In 1977, the Eagles released “Hotel California,” a song about drugs and the effects an addiction has on people. Putting “We are all just prisoners here, of our own device” in the context of our today’s digital lifestyle we find a lot of truth. There is a reason why Google provides most of its services for free or why Amazon wants us to have an Echo in every home or why Facebook has become our directory of “friends.” What looks pretty convenient is a threat. It is a threat to the end consumers but also a threat to the established economy. And even if we have the choice to check out any time – we will never leave.
Feast of the Beasts
After already two decades, the Internet giants – speaking of Amazon, Google, Facebook, Alibaba and Baidu – are still collecting tons of data, filling their databases with information of everyone’s knowledge, opinions, recommendations, locations, movements, buying behavior, relation status, lifestyle etc. This is not a secret and nothing new. And there is no end in sight. On the contrary, almost every month, new services or devices are released to provide a better user experience, make our life more convenient and increase our dose of digital addiction.
Amazon, Google, Facebook and co. have become ubiquitous in our life. And thanks to the Internet of Things, the gap between our analog and digital life is getting smaller and smaller. After providing a massive amount of services getting us on the web-hook respectively the device-hook via smartphones and tablets, the Internet giants are going to make themselves comfortable in everyone’s home.
Smart home devices like Nest, Tado or Netatmo are just the beginning of a new breed of appliance classes that are becoming the eyes in people’s private sphere that haven’t been connected to the internet and are yet to become the grapplers of Google & co. Intelligent private assistants like Amazon Echo or Google Home have become the next evolutionary level, which can be used to control smart home devices or make our lives easier by simply using our voice. On a side note, we should use the term “intelligent” very carefully since the commands are pretty much pre-defined scripts. And frankly speaking, I don’t have the impression that neither Apple’s Siri nor Amazon’s Alexa (the Artificial Intelligence (AI) Engine behind Echo) is currently learning from my interactions.
However, this progress of technological developments shows one thing: Amazon, Google & co. find new ways to engage with us over other channels, collecting the data, information and knowledge they need to make better decisions and deliver better answers back to us. Therefore, they clearly follow one purpose. Every one of us is simply being used to train their Artificial Intelligence on a daily basis. Meaning, all the services Google & co. offer to their customers are aimed at drawing a map of the world with the data they get.
Effect on the End Consumers: Convenience in the Rat Race
End consumers basically do not have much to complain about. Following the quid pro quo principle, in particular Google and Facebook provide fancy services for free and just take data in return. And, the digital addiction plays perfectly into their hands. End consumers have checked-in into the “Hotel California.” And even if they can check-out at any time, the question is, do they want to leave?
The tragic answer to this question is no. Once one is part of this circle, it is pretty hard or impossible to leave. The reason is that everything is becoming digital. Our society will reach a point where nothing will work without digital services anymore. You could also say that someone who doesn’t exist digitally, doesn’t exist anymore. And by making the user experience even more convenient, nobody has to be a technology expert anymore. This makes entering the “Hotel California” trap even worse since the majority of our society doesn’t know how things are connected anymore – respectively doesn’t know what is really going on. Convenience in the rat race.
Bottom line, the rat race providing everyone’s data is the foundation for Google & co.’s success and their weapons against the established economy.
Effect on the (Established) Economy: Move, Change and Innovate or Die
The most sarcastic part of it is that everyone of us is supporting Google and co. against the established economy, even the established economy itself. Companies of the established economy also have become customers of the Internet giants. For a good reason. In most cases, it doesn’t make sense anymore to run your own IT infrastructure and services in own environments or it is simply too expensive to develop innovative services on your own that already have been developed by Amazon, Google and co. However, the established economy is stuck in a vicious circle. Even if they still own their data – from a legal perspective – this doesn’t mean that they exclusively own the knowledge from their data.
Data and insights deduced from data are the foundation on which the Internet giants have built big parts of their businesses. They are working with data and monetizing it. However, this is just one single piece of a big machinery of how the Internet giants work. But this is one piece that gives them the power to disrupt any current working business model of the established economy. Amazon is just one example that already has started to cut out the intermediary in every possible way. We can be sure that companies like DHL, UPS or FedEx are not going to exist in the way they are doing business today – hint: Amazon Prime Air. Furthermore, Amazon has put everything into place to become a fully end-to-end provider of goods. Digital as well as non-digital.
Speaking of Artificial Intelligence, the Internet giants are fully embracing AI. However, most leaders underestimate the effect this will have on their businesses. But at the same time, the Internet giants are heavily investing into AI. And especially the established economy is the big loser in this game.