Google and Meta Online Advertising Market Share Falls Below 50%
[Asia Economy Reporter Jo Yoo-jin] The market share of Google and Meta, which had each established monopolistic structures in the U.S. search engine and social media markets respectively, has fallen below 50% for the first time in eight years. The big tech industry, whose monopolistic structure collapsed last year, has shifted to austerity management for the first time in decades. With antitrust regulatory movements targeting them spreading worldwide amid sluggish core business performance, this year is expected to be the most challenging year for the big tech industry.
On the 15th (local time), The Wall Street Journal (WSJ), citing research firm Insider Intelligence, reported that Google and Meta's share of the U.S. digital advertising market fell below 50% for the first time since 2014. It analyzed that the rapid growth of emerging companies like China's ByteDance's TikTok led to the decline in Google and Meta's digital market share.
◆ Struggling with austerity amid recession concerns = Big tech companies experienced rapid expansion and soaring performance for two years from 2020, riding the COVID-19 pandemic. As non-face-to-face consumption expanded, advertising demand concentrated online, causing core business revenues of big tech firms to surge. However, concerns about an economic downturn that began last year dealt a direct blow to product sales and online advertising revenue.
Facing growth stagnation, big tech companies are tightening the reins on workforce reductions and cost-cutting. Amazon announced plans to cut 18,000 jobs earlier this year, and Alphabet, Google's parent company, decided to lay off 15% of employees at its healthcare subsidiary Verily. Meta reduced about 13% of its total workforce through high-intensity restructuring last year.
According to Layoffs.fyi, a site that tracks layoffs in tech companies, the scale of layoffs in tech firms reached 170,000 last year. The layoffs continuing since last year are expected to be the prelude to even more severe restructuring. The prolonged Russia-Ukraine war, ongoing global inflation, and interest rate hikes are analyzed to hamper the global economy.
Wedbush Securities analyst Dan Ives said, "The era when big tech made money easily is over," adding, "They will go through a tough period like the 'strongest grade 5 storm.'” He emphasized, "Tech companies that used to spend money like rock stars in the 1980s are now spending like elderly people within fixed budgets."
◆ Comprehensive regulatory pressure in the U.S. and Europe = The global 'regulatory crossfire' to prevent big tech monopolies is the biggest threat to big tech businesses this year. In the U.S., President Joe Biden has taken the lead in urging bipartisan cooperation to reform big tech and prepare regulatory bills. With the House of Representatives, which holds legislative and budget authority, shifting to Republican control this year, there are concerns that major big tech regulatory bills pushed so far may be stalled, prompting an expansion of regulatory efforts.
In Congress and political circles, multiple antitrust package bills are being simultaneously promoted. These include bills that ban preferential treatment of their own services on platforms operated by big tech companies such as Google, Apple, Amazon, Meta, and Microsoft, and the '21st Century Antitrust Act,' which aims to block mergers and acquisitions (M&A) attempts to exert dominant power or eliminate competitors in specific markets. However, debates over the level and scope of regulation continue, and the bills remain pending without passing the congressional hurdle.
WSJ predicted that European-origin regulations will also be strengthened this year. EU regulators plan to increase the intensity of crackdowns on big tech's anti-competitive behavior and content management through the Digital Markets Act (DMA) and Digital Services Act (DSA) passed last year. Leading big tech companies Apple and Meta have faced hefty fines in Europe since the beginning of the year. Apple was fined 8 million euros (about 10.8 billion KRW) by France's data protection authority CNIL on the 4th for using some iPhone operating systems to utilize personal information for advertising without user consent. Meta was fined 390 million euros (about 530 billion KRW) by the European Union (EU) for its use of user information in targeted advertising.
Particularly threatening is Germany, which is regarded as having a more robust legal framework for antitrust regulation than the U.S. and the U.K., is gearing up for big tech regulation with new legislation. Foreign media warned that Germany's Competition Act 'Section 19a,' effective since January 2021, could be stronger than the EU's DMA and DSA. WSJ predicted that the EU's measures could spread to other countries considering similar legislation, such as India, leading to a broader trend of strengthening regulations against big tech.
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