Google and Facebook stand pre-eminent in the tech world on account of their colossal numbers. Their products such as the social media site Facebook and the Google search engine are used by literally billions of people daily. Both companies were set up by young, tech-savvy computer experts who are driven to dominate the technology market. They do not intend to rest on their laurels; rather they are forever looking at ways to expand and dominate the market place. Their modus operandi is to look at present trends and find new nascent technologies to capture future market share.
One example of this is YouTube. Eyebrows were raised at the time when Google bought the company for $1.65 billion. At the time commentators wondered whether this wasn’t the start of another tech bubble destined to burst. They have been proved wrong – the video sharing site is now second only to Google in search engine hits. It now processes 3 billion searches a month. Rather than dismantle and rebrand the company, Google has integrated the site into their Google family. The videos have Google ads and just as with the search engine, people can pay to jump the queue and appear at the top of search results.
Clearly the average internet user prefers to see videos than to read text. In many instances this is easy to understand – for example, ‘how to’ content. It is so much easier to see a video about how to change a washer on a tap than it is to read an article on the topic. YouTube has become the biggest teaching resource in the world. It is also a heavy weight in the entertainment sector – new digital televisions offer YouTube and many people prefer to search YouTube videos rather than watch standard broadcasting on TV.
Facebook to keep up is continually trying to find new ways for people to interact and share on their site with new facilities for photo sharing and tagging. They also have instant messaging and have even moved into EBay territory with its own version of the auction site.
Tech commentators have been puzzled by the recent acquisitions of Facebook and YouTube. In the last 18 months Google has bought 8 robotics companies. Facebook has bought Instagram, WhatsApp, a messaging company and Oculus VR, a virtual reality company. Both firms have bought drone start-ups. Google got its hands on Titan Aerospace and Facebook Ascenta.
Let’s try and pick this apart.
Instagram was a rival to Facebook as Instagram was becoming perceived as a cooler picture sharing site than Facebook. The competition has been bought out.
Pilotless drone airplanes are commonly seen as the problem to how to bring internet connections to the developing world. Laying cables is expensive and time consuming. Solar powered drone planes that stay up in the air for weeks without refuelling, flying at the edge of the atmosphere are seen as the best way to deliver internet connections to vast areas of untapped internet demand. Europe and the USA are fully online whereas there are large swathes of potential users still to grasp in Asia, Africa and South America.
But why go to the effort? The answer is that users give their personal data in order to be online. Personal information is the ‘oil’ of the tech world. Knowing information about demographics, personal interests, telephone numbers, buying habits, browsing habits and so forth offers Facebook and Google the opportunity to offer advertisers ‘targeted adverts’. This is the mainstream of their revenue streams.
Virtual reality and robotics do not seem to fit easily into this revenue model. They don’t mine personal information to sell to advertisers. This is where Google and Facebook are unusual. Although they are corporates with shareholders, both have a two tiered share system that gives their owners complete control of their respective companies. Mark Zuckerberg (Facebook) and Larry Page and Sergey Brin (Google) are essentially computer geeks. They love computers and tech stuff. They see the fascination of technology as a massive draw. People want new ‘space age’ and cutting technology, almost for its own sake. I don’t think either Zuckerburg or Page/Brin know exactly how they are going to make money from robotics. They do know that robotics can capture the imagination of future generations. They also know that robots carry out the commands of computers. Already computers and the internet allow people to manipulate their environment remotely such as- changing thermostat settings, moving cameras, opening garage doors etc. Robots could take this ability to the next level. You are in the office. Your boss tells you to fly to New York that night. You simply send a command to your robot at home via your smart phone to pack your bag. You then phone a courier service to pick your bag up and bring it to your office. Job done.
It is this type of facility that fascinates the Google and Facebook founders. It is their vision of the future and they can’t resist getting in on the act with early acquisitions. Besides their respective companies seem like never-ending gold mines. To raise more money they just have to issue more shares. This is no bother since they still keep control.