What happens when the winner takes all

Posted on by Guy Cookson

One of the great ironies of the internet is that anyone can create a website and reach millions of people, and yet at the same time a tiny handful of companies are increasingly dominating our online lives.

Evidence of the winner takes all effect are everywhere.

According to Forbes, four out of every $10 spent online in the United States is now with Amazon, and an estimated 64% of all American households now have an Amazon Prime membership.

Google has well over 80% of the search engine market in countries as diverse as Brazil, Germany, India, Spain, the UK, and the US, and processes an incredible 3.5 billion search queries a day.

Meanwhile over 2 billion people globally have an active Facebook account – more people than were even alive in 1900.

And when newcomers do enter the market and threaten to take people’s attention away, Facebook either buys them (like Instagram and WhatsApp) or shamelessly copies their best features (Snapchat was recently described by one observer as Facebook’s R&D department).

Facebook and Google as a duopoly have captured one fifth of all online advertising spend in the world, earning a combined $106.3bn last year, and are responsible for almost all of the growth in this sector.

What makes this so difficult to counter is that the scale of these businesses is the very thing that makes them popular.

Facebook functions so well as a social network because most of your friends are there. Google serves the best search results because the more people that use it the smarter it gets. Amazon can deliver your parcel the very next day because it is worth their while to invest in the infrastructure that makes that possible.

One of the most interesting challenges today for small businesses is how to best use the tools created by these corporate giants to their advantage.

As an agency we spend an increasing amount of our time helping our clients acquire and engage customers through Google and Facebook. We use Amazon Web Services to host data.

These companies are inescapable and yet not unassailable, because even when the winner takes all the game can still change. Just ask Kodak.

This post also appeared in a weekly column in the Lancaster Guardian, Blackpool Gazette and Lancashire Post. 

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