Google and Facebook Earn 50% of All Global Advertising Revenue—Gobbled Up 90% of Advertising Growth
According to a new report from Axios, together the US technology giants Google and Facebook earned over 50% of all global advertising revenue in 2016.
Google alone earned a monstrous sum of $80.8 billion dollars—much of it from their profitable adsense platform.
Facebook trailed, earning $36.3 billion in 2016.
The other major US companies, household names like Amazon, Microsoft, and Twitter, bring in next to nothing compared to Facebook and Google.
As large as those numbers are, what’s more interesting is that Facebook and Google gobbled up over 90% of advertising growth.
It would seem that, due to the power of network effects, the growth of Google and Facebook’s advertising revenue is exponential.
This is good for shareholders, but it may be bad news for the American public.
The concentration of too much wealth or power in the hands of too few is a perennial problem in any democracy. Why? Because power corrupts, so the wider it is dispersed, the better.
This is why Rockefeller’s Standard Oil was broken up—the company was simply becoming too powerful and dominant in American life.
But there’s no denying that digital businesses are different from the brick-and-mortar businesses of old: they are dominated by network effects.
The power of social media is predicated on the size of its user-base. The bigger the network, the more alluring it is to new users. And the bigger it is, the more robust it becomes.
This means that standard anti-trust legislation (breaking up Facebook), wouldn’t work. We’d just see another entity come to dominate the market sooner rather than later.
Network effects guarantee a highly asymmetric outcome—there are no stalemates.
So perhaps the solution is to regulate our internet infrastructure as we do physical infrastructure projects, and other natural monopolies. But of course, this comes with its own set of problems.
Either way, it’s time we started considering whether companies like Google and Facebook are too powerful. If they are, then we can decide what to do with them.