The Race to Own You

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It should come as no surprise to anyone following the business world that four companies are emerging as the (new) powers that be. They are, of course, Google, Facebook, Amazon, and Apple.

Each is famous for establishing indisputable leadership in a particular niche of the online world: Google in search; Facebook in social; and Amazon in retail. Apple is a special case: It grew from an also-ran in the PC wars to become the world's most valuable technology company (at least for a time) by making devices and systems that seamlessly connected consumers to their digital media lives.

Increasingly, however, these companies no longer dwell in discrete categories of usage, but compete ferociously with one another.

It's clear that Google+ aims to challenge Facebook's social hegemony. And that Amazon Instant Video is a direct attack—using streaming media—on Apple's download model (iTunes and the App Store) and Google's YouTube. And that Google and Amazon are competing to sell cloud services. And that Facebook is poised to enter the e-commerce and payments space, whenever it decides to commit.

But these skirmishes barely define the real competition among these four companies. What they're really after is dominance of customer information.

In a recent "open letter" from Axel Springer CEO Mathias Dopfner to Google executive chairman Eric Schmidt, the head of the largest publisher in Germany—which is the largest economy in Europe—made a profound and provocative point: "If fossil fuels were the fuels of the 20th century, then those of the 21st century are surely data and user profiles."

It's no coincidence that Schmidt noted back in 2010 that the power of Google's search algorithms—which process 5.9 billion queries globally every 24 hours—gives it unique insight into consumers.

As Schmidt observed then, "We know where you are; we know where you've been. We can more or less know what you're thinking about."

Each of the Web's Big Four are ideally positioned to know more about us individually, and as a species, than ever before in the history of life on earth.

Google is the most extreme example. It operates the largest search engine in the world. (It has 70 percent market share in the United States and 90 percent in the EU.) It owns YouTube, the second largest search engine in the world. Its Chrome browser is the most popular on earth. And Android, its mobile OS, dominates global mobile markets. That's to say nothing of Google Maps, Translator, Earth, Drive, Nest, and a host of other services, all of which collect data about what we do.

Google is in a unique position to "own" our personal information—and that information drives its business: Of $60 billion in revenue last year, 97 percent was generated from advertising—laser targeted based on its knowledge about us.

Facebook plays the game too. Its 1.3 billion users spend, on average, 6 hours and 41 minutes a month on the site. Each visit lasts 18 minutes. That gives it deep insight into more than 15 percent of the world's population—and that number is growing. Its primary source of revenue? You guessed it: targeted advertising.

Amazon has hundreds of millions of customers. But its focus is on the estimated 20 million customers who subscribe to Prime. It knows all about them for a simple reason: They buy at least 150 percent more per year than the site's "regular" customers. Heavy Prime users handily buy two to three times a week. And Amazon tracks their every move—across every product category imaginable, and then some.

Perhaps most intriguing is Apple. It used to be a hardware company. But its growth business now is digital media. Thanks to iTunes and the App Store, it possesses an estimated 800 million customer records, and it's adding 575,000 users a day.

These four companies are the ultimate CRM machines. Their sheer scale will dominate any of the old guard keepers of customer information.

And their only competition will come from the other side of the world—in China.

Watch out for Baidu, Alibaba, and Tencent, for a simple reason. Separate from their "core businesses," they're playing the same game. Buyer beware. Or be grateful.

Jeffrey Rayport is a faculty member in entrepreneurial management at Harvard Business School. An author, consultant, and investor, he specializes in digital media, marketing, and technology-based services.

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