Read the case study "Google, Apple, and Facebook Struggle for Your Internet Experience" on page 255. Then discuss the advantages and disadvantages for each company.

BUSINESS PROBLEM-SOLVING CASE Google, Apple, and Facebook Battle for Your Internet Experience Apple has a legacy of innovation on its side. In Three Internet titans Google, Apple, and 2011, it unveiled the potentially market disrupting Facebook are in an epic struggle to dominate your Siri (Speech Interpretation and Recognition Internet experience, and caught in the crossfire Interface), a combination searchavigation tool are search, music, video, and other media, along and personal assistant. Siri promises personalized with the devices you use for all these things, cloud recommendations that improve as it gains user computing, and a host of other issues that are likely familiarity all from a verbal command. Customer central to your life. The prize is a projected $400 billion retail e-commerce marketplace in which the response has been mixed. Google countered by major access device will be a smartphone or tablet quickly releasing its own Al tool, Google Now. computer. Google quickly attracted attention also for its Mobile devices with advanced functionality and unrivaled ability to return relevant search results. ubiquitous Internet access are rapidly overtaking It continues to be the world's leading search engine, traditional desktop machines as the most popular accounting for three-quarters of the world's web form of computing. Today, people spend more than searches. About 90 percent of Google's revenue half their time online using mobile devices that take comes from ads, most of that on its search engine advantage of a growing cloud of computing capacity. Google dominates online advertising It's no surprise, then, that today's tech titans are so In 2005, Google had purchased the Android aggressively battling for control of this brave new open source mobile operating system and founded mobile world. the Open Handset Alliance to compete in mobile Apple, which started as a personal computer com computing. Google provides Android at no cost pany, quickly expanded into software and consumer to smartphone manufacturers, and many manu. electronics. Since upending the music industry with facturers have adopted Android as a standard. In its MP3 player, the iPod, and the iTunes digital music contrast, Apple only allows its own devices to use service longer than a decade ago, Apple took mobile its proprietary operating system, and the millions computing by storm with the iPhone, iPod Touch, of apps it sells can only run on Apple products. and iPad. Apple wants to be the computing platform Since the first Android phone hit the market in of choice for the Internet. Apple is the leader in mobile software applications, thanks to the popular October 2008, free, publicly available source code and permissive licensing have propelled Android to ity of the App Store, with more than 1.2 million apps for mobile and tablet devices. Applications greatly the top place in mobile operating systems. Android enrich the experience of using a mobile device, and is deployed on 81 percent of smartphones worldwide whoever creates the most appealing set of devices and is the most common operating system for and applications will derive a significant competitive tablets. advantage over rival companies. Apps are the new The purchase of Motorola Mobility Holdings for equivalent of the traditional browser. Apple still S12.5 billion in August 2011 provided Google with leads in this area and as a major provider of mobile 17,000 patents, with another 7,000 in the pipeline to computing devices that access the Internet help defend Android from the smartphone patent Although Apple has a number of advantages in the platforms with its Nexus 7 tablet, an Android mobile wars. Google is also innovating in mobile hardware car dashboard system, and plans for an inexpensive mobile phone that uses both existing cellular and battle for mobile supremacy, it faces strong competi tion in both the United States and in developing markets such as China from inexpensive Chinese smartphones and from Samsung Android phones that have larger screens and lower prices. The iPhone 6 comes in a large screen version to compete directly with Samsung. Apple has on its side a history of market-moving innovations and a loyal user base that has steadily grown and is very likely to buy future products and offerings Wi-Fi networks. Google is always looking for new ways to con- nect more people to the Internet, including fleets of little satellites, solar powered drones that would fly around the world, and balloons that float high into the stratosphere, beaning the Internet to those below. Such devices in the sky will help Google spread the Internet to the roughly 4 billion people Chapter Telecommunicabon, HEILTRLI M U . in undeveloped areas who currently lack Internet access. The more people who are connected directly to Google, the more ads it can show them. Whoever has the dominant smartphone operat- ing system will have control over the apps where smartphone users spend most of their time and built-in channels for serving ads to mobile devices, for example, on Google-owned YouTube and the Google Maps app. Although Google search technol- ogy can't easily navigate the mobile apps where users are spending most of their time, Google is starting to index the content inside mobile apps and provide links pointing to that content featured in Google's search results on smartphones. Because about half of Google searches are from mobile devices, the company revised its search algorithms to add mobile friendliness to the 200 or so factors it uses to rank websites on its search engine. This favors sites that look good on smartphone screens. The cost-per-click paid for mobile ads has trailed desktop ads. Google instituted a design change to merge PC ads and mobile ads and present a cleaner mobile search page. Users were increasingly consenting to click mobile ads and shop from their smartphones and tablets. Both changes began to strengthen overall ad prices. To blunt Facebook's competition as an advertising vehicle, Google launched Google+ in mid-2011, its fourth foray into social networking. With 300 mil lion active users as of early 2015, Google+ has sur passed Twitter. Rather than a single website, Google hopes to meld the social experience across all of its sites. Google+ has morphed from a social network into a gateway to Google's package of services such as Gmail, Google Docs, Google+ network, maps, hotel reservations, and more Google faces other headwinds. The European Union is investigating whether Google is using its dominant market share in search and smartphone operating systems to gain an unfair advantage over competitors. On April 15, 2015, the European Commission issued a set of formal charges accusing Google of highlighting its own shopping services in response to search queries ahead of links to similar services run by rivals. Such conduct infringes EU antitrust rules because it stilles competition and harms consumers. The commission also opened a formal investigation of anticompetitive agreements regarding Google's Android operating system for mobile phones, focusing on whether Google forces smartphone makers that use Android to install many of Google's own apps and to set some, includ. ing Google Search Staff members at the U.S. Federal Trade Commission (FTC) in 2012 found that Google favored its own shopping, travel, and local services in general search results, even when some of those products weren't most relevant to users. FTC Commissioners later voted unanimously not to charge Google with antitrust violations. i r Google can't effectively rebut the EU charges and loses in court, the EU can fine Google up to 10 percent of its global annual revenue and impose conditions on how it does business in Europe. That could deal a serious blow to Google's business performance and hurt Google's operations in other jurisdictions. Facebook is the world's largest social networking service, with more than 1.4 billion monthly active users. People use Facebook to stay connected with their friends and family and to express what matters most to them. Facebook Platform enables developers to build applications and websites that integrate with Facebook to reach its global network of users and build personalized and social products. Facebook has persistently worked on ways to con- vert its popularity and trove of user data into adver tising dollars, with the expectation that these dollars will increasingly come from mobile smartphones and tablets. More than 890 million people around the world used Facebook on an average day, and three-quarters of them log on using mobile devices. About 1.2 billion people access the service on mobile devices. Facebook ads allow companies to target its users based on their real identities and expressed interests rather than educated guesses derived from web-browsing habits and other online behavior. Mobile advertising accounts for about 60 percent of Facebook's revenue, with many of those ads highly targeted by age, gender, and other demo- graphics. Facebook is now a serious competitor of Google in the mobile ad market and is even trying to compete with emerging mobile platforms, having purchased Oculus VR Inc., a maker of virtual reality goggles, for $2 billion. In March 2013, Facebook overhauled its home page to increase the size of both photos and links and allow users to create topical streams. This move gives advertisers more opportunities and more inter- est information with which to target a market. A personalized newspaper with, for example, an op-ed feed featuring followed commentary pages, a sports section tailored to preferred events and teams, and a hometown news feed will swell Facebook's database with useful tidbits. Next, Facebook introduced a mobile application suite to replace the typical