where Amazon is headed: 1) Take over the retail and media sectors, globally; and 2) Replace the delivery of all these products (adieu UPS, FedEx, and DHL) with its own planes, drones, and autonomous vehicles.

Facebook is more than insidious. "IF SIZE MATTERS (information technology does)," says Galloway, "Facebook may exist the near successful affair in the history of humankind." And "Powered past its mobile app, Facebook is at present the world'southward biggest seller of brandish advertising—an boggling achievement, given Google's brilliant theft of advert revenues from traditional media simply a few years agone." The concentration of this much power in advertising is unprecedented. "Google and Facebook are redrawing the media map. Eventually they will command more than media spend than whatsoever 2 firms in history."

These iv big firms accept a dampening effect on innovation. Galloway explains:

I've sat in dozens of VC pitches past small firms. The narrative has get universal and static: 'We don't compete direct with [Amazon/Apple/Facebook/Google] merely would be dandy acquisition candidates.' Companies thread this needle or are denied the requisite oxygen (capital) to survive infancy. IPOs and the number of VC-funded firms have been in steady decline over the past few years.

All of them avert paying higher tax rates — "Between 2007 and 2015, Amazon paid only 13 percent of its profits in taxes, Apple paid 17 percent, Google paid 16 percentage, and Facebook paid just 4 per centum. In dissimilarity, the boilerplate revenue enhancement charge per unit for the Southward&P 500 was 27 percent." — they don't have many employees, and their ability to suffocate competition is non expert for the economic system overall. As a event of this, Galloway suggests that they need to be cleaved upward, like Bell Telephone back in the day.

Is this possible? It's hard; these companies spend a great deal of money on lobbyists, and they are, in general, well liked. Simply they skew the economy; they stifle contest.

Galloway concludes:

This isn't an indictment of the Four, or retribution, but recognition that a key part of a good for you economic bicycle is pruning firms when they become invasive, cause premature expiry, and won't let other firms emerge. The breakup of big tech should and will happen, considering nosotros're capitalists. It's time.

Why read: The Four: The Hidden Dna of Amazon, Apple, Facebook and Google

This volume makes a good example for treating these large companies differently than we accept been since their inception. Many people don't realize just how big they accept become, and if yous're setting upwards a new business that may compete with even a part of these companies, it'south good to understand the implications of their command over essential markets.

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