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Amazon/Google/Facebook

at 8:00 am
...'Public Parts-author and digeratus emeritus Jeff Jarvis sees the digital revolution disrupt every single industry and institution, and believes that technology is leading to an “efficiency over growth” paradigm, with far-reaching implications: “Productivity will improve. Companies will be more profitable. Wealth will be created. But employment will suffer.” Jarvis acknowledges that great wealth can be created by serving millions of people with relatively small staff – see Google, Facebook, Amazon, and other icons of the digital economy – but he cautions that this might just further widen the income and capital disparity, which is “just wide enough today to cause unrest around the world,” as he writes on his blog...

This comes from from frog CMO Tim Leberecht, who recently returned from the World Economic Forum in Davos and debriefed in a detailed and interesting blog post.

Tim, as usual, thoughtfully deals with the nuances of the issues he "brought back" with him. Yet, I felt uncomfortable as I read this, much in the same way I've felt uncomfortable as I read many other recent articles that lump Amazon, Google, and Facebook together in support of some attempt to sum up the digital economy or, even more broadly, the state of things.

But I think putting these three companies in the same category is a mistake and almost certainly leads to a misperception of the complexity of the digital economy. We're well beyond the long tail theory at this point in our understanding of how the internet has been disruptive to economic and social paradigms that those of us who grew up in a pre-wired culture were used to. Google, Facebook and Amazon certainly share something significant: they embody the accelerated expectations of digital commerce, not to mention the need to be as good at generating wealth as wielding cultural influence. All three certainly succeed in these ways. But the key differentiator is how they do so.

If we were to plot these companies on a commercial spectrum, the left side representing business to consumer products and services and the right side representing business to business products and services, the difference would be clear. Furthest to the left, relative to the others, would be Amazon. While plenty of its customers are almost certainly businesses, Amazon's business is to sell products of all kinds to consumers. They are a digital department store, plain and simple. Further to the right on this spectrum, indeed more to the right than the center, would be Google. While Google offers products and services to consumers, most of these are free of charge. Their revenue comes mostly from businesses purchasing advertising an opportunity unprecedented until Google could offer a new landscape of billions of webpages used by millions of people all over the world (the people using their free products). It's a subtle distinction, though I wish it were more obvious when sweeping digital economy theorizing is done: Google's customers are mostly not its users. Of course, that leads to the next point on the spectrum farthest to the right where Facebook resides. Facebook offers millions (perhaps soon to be billions) of people the ability to create a digital identity and commune with one another, and do so, like Google, at no charge. Also like Google, they capitalize on this by turning their users into their product. Rob Horning, over at the always interesting and often over-my-head Cyborgology blog, puts it well when he says that Google "manages to take human curiosity and turn it into capital." I think it's more complicated than that, of course, but he's nonetheless on the right track when he concludes that "the consequences of that are profound. Our curiosity is no longer a sign of our leisure; it’s an enormously important economic factor."

As the largest consolidated advertising network (ever?), not to mention the most powerful in terms of demographic granularity, Facebook has the potential to leave Google in the dust as far as cash is concerned, because, to turn Horning's phrase, they have managed to take human leisure and turn it into capital. While Facebook and Google may appear somewhat similar in their positions on the spectrum Horning, too, seems to lump them together I'd argue that Facebook is far more to the right of Google because Google's free offer to users enables significant productivity, whereas Facebook's does not. I realize that this point could be debated, and I would be interested in hearing a counterpoint. But I just don't see how one could seriously compare the consumer-level productivity offered by Google's many services (email, calendar, documents, analytics, etc.) with whatever might be going on within Facebook's walled-garden. Horning, by the way, ends on a sinister note, lamenting that "we let Google tell us what to do next," a nice play on former CEO Eric Schmidt's claim that such is what consumers want from Google. Perhaps. But I find it all the more sinister that Facebook need not tell us what to do next, because they provide a very limited and controlled set of options of what to "do." Namely, share something, like something, stick around in our clubhouse and tell us more about yourself.

In any case, I think the relationship between business and consumer here is what is truly interesting. Amazon has taken a much more traditional approach to that relationship, but has been able to do it so successfully by leveraging the internet. Google was able to transform how we use/built/understand the web by providing a powerful way to "map" it as it scaled beyond any human's ability to keep track of it. That technology alone gave them domain over a substantial "territory" online, and they've turned that into an advertising network. But their network is based upon pages files, information, the like. Facebook, on the other hand, has pushed that even further. They've turned people into ad space. Clearly, this is the logical progression of what was made possible by internet technology, but it's on a very different level, even from Google.

Anyway, Tim Leberecht mentioned the three companies in a post that was largely about how those attending the Davos event considered issues of power, trust, and even happiness in a world in which technology seems to paradoxically enable greater individual freedoms through things like social media as well as consolidate power under private corporations that are motivated to erode individual privacy. I think this presents significant and important philosophical and ethical questions, questions that I'm concerned are sidelined by too great a focus on things like IPOs. Our culture has shifted quite far in the favor of corporations, and while there are certainly movements in resistance to this (Occupy, etc.), they do not seem to diminish the growing immersion we have as a culture in digital environments like Facebook. How can this be? How is it that we can speak with skepticism and ambivalence about corporations and yet spend so much of our time and attention intimately exposed under their watchful eye? Intellectually, I think that the transactional differences between Amazon, Google and Facebook are perceivable to the average person surely, if questioned, one would probably be capable of identifying them yet there is nonetheless a day-to-day lack of existential weight to that awareness. Why?

Thoughts?





Comments

Jon | February 29, 2012 8:34 AM
I think overall you are right, but you also have to consider the commodification of the user by Google and Facebook through their various usage tracking systems. While Amazon may indeed have users by the wallet, so to speak, Google And Facebook are following what they are thinking and desiring. Marketing gold that they are surely cashing in on.

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