E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Structure is about to be imposed as industrial giants—battling for self-preservation in an uncertain world—seek to shape the Internet in ways that protect their interests
It often takes a recession to restructure industries. The auto industry that emerges from the great recession will be radically different from the one that entered it. The same is true for banking and, one can hope, for health insurance. When things are going well for everyone, there is less pressure to change commercial relationships. But when the economic screws tighten as they did in the year just ended, everyone starts looking for a new order.
A new order seems to be emerging within the medium on which e-commerce rests-the World Wide Web. Since its beginning as a commercial platform in the early 1990s, www more often than not meant Wild Wild West. There were few business rules and virtually no government regulation. It was a wide open enterprise zone where entrepreneurs cashed in on their inventive instincts.
In the last year, that environment has begun to change. Structure is about to be imposed as industrial giants-battling for self-preservation in an uncertain world-seek to shape the Internet in ways that protect their interests. I cite the following stories from the last year as Internet game-changers:
Comcast Buys NBC Universal. If you still need proof that the Internet is about to replace television as the principal marketing and entertainment delivery vehicle, this deal is the writing on the wall. Realizing that the days of network broadcasting and movie theaters are drawing to a close, General Electric last month sold a 51% stake in NBC Universal to Comcast, the nation’s largest provider of cable TV and high-speed Internet service. Comcast, not satisfied with being an Internet transmission utility in an era of web content downloads, wants to own and profit from the content that flows through its broadband pipes. When there’s a battle over control of the Internet between those who provide access to the web and those who provide content on the web, it’s comforting to have ownership of both.
Google, Bing and Rupert. 2009 was the year that the world’s largest media company, Rupert Murdoch’s News Corp., took on Google, the world’s largest Internet search engine. Murdoch absolutely despises Google because it provides access to his company’s massive amount of content without paying for it. He is threatening to block Google from indexing News Corp.’s web sites and is negotiating a deal with Microsoft to provide exclusive search engine access to his web content via the software giant’s new search engine, Bing, which was launched last June. Under this arrangement, the terms of which are reportedly still under negotiation, Microsoft would pay Murdoch for that access. If other media properties were to follow News Corp. down this path, Bing could leverage its “ownership” of content access rights to challenge the mighty Google, which built its insanely profitable empire on free access to web content.
There’s an App for That. This battle over access to web content has moved to the Internet’s mobile platform-the smartphone. Since it introduced its revolutionary iPhone in mid-2007, Apple has been steadily adding specialized applications to deliver unique web content to its growing millions of iPhone customers. They sometimes pay to download the apps and often pay to continually upgrade their phones to make full use of the ever more sophisticated iPhone applications that are available. Apple massively promoted these iPhone applications in the last year. What it hasn’t advertised is the fact that Apple is using this control of web content to get a piece of the action that such content generates.
In case you’re wondering where e-retailers stand in this battle, they are content providers and their unrestricted access to the web hangs in the balance.