Google vs Amazon. Two Internet giants decided to fight

Amazon and Google are among the richest and most influential companies on the planet. Together with Apple and Microsoft, they are in the top 4 most expensive corporations. And more recently, they do not like each other very much. Google prohibits Amazon from using its services, and the US main online store refuses to sell all products that are at least somehow connected with search engine subsidiaries. To annoy Google, Amazon even made friends with Apple. A short story about the (rather unpleasant) rivalry of two giants last year was made by Medusa, but recently the story got its continuation.

How did it start

Amazon loves its Prime Video service very much. In the US, it is rapidly catching up with Netflix, with 86 million users (against 128 million). In October 2015, it was discovered that America’s main online store stopped selling the Chromecast media player (as well as Apple TV). The company explained this by saying that the set-top boxes of competitors do not support Prime Video, and this is "unacceptable for users." As a result, if you type the word “Chromecast” in Amazon.com search, on the first ten places of issue there will be Amazon Fire TV, as well as cables and adapters to it.

Google was very unhappy with this store behavior. Amazon accounts for 44% of all online sales in the US (eBay is second with 6.8%, Walmart and Apple share third with 3.6%). In September, the second generation of Chromecast just came out, and the reviews were positive, but now the main console sales go to Korea and other foreign markets - Americans are used to buying their electronics only on Amazon, and if the device is not there, the buyer won't hunt for it.

Further more. The Google Home smart column disappeared from the site - the only serious competitor to Amazon Echo (guess what was shown instead of Google Home in the issue of the site). The Corporation of Good, perhaps, would like to respond to the insolent store, but it did not have adequate leverage. But they appeared in 2017, when Amazon Echo Show, a smart screen column, was released in June. On September 26, Google "without a declaration of war" banned this column from showing its YouTube. Neither Amazon nor the device users warned about this. The formal reason is that the video was shown differently than Google would like (without autoplay, displaying subscriptions, recommendations, comments):

The way Amazon showed YouTube violated our guidelines and created the wrong user environment.

The opportunity to watch videos from the video hosting site reappeared on the column in November. It turned out that Amazon itself did it, without any agreement with Google. She just released her own “pirated” web version of YouTube. With voice control instead of the interface that Google called a gross violation of the terms of service.

At the same time, Amazon stopped selling part of Nest products for the smart home - an advanced thermostat, a camera and an alarm system. Nest Labs since 2014 belongs to Google. The exact reason for the removal of goods from the site is unknown, and it all looks rather strange: before Amazon even promoted this thermostat, Nest Thermostat E, as the “Best Choice” and gave the company's products a plate “working with Alexa”. The experts have only one explanation: having finished removing the products of Google itself from its platform, Amazon started for its subsidiaries. Perhaps the calculation was that Google would give up and allow Amazon devices to work quietly with its services.

But Google, on the contrary, went on escalation. A week after Amazon's actions, she completely blocked the access to YouTube for her own part of the smart Echo Show column. And announced that from January 1, 2018, video hosting will stop working on Fire TV set-top boxes. Google says bluntly that the new decision to block YouTube on competitor’s devices is due to Amazon’s reluctance to negotiate cooperation:

We tried to reach an agreement with Amazon, opening up customers with access to each other’s products and platforms. But Amazon doesn’t sell Google products like Chromecast and Google Home, it doesn’t open access to Prime Video for Google Cast users, and stopped selling some of the latest Nest products in the previous month. Given this lack of interaction from Amazon, we would no longer support YouTube on the Echo Show and FireTV. We hope that we can soon reach an agreement to resolve these problems.

Meanwhile, Amazon considers it “dishonest” to block access to YouTube on its devices. In a statement, the company wrote that "We are saddened by Google’s decision to selectively restrict our users from accessing the open site." Meanwhile, Apple TV was back on Amazon.com. Apparently, the enemy of my enemy is my friend. Or Apple at Amazon is now in the list of "good boys."

AmazonTube

On December 20, it was discovered that Amazon had applied for registration of the trademarks “AmazonTube” and “OpenTube”. The ability to watch videos is the main feature of the Echo Show column, and the YouTube short video format was perfect for it. Without access to good video hosting in such a device, there is not much point, and, apparently, in order not to make concessions to a competitor, Amazon thinks about creating its own. The description of the application states that AmazonTube will be “a service that provides non-downloadable, pre-recorded audio and video over wireless networks to a variety of topics of common interest.”

Experts doubt that Amazon plans to create a direct competitor to YouTube. Still, the company already has a similar working service - Amazon Video Direct , in which content Prime subscribers can watch. But the name AmazonTube seems to hint that the company is not afraid of rivalry with Google, and that it still has options. She even has already registered the domains AmazonOpenTube.com, AlexaOpenTube.com and AmazonAlexaTube.com.

Attempts to "create an alternative to YouTube" may seem pathetic and ridiculous, but in the world of smart speakers, not everything is so simple. When a person gives a command, he usually says something like "Alex, show me a video with cats" or "Alex, turn on the video with the sounds of nature." What platform the content comes from here is not so important. The main thing is that it is.

Standoff at CES 2018

One of the main stories of the exhibition in Las Vegas, held from January 9 to January 12, was the “battle” of Google and Amazon on the field of smart speakers and smart assistants. In 2017, Echo with Amazon Alexa was the breakthrough of the exhibition and its main news. But this time, Google did everything possible (and impossible!) To show that their development is not worse, and even better for many. For starters, she spent a lot of money on an outdoor presentation. With pizza, dominoes, a coffee bar, video games and a slide for rolling, like a company in the main office in Mountain View. The “Hey Google” panel was the most impressive and expensive at the show.

If earlier Google entered into transactions at CES, worked with partners and held meetings, this year the strategy has changed. All of Las Vegas is filled with giant advertising banners inviting to see what the company is showing. And in the parking lot in front of the conference center, they built a three-story structure that advertises Google Assistant - in fact, Alex's only competitor from Amazon . With all the devices this smart assistant is built into, from smart speakers and watches to kitchen utensils and Android Auto in Alfa Romeo parked nearby. All so that this year's discussions at CES revolve around Google, and not around Amazon.

The funny thing is that nothing particularly interesting technologies from Google did not show. Everything focused on the idea of ​​a “smart home”, where the Assistant binds all systems. Moreover, the “smart home” in the Google view is just a building, all devices in which are controlled remotely, without the need to physically approach and press a button. Something proactive, such that it wouldn’t be possible to do anything without Google, wasn’t represented - and this was at a time when special walking robots and exoskeletons were already being created for Alex.

Amazon at CES 2018 had its own open-air zone, closer to the epicenter of the exhibition. Much smaller than Google. Experts say Amazon speaks from a position of strength, so it doesn’t invest much in marketing. In the field of smart speakers, Echo / Echo Dot accounts for 88% of the market in the United States, and Google's Home / Home Mini has 10%. Alexa is integrated into 4000 products, Assistant - in 1500. But CES 2018 is widely believed to be Google. And while Alexa wins in America, Google Assistant has more languages ​​and more potential for development abroad. By the way, Apple, which wants to be third in the market, in terms of the number of sales and “skills” of its assistant, lags behind the two leaders by more than an order of magnitude.

Who is stronger

Understandably, the parties will come to a compromise. Wallow in scandals is not beneficial for any of the companies. But it’s funny to imagine who is who if the conflict continues to grow. In the style of the dispute "who is stronger, Stallone or Schwarzenegger."

Let's compare financial indicators - after all, these are corporations whose main task is to generate money and dominate the market. In 2001, Amazon seriously overtook Google: its revenue was $ 3.1 billion versus $ 0.1 billion from the search engine. Now the balance of power has shifted. At the end of 2016, Amazon received $ 136 billion in revenue, and Alphabet $ 90.3 billion. The net profit of the main American store was $ 2.4 billion, and the search engine had $ 19.5 billion. Both companies are growing by 10-20% annually, although the latter Amazon has been ahead in revenue growth for several years.

Amazon and Google are in the top 5 global corporations, but their strategies are very different. Bezos, the world's top billionaire, is investing all his money in new products and development, so Amazon hardly shows profit, often finding himself in the red because of big purchases and investments. Google / Alphabet always gives a plus, usually 20% + of the total annual income, which gives the company a good safety cushion.

Amazon gets 59% of its revenue from a store in North America, 32% in other countries, and 9% of AWS cloud services. Alphabet accounts for 99.1% of Google, and 0.9% for Other Bets (including Nest, Fiber, Verily, Calico, Waymo, and so on). If you look at total revenue, growth, and asset diversification, Amazon wins. But net profit is much higher with Alphabet.

Can Google bypass Amazon by total revenue in the future? Most experts think so. The difference between the companies is not so great. But can Amazon bypass Google in net profit? Most likely no. Amazon's infrastructure costs — warehouses, packaging centers, hundreds of thousands of employees, delivery services, etc. - never leave and will not fall. To maintain its work, Google will always spend tens of billions of dollars less than Amazon, and therefore the search engine profit in the coming years will be higher. So in general, his position is stronger. Plus, Google has a “crown combo punch” if it bans the entire Amazon.com in its search results. This is almost certainly not going to happen, but the consequences for Amazon would be disastrous.

In the meantime, the most popular YouTube video hosting in the world is blocked for Amazon devices. And online shoppers can't get Google and Nest products in the world's most famous store. The conflict between the two companies is reflected in their customers. As The Washington Post wrote, “Amazon and Google are fighting, and this means that as a result, we all lose.”

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