Google and Facebook: voracious giants with the power to create the future

The web’s biggest consumer companies make the bulk of their incomes, and have built up vast assets, from targeted advertising. It accounts for around 90% of Facebook’s revenue and much the same for Google. By supporting a vast range of services that variously offer search, chat, email, file storage, video and photo-sharing, they can track every nuance of online activity, preference and behaviour, targeting and adapting advertising and services.

Yet with such a simple and lucrative core business, Facebook and Google are investing significant sums in new, exploratory and seemingly unrelated technologies. Facebook astonished the industry with its $2bn acquisition of Oculus Rift, a promising but niche and untested virtual reality headset. Google X, the company’s notionally secretive experimental wing, has bought 14 specialist startups since March 2013, covering robotics, machine learning and gesture recognition, but has also been developing Google’s self-driving car project, the augmented reality Google Glass headset and Project Loon, which is developing ways of using a network of balloons in the stratosphere to bring internet connectivity to developing regions. Why?

First, these firms have vast resources at their disposal: the intellectual prowess of engineers and scientists, and the financial means. Google has $126bn in assets; Facebook $24bn. Shareholders expect a diversification of revenue streams to make the company less vulnerable to changes in consumer behaviour. Investing in new products gives insight into possible trends and, at the scale of Google and Facebook, with at least a billion users every month, introducing even a trial version can influence consumer behaviour by pushing out a service to a vast audience.

Google was once confidently described as an advertising company, but its business now could be seen as disruption, using its vast size, network power and technical approach to challenge and often undermine. Subsidised by its core advertising revenue, Google can afford to ignore existing business models. Academia and book publishing have been challenged by its programme to scan millions of books, in and out of print. Telecoms firms in the developing world are challenged by its wacky internet-connectivity balloons. Mapping firms by its online maps. The car industry by self-driving cars. News publishers by Google’s scraping of and linking to their content.

Part of the motivation is to understand and predict changes in consumer behaviour. The shift to mobile internet was a major change for most consumers and meant websites redesigning their sites. Facebook, which was slightly caught out by the speed at which consumers moved away from desktop, says 703 million of its 864 million daily users now access the site on mobile. With Oculus Rift, Facebook wants to pre-empt the next wave of consumer activity. Oculus will, it hopes, give clues about how immersive technology could be used to drop users into a room with animated friends and family members. It might sound dystopian, but Oculus is a powerful and compelling technology to try – and far more rewarding than a glitchy long-distance Skype call.

Despite technological innovation, no one entity can yet claim to see the future. But with their vast oversight of consumer behaviour and influence in rolling out new services, today’s technology corporates arguably do more to determine the future than any other organisations on Earth.

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