Former Google CEO predicts the internet will split in two — and one part will be led by China

  • Speaking at a private event hosted by Village Global VC yesterday night, tech luminary and former Google CEO Eric Schmidt predicted that the internet will bifurcate into Chinese-led and US-led versions within the next decade.
  • Under Sundar Pichai’s leadership, Google has explored the potential to launch a censored version of its search engine in China, stirring up controversy internally and outside the company.

Former Google CEO claims internet will split between U.S. & China  

Eric Schmidt, who has been the CEO of Google and executive chairman of its parent company, Alphabet, predicts that within the next decade there will be two distinct internets: one led by the U.S. and the other by China.

Schmidt shared his thoughts at a private event in San Francisco on Wednesday night convened by investment firm Village Global VC. The firm enlists tech luminaries — including Schmidt, Jeff Bezos, Bill Gates and Diane Green — as limited partners, then invests their money into early-stage tech ventures.

At the event, economist Tyler Cowen asked about the possibility of the internet fragmenting into different sub-internets with different regulations and limited access between them in coming years. “What’s the chance, say, 10 to 15 years, we have just three to four separate internets?”

Schmidt said:

“I think the most likely scenario now is not a splintering, but rather a bifurcation into a Chinese-led internet and a non-Chinese internet led by America.

If you look at China, and I was just there, the scale of the companies that are being built, the services being built, the wealth that is being created is phenomenal. Chinese Internet is a greater percentage of the GDP of China, which is a big number, than the same percentage of the US, which is also a big number.

If you think of China as like ‘Oh yeah, they’re good with the Internet,’ you’re missing the point. Globalization means that they get to play too. I think you’re going to see fantastic leadership in products and services from China. There’s a real danger that along with those products and services comes a different leadership regime from government, with censorship, controls, etc.

Look at the way BRI works – their Belt and Road Initiative, which involves 60-ish countries – it’s perfectly possible those countries will begin to take on the infrastructure that China has with some loss of freedom.”

The Belt and Road is a massive initiative by Beijing to increase China’s political and economic influence by connecting and facilitating all kinds of trade, including digital trade, between China and countries in Europe, Africa, the Middle East and Asia.

Schmidt’s predictions come at a time when his successor at Google, CEO Sundar Pichai, has stirred up controversy around the company’s strategy in China.

Reportedly, Google has been developing “Project Dragonfly,” a censored version of its search engine that could appease authorities in China. The project allegedly included a means to suppress some search results, booting them off the first page, and a means to fully block results for sensitive queries, for example, around “peaceful protests.”

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In recent weeks, hundreds of Google employees lobbied Pichai for more transparency and signed a letter saying that the reported plans raised “urgent moral and ethical issues.”

Pichai has said that Google has been “very open about our desire to do more in China,” and that the team “has been in an exploration stage for quite a while now,” and considering “many options,” but is nowhere near launching in China.

In a separate discussion last night between Schmidt and several start-up founders, he lauded Chinese tech products, services and adoption, especially in mobile payments. He noted that Starbucks in China don’t feature a register. Customers order ahead online and pay with their phones before picking up their lattes.

A business development leader with Facebook, Ime Archebong, asked Schmidt if large tech companies are doing enough good in the world.

Schmidt replied: “The judge of this is others, not us. Self-referential conversations about ‘Do I feel good about what I’m doing?’ are not very helpful. The judge is outside.”

At several points in the private discussion, Schmidt urged entrepreneurs to build products and services that are not merely addictive, but valuable. He also said not enough companies “measure the right things.” Too many focus on short-term revenue growth and satisfying shareholders, rather than what’s best for their users, society and the long-term health of their companies.

Schmidt was the CEO of Google from 2001, when he took over from co-founder Larry Page, through 2011, when Page reclaimed the reins. He remained as executive chairman of Google and then Alphabet until earlier this year.

Correction: Eric Schmidt did not specify a date by which he believed the internet would bifurcate. He was responding to a question from Tyler Cowen which specified “in the next 10 to 15 years.”

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Search engines are weakening Amazon’s hold on product search

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Source: http://www.businessinsider.fr/us/google-search-engines-weaken-amazon-hold-on-product-search-2017-12/

Where US Consumers start product searches

BI Intelligence

Amazon’s share of initial product searches dropped from 55% in 2016 to 49% in 2017, and search engines like Google appear to be responsible, according to a survey from Survata as cited by Bloomberg.

Search engines’ share went from 28% to 36% between 2016 and 2017, reversing the drop they saw between 2015, when they had 34%, and 2016.

The rise of mobile commerce (m-commerce) may be responsible for search engines’ turnaround.

Search engines are the most popular option for mobile shopping, with consumers favoring them over retailers’ websites and apps, which includes Amazon’s. M-commerce is estimated to have grown from 19% of US e-commerce sales in 2016 to 23% in 2017, so search engines’ mobile advantage may be helping it gain on Amazon in product search. Mobile shopping is projected to make up nearly half of all US e-commerce by 2021, so search engines would be wise to invest in their mobile shopping search experience going forward.

Winning back search is necessary when competing with Amazon because of its strong conversion rate. Amazon has a tremendous ability to convert searchers to purchasers, which blocks competitors from having an opportunity to steal them away. If search engines and retailers want to take back more control of search, they should note the reasons consumers gave for starting their searches on Amazon — navigation, product selection, prices, and shipping capabilities — and then look to improve in those areas.

Voice shopping and social commerce may be the next battlefields for e-commerce search.

  • BI Intelligence estimates that 31% of US adults will use voice to make a payment by 2022, up from 8% this year, opening up a new field for search. Amazon is already well established in the space, but Google is working with retailers in the hopes of overtaking it and claiming more of voice search for itself. And as the industry develops, there are sure to be even more players.
  • Social media is heavily influential on younger generations of shoppers, so many of them are likely to search for products there. Those trying to control product search will need to find ways to use social media to stay competitive in search, as Amazon is trying to do with its social platform Spark.

Americans go to buy products from Amazon before Google online (Business Insider)

Source: Americans go to buy products from Amazon before Google online: CHART – Business Insider

If you’re an American buying a product online, you’re probably going through Amazon.

Online marketplaces, a category that includes everything from eBay to Amazon, are the first stop for 38% of online shoppers in the US when they search for a product, according to a recent UPS survey charted for us by Statista. And Amazon itself is by far the most popular such destination, with 29% of the 5,000 shoppers surveyed heading to Amazon first.

That’s nearly twice as many as those who use search engines like Google, and equal to the total number of those who said they use specific retailers’ various channels.

The figure is yet another reminder of how much of a necessity Amazon, a  data-drivencompany, is becoming for companies who want their products to reach consumers.

That growing dependence creates a convenient all-in-one marketplace for consumers, but given Amazon’s ability to make and heavily promote its own versions of popular products, the ongoing shift toward online shopping, the ever-increasing number of Amazon Prime members, and Prime members’ tendency to only shop on Amazon, it’s also raised questions of how healthy the trend would be for consumers if it were to keep up in the coming years.

COTD_7.6

 Here’s How 5 Tech Giants Make Their Billions – Alphabet & Facebook: Advertising

Source: Chart: Here’s How 5 Tech Giants Make Their Billions

on May 12, 2017 at 1:03 pm

Chart: How 5 Tech Giants Make Their Billions

The Revenue Streams of the Five Largest Tech Companies

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Last year, we published a chart showing that tech companies have displaced traditional blue chip companies like Exxon Mobil and Walmart as the most valuable companies in the world.

Here are the latest market valuations for those same five companies:

Rank Company Market Cap (Billions, as of May 11, 2017) Primary Revenue Driver
#1 Apple $804 Hardware
#2 Alphabet $651 Advertising
#3 Microsoft $536 Software
#4 Amazon $455 Online Retail
#5 Facebook $434 Advertising
TOTAL $2,880

Together, they are worth $2.9 trillion in market capitalization – and they combined in FY2016 for revenues of $555 billion with a $94 billion bottom line.

BRINGING HOME THE BACON?

Despite all being at the top of the stock market food chain, the companies are at very different stages.

In 2016, Apple experienced its first annual revenue decline since 2001, but the company brought home a profit equal to that of all other four companies combined.

On the other hand, Amazon is becoming a revenue machine with very little margin, while Facebook generates 5x more profit despite far smaller top line numbers.

Company 2016 Revenue (Billions) 2016 Net Income (Billions) Margin
Apple $216 $46 21%
Alphabet $90 $19 21%
Microsoft $85 $17 20%
Amazon $136 $2 2%
Facebook $28 $10 36%

HOW THEY MAKE THEIR BILLIONS

Each of these companies is pretty unique in how they generate revenue, though there is some overlap:

  • Facebook and Alphabet each make the vast majority of their revenues from advertising (97% and 88%, respectively)
  • Apple makes 63% of their revenue from the iPhone, and another 21% coming from the iPad and Mac lines
  • Amazon makes 90% from its “Product” and “Media” categories, and 9% from AWS
  • Microsoft is diverse: Office (28%), servers (22%), Xbox (11%), Windows (9%), ads (7%), Surface (5%), and other (18%)

Lastly, for fun, what if we added all these companies’ revenues together, and categorized them by source?

Category 2016 Revenue (Millions) % Total Description
Hardware $197,020 36% iPhone, iPad, Mac, Xbox, Surface
Online Retail $122,205 22% Amazon (Product and Media Categories)
Advertising $112,366 20% Google, Facebook, YouTube, Bing ads
Software $31,692 6% Office, Windows
Cloud/Server $31,396 6% AWS, Microsoft Server, Azure
Other $60,177 11% Consulting, other services (iTunes, Google Play), etc.
$554,856 100%

Note: this isn’t perfect. As an example, Amazon’s fast-growing advertising business gets lumped into their “Other” category.

Hardware, e-commerce, and and advertising make up 76% of all revenues.

Meanwhile, software isn’t the cash cow it used to be, but it does help serve as a means to an end for some companies. For example, Android doesn’t generate any revenue directly, but it does allow more users to buy apps in the Play Store and to search Google via their mobile devices. Likewise, Apple bundles in operating systems with each hardware purchase.

Top 10 – ‘Meaningful Brands’ – Belgique (Source: Havas – Infographie: Mediafin)

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Meaningful Brands is a unique global study from Havas Group that links brand performance to our quality of life and wellbeing. This year, Meaningful Brands 2017 also reveals new data that tracks the relationship between a brand’s business performance, its meaningfulness and the content it produces.

The largest global study of its kind – spanning 33 countries, 300,000 people and 1500 brands – it is also the first study to analyse and measure content effectiveness at this scale.

Meaningful ?  Go beyond the product, exploring how brands tangibly improve peoples’ lives and the role they play in society !

More Meaningful News ? http://www.meaningful-brands.com/en/news