Google, Apple, and Facebook Battlefor Your InternetExperienceCASE STUDY#2Three Internet titans Google,Apple, and Facebook are in an epic struggleto dominateyou Internet experience,and caught in the crossfire are search, music, video, and other media alongwith the devices you use for all of these things, cloud computing, and a hostof other issue that are likelycentral to yourlife. Mobile devices with advanced functionalityand ubiquitous Internet access are rapidly overtaking traditional desktopmachinesas themost popularform of computing. Today,people spend more than half theirtime online using mobiledevices that take advantage of a growingcloud of computing capacity. Its no surprise, then, that todays tech titansare aggressivelybattling for control of this brave new mobileworld. Apple, which started as a personal computer company, quickly expanded into software and consumer electronics. Since upending the music industry with its MP3 player, the iPod, and the iTunes digital music service, Apple took mobilecomputing by storm with the iPhone, iPod Touch, and iPad. Now Apple wants to be the computing platform of choice for the Internet. Apple is the leader in mobile software applications, thanks to the popularityof the App Store, withmore than 2 million apps for mobile for mobile and tablet devices. Applicationsgreatly enrich the experience of usinga mobiledevice, and whoever creates the most appealing set of devices and applications will derive a significantcompetitive advantage over rival companies. Apps are the new equivalentof the traditional browser.Apple thrives on its legacy of innovation. In 2011, it unveiled the potentially market-disrupting Siri (Speech Interpretation and RecognitionInterface (, a combinationsearch/navigation tool and personal assistant.Siri promisespersonalizedrecommendations that improve as it gainsuser familiarity all from a verbal command. Google counteredby quicklyreleasing its own AI tool, Google Now.Apple faces strong competition for its phones and tabletsboth in the United Statesand in developing marketslike China from inexpensive Chinesesmartphones and from Samsung Androidphones that have larger screens and lower prices. iPhones sales have started to slow, but Apple is not counting on hardware devices alone forfuture growth. Services have always played a large part in the Apple ecosystem, and they have emerged as a major revenue source. Apple has more than 1 billion active devices in circulation,creating a huge installed base of users willing to purchase servicesand a source of new revenue streams. Apple Pay, now availablein more than 10 millionlocations around the world, has been adding 1 million new users per week. Four monthsafter the Apple Musicservice started collecting revenue, it had more than 10 million subscribers, adding $1.2 billion to Applesannual bottom line. Revenue from the App Store is skyrocketing. In the two weeks ending January 3, 2016, customers spend more than $1.1 billion on apps and in-app purchases. According to CEO Tim Cook, Apple has become one of the largest service businesses in the world. This service-driven strategy is not without worry. Both Google and Facebook offer stiff competition in the services area. Apples Siri may be good for setting an alarm or making a phone call, but she cant carry on a conversationor execute complex tasks across many apps and servicesthe way her rivals can. Within Facebook Messenger, you can send money to a friend, order an Uber ride, or obtain customerservice fromairlines like United and Delta. Googles Allo messaging app for iOS and Androidwill enableusers to chat with an assistant to have it perform taskssuch as getting the news, finding out travel times just about anythingyou could searchfor on the web. It can even suggest responses or web searches while youre in conversations with other humans. Google continuesto be the worldsleading search engine, accounting for three-quarters of the worldsweb searches. About 90 percent of Googles revenuecomes from ads, most of that on its search engine. Google dominate onlineadvertising. However,Google is slippingin its position as the gateway to the Internet. New search start-ups focus on actions and apps insteadof the web. Apple has also becomea mobile search competitor. Is iOSmobileoperating systemsoftware givesiPhone and iPad users the abilityuse Apples own search engine for searches of music,apps, and local services,bypassingGoogle.In 2005, Google had purchased the Androidopen source mobile operating system to compete in mobile computing. Googleprovides Android at no cost to smartphone manufacturers, generatingrevenue indirectly through app purchases and advertising. Many differentmanufacturers have adoptedAndroidas a standard. In contrast, Apple allows only its own devices to use it proprietary operating system, and all the apps it sells can run only on Apple products.Androidis deployedon 76 percent of smartphonesworldwide, is the most commonoperating system for tablets, and runs on watches, car dashboards, and TVs more than 4,000 distinct devices. Google wants to extend Androidto as many devices as possible. Googles Android mobileoperating system is expected to gaineven more market share in thecoming yearswhich could be problematicfor Apple as it tries to maintain customerloyalty and keep software developers focused on theiOS platform. Whoever has the dominant smartphoneoperatingsystem will have controloverthe apps wheresmartphones usersspend most of theirtime and built-in channels for servingads to mobile devices. Although Google search technology cant easily navigate the mobile apps where users are spending most of theirtime, Google is starting to index the content inside mobile apps and provide links pointing to that content featured in Googles searchresultson smartphones. Since about half of Google searches are for mobile devices, the companyrevisedits search algorithms to add mobile friendlinessto the 200 or so factors it uses to rank websites on is search engine. This favorssitesthat look good on smartphonescreens. The cost-per-click paid for mobileads has trailed desktop ads. Googleinstituted a design change tomerge PC ads and mobileads and present a cleaner mobile search page. Much of Googles efforts to make its search and relatedservices more powerful and user-friendly in the years ahead are based on thecompanys investments in artificialintelligence and machine learning. These technologiesalready have been implemented in applications such as voice search, Google Translate,and spamfiltering. The goalis to evolve search into more of a smart assistancecapability, where users will be able to get help from Google based on context, situation, and needs. Allo is a smart messaging app that can learn your textingpatterns over time to make conversationsmore expressive and productive. It suggestsautomatic replies to incoming messages, and you can get suggestions and even book a restaurant reservationwithout leaving the chat. Google assistantis meant to provide a continuing, conversationaldialoguebetween users and the search engine. Google is always looking for new ways to connect more people to the Internet, including fleets of little satellites, solar-powered drones that would fly around the world, and balloonsthat float high into the stratosphere, beaming the Internet to those below. Such devices in the sky will help Google spread the Internet to the roughly 4 billion people in undeveloped areas who currently lack Internet access. The more peoplewho are connected directly to Google, the more ads it can show them. Facebook is the worlds largest social networking service, with 1.65 billion monthly active users. People use Facebook to stay connected with theirfriends and family and to express what matters most to them. Facebook Platform enables developers to build applications and website that integrate with Facebookto reach its globalnetwork of users and to buildpersonalized and socialproducts. Facebook has persistentlyworked on ways to convert its popularityand trove of user data into advertising dollars, withthe expectationthat these dollarswill increasingly come from mobilesmartphones and tablets. On an average day, about 989 million people aroundthe world log on to Facebook using mobile devices. Facebookads allow companies to target its users basedon theirreal identities and expressedinterests rather than educated guessesderived from web-browsing habits and other online behavior. Mobile advertising accounts for about 75 percent of Facebooksrevenue, withmany of those ads highly targetedby age, gender, and other demographics. Facebookis now a seriouscompetitor to Google in the mobile ad market and is even trying to compete with emergingmobile platform, havingpurchasedOculus VR Inc., a maker of virtualreality goggles, for $2 billion. InMarch 2013, Facebook overhauled its home page to increase the size of both photos and links and allow users to create topical streams. This move gives advertisers more opportunities and more informationwithwhich to target markets. A personalizednewspaperwith, for example, an op-ed feed featuring followed commentary pages, a sports section tailored to preferred events and teams, and a hometown news feed will swell Facebooks database with useful tidbits. Facebookalso introduceda mobileapplication suite to replace the typicalsmartphone home screen. Facebook Home is an interface running on top of the Androidoperating system that replaces the smartphones typicalcover screen with Facebookconnect,such as photos, messages,and statusupdates. Homestill provides accessto apps on thephone, but the experienceiscentered aroundFacebook. About the same time, Facebook launched a new search tool to challenge Googles dominance of search. Facebook Search (formerly Graph Search) mines Facebooks vastrepository of user data and deliversresults based on social signals, such as Facebooklikes,and friend recommendations. Its a more socialway of searching than Google. Although Facebook search isnot in the same leagueas Google, it offers more precisedata on its users, such as gender, age, marital status, and interests. Facebooks share of worldwide digital advertising revenue has been growing. Facebook CEO Mark Zuckerberg is convinced that social networking is the ideal way to use the web and to consume all of the other content people might desire, including news and video. That makes it an ideal marketing platform for companies. But he also knows that Facebook cant achieve long-term growth and prosperity based on social networking alone. Duringthe past few years Facebook has movedinto virtualreality, messaging, video, and more. Facebookis challengingYouTube as the premier destination for personal videos, and it is making its messages smarterbydeployingchatbots. Chatbots are stripped-down software agents that understand what you type or say and respondby answering questions or executing tasks, and they run in the background of Facebooks Messenger service. Zuckerberg has said that he intendsto help bring the next billionpeopleonlineby attracting users in developing countrieswith affordable web connectivity. Facebookhas launchedseveralservices in emerging markets, such as the Free Basics Internet service designed to get peopleonline so they can exploreweb applicationincludingits socialnetwork, Facebook wants to beamthe Internet to underserved areas through the use of drones and satellitesalong with other technologies. Zuckerberg thinks that Facebook could eventually be an Internet service provider to underserved areas.If Facebook can match Google on this front and success in making itself synonymous with mobile access, the company could very well compete for global advertising dominance. Case Study Questions

1.Compare the business models and core competencies of Google, Apple, and Facebook

2.Why is mobile computing so important to these three firms?Evaluate the nonstrategic each firm.

3.What is the significance of search to the success of failure of mobile computing? How have Apple and Facebook attempted to compete with Google? Will their strategies succeed?

4.Which company and business model do you think is most likely to dominate the Internet, and why?

5.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.