Apple recently released one of its most anticipated software updates, App Tracking Transparency, which gives more control to Apple users over how their data is shared. Apple grounded this contentious decision within the company’s narrative of a commitment to privacy. In April 2021, Spotify announced its “Hey Spotify” feature. Many interpreted this addition as the final launch of another voice-command experience that was in the works since early 2019.
Analyzing these two seemingly disparate launches, and connecting the dots with some other recent news, reveals:
(1) The evolving ecosystem strategies adopted, maintained, and sustained by big tech companies like Amazon, Google, and Apple.
(2) The countermove strategies and tactics devised and executed by the content platforms like Spotify, Roku, or Epic Games against these ecosystem strategies of the big tech.
In this blog, I take a comprehensive look at funnel strategies adopted by big tech ecosystems, evaluate the countermove strategies and tactics against them, and analyze what it all means for competitors and the wider marketing/advertising industry.
A few tech and digital platform companies like Google, Apple and Amazon desire to create ecosystems around their brands. These ecosystems frame consumer choice and habitual purchase behavior as they dominate the path to purchase, from awareness (upper funnel) to decision (lower funnel). Consumer’s choice of content providers, products, financial services, telecommunication services or electronic products has, is and will be shaped and bound by their compatibility with, or order-ability within, these ecosystems.
The big tech ecosystem strategies particularly concentrate on managing the top of the funnel — the beginning of the consumer decision-making journey — and do this by getting as close to the consumer as possible in order to be the first touchpoint and guide the consumer’s journey through the platform. We see two main strategies to control the upper funnel: i. Establishing the hub for search; ii. Accessing biometrics data via wearables
Establishing the Hub for Search. Where consumers search for products is a strategic battlefield in terms of controlling that top-of-the-funnel dominance and leveraging the search activity as a way to lead consumers deeper into the funnel within the ecosystem.
Google Search — We have associated the search activity with Google. The company’s early disruption of the search category, with cleaner aesthetics and more relevant and quick results, has ensured a global dominance and competitive edge for a long time. But, is Google still the first point of contact for consumers to start their purchase journeys? Is it the default search platform for consumers?
Amazon — According to some recent reports, a big proportion of consumers deem Amazon as their default search engine, especially in some particular product categories. The preference of Amazon searches over Google vary by age, increase by Prime membership status, depend on consumers’ frequency of using their Prime membership (and also the wording in the survey questions). More detail on this blog about different reports on Amazon vs Google search battle.
Accessing Biometrics via Wearables. Technology is getting smaller and closer to the body. If you need convincing of that, trace the trail of the phone from the street corner to your home, your car, your bag, your pocket and now on your wrist and in your ear (and soon as part of your vision delivered by mixed reality goggles). As technology gets closer to the body, the types (eg sweat, heart rate, sleep, iris, fingerprint), modality (eg voice, haptics, touch), and intimacy (eg on the body, in the body) of the data it collects expands.
Alexa — Via Alexa, Amazon has become closer to consumers compared to the proximity of a search engine. Consumer-to-machine (C2M) engagement via voice is comparably frictionless interactions for consumers rather than going to a computer or mobile device and typing into a search bar. Amazon makes this particular touchpoint more strategic via Alexa Custom Assistant by granting brands access to Alexa’s framework and, as a result, strengthening their upper funnel dominance. This custom assistant allows brands to create their own assistants with their featured voices, custom wake words, and other capabilities.
Amazon Halo — Aside from seeking to converge the healthcare and tech ecosystems, Amazon Halo is an effort to get closer to the human body to be able to integrate the physiological and emotional functions of the body into the Amazon ecosystem — without a screen like its counterparts Apple iWatch and Google FitBit. Amazon Halo seeks to measure the body and track your cardio, sleep, body fat, and voice tone. Indeed, Google’s FitBit acquisition also sought to get closer to the body than Alexa was.
These strategies are designed to engage consumers at the early phases of their consumer journey, to embed the decision-making processes and secure consumer loyalty to their ecosystems. Proximity to the body helps these platforms access and acquire rich and layered consumer profiles and use data across devices, modalities, and touchpoints.
Now, let’s see how the other brands and content platforms are reacting to these data and upper-funnel dominance strategies.
The content platforms like Spotify, Roku, or Epic Games or house-of-brands like Procter & Gamble and Unilever have realized that they are negatively impacted by these intensifying and cocooning ecosystem strategies of big tech platforms. This discernment pushed these platforms (although a bit late) to devise and execute some countermove strategies.
Hey Spotify [countermove to Siri/Alexa] — Spotify has launched a “new voice-controlled experience” called Hey Spotify to make it easier for Spotify users to “start, navigate, and search for their music and podcasts without using their hands.” Siri’s default music app is Apple Music and its capabilities to interact with Spotify are very limited. Spotify’s experience is bound by and cocooned within Apple’s or other tech ecosystems. With this new voice-activation feature, Spotify can directly touch the consumer, acquire voice data and free itself of constraints of Siri- and Alexa-driven experiences.
Roku [counterrnove to YouTube TV/Google] — As the distribution agreement between Google and Roku expired in April 2021, Roku decided not to carry YouTube TV in its channel store due to Google’s “unfair and anti-competitive requirements.” Roku made this decision public emphasizing the underlying reasons. Roku stated that Google “manipulates search results, impacts the usage of user data, and ultimately costs the user more.” Roku repeated their commitment to their collaboration with Google and requested users to reach out to Google to “not to require sensitive search data” and “manipulate user search results.” Leveraging consumers’ awareness of and sensitivity to tech companies’ privacy transgressions, Roku is trying to control its own user experience while still leveraging the benefits of the Google ecosystem.
Epic Games [countermove to Apple] — The conflict between Apple and Epic Games dates back to August 2020 when Epic’s Fortnite game added a direct payment mechanism in violation of Apple’s rules. Apple removed the game from the AppStore and Epic filed an antitrust lawsuit against Apple for establishing a monopoly. The battle is a great example of countermoves by content platforms against the big tech. Similar to Roku, Epic wants to be on the iOS system but wants to have a bigger portion of the ad revenue of its games.
Colgate, P&G, Unilever [countermove to Google/Amazon] — House-of-brands are among those negatively, and majorly, impacted by big tech dominating the path to purchase funnel, particularly the top of the funnel. The majority of the house-of-brands tend to focus on mid-funnel strategies to ensure they have well-developed product lines that satisfy different segments in that particular category, for example, Colgate in oral care, Unilever in personal care or P&G in detergents. The individual brands don’t really have any digital footprint at the top of the funnel (eg consumers don’t search for the brands via the brand sites). Until very recently, these house-or-brands instead poured their budgets into building awareness. In 2019, however, Unilever started backing Mila, a beauty search engine. A recent Washington Post article reported that P&G is working with Chinese investors to “gather iPhone data for targeted ads, a step intended to give companies a way around Apple Inc.’s new privacy tools.” Colgate has created an e-commerce site for its new Co by Colgate line targeted at GenZ and young Millenials.
Content platforms and house-of-brands have become more aware that these ecosystem strategies are changing consumer decision making and loyalty, and are producing and executing strategies to level the playing field. These strategies desired to maintain the direct and not mediated touchpoint with the consumer, especially at the earlier stages of decision making and establishing physical proximity to the human body to access and acquire the rich and multimodal data.
ARE THE FLOODGATES OPEN? Will these content platforms or house-of-brands be the only ones to execute countermoves — via legal means or mobilizing consumers — against these ecosystems? No. We will see more disintermediation moves — like Spotify or Epic Games — that will to sustain the brands’ direct touch with the consumers. But, what does a widely adopted disintermediation mean for consumers? How many Siris or Alexas will consumers want to engage with? Or, will they go to, for example, Unilever’s Mila search engine to specifically search for beauty products?
IS IT TOO LATE? Is it too late for these countermoves? Maybe. Controlling the top of the funnel and/or accessing the various biometric data are not and will not be enough to create ambient multimodal consumer experiences or design consumer habits/routines. Voice control or the data from that touchpoint, for example, will not be enough for Spotify to design coherent and personalized music consumption experiences in a smart home. Spotify will still need other data from Apple to understand consumer preferences, rely on Alexa to integrate that experience in the home-based routines such as dimming the lights for the mood, and/or depend on a pair of Apple Airpods to deliver that content.
These tech ecosystems derive their power and influence not necessarily from a single touchpoint — like Alexa voice or user data they scrape from Roku — but, rather their power is firmly grounded in the effective & holistic uses of cloud computing, machine learning and AI across stacked hardware, software, & platforms, what I call experience systems.
WHAT IS THE FUTURE OF THE ECOSYSTEM STRATEGY? Most big tech ecosystems are built around the home, establishing the home as a smarter system. The next stage for cocooning and platformitization will be cars — creating an ecosystem within and around the car. We see early observations that reveal how cars will be one of the hubs of smart technology, rather than an extension of smart home systems. In March 2021, SpaceX filed an application with the Federal Communications Commission (FCC) requesting to beam its Starlink internet to vehicles, not just homes. Spotify has launched its Spotify-only, voice-controlled device for the car, Car Thing to limited users in the US to control the music consumption experience in the car. This also allows Spotify to be close to the consumer data rather than being veiled by another ecosystem like Tesla, Apple or Amazon. For many consumers, the car, especially as a result of the pandemic, has become a safe, clean place that holds new meaning and hosts new marketplace performances like curbside pickups and trunk delivery.
WHAT DOES IT MEAN FOR COMPETITORS AND THE ADVERTISING INDUSTRY? These new dynamics are creating unique challenges for house-of-brands and content platform marketers, but also opening up new possibilities for platform ecosystems like Apple, Amazon and Google. The existing big tech ecosystems are making aggressive moves to sustain their power and to control monetization models and advertising revenues. Although Apple emphasizes the privacy concerns to explain its recent App Tracking Transparency move, the update also enables Apple to contain ad revenues within its own ecosystem; thus, getting the most out of the billion-dollar ad game where Facebook, Google and Amazon are major players. The fact that this particular update is causing a big dispute between Facebook and Apple due to Facebook’s concern about the future of its own ad business — Facebook encouraged its iOS 14.5 users to enable tracking so its apps remain ‘free of charge’ — reveals where the real battlefield is being waged. This is not about privacy. It is positioned as such due to the sensitivities and faultlines in the Zeitgeist. But, let’s be clear, this is a battle over advertising dollars.