The Internet Value Chain

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THE INTERNET VALUE CHAIN

growing rapidly. This trend is underpinned by the growth

of mobile internet, which lends itself to short-form,

small-screen consumption.

The third has been the need to continue to grow to

maintain, let alone gain, position. The largest US player

in 1999, AOL with 46 million unique visitors, would not

have been on the top 15 US list in 2009. In 2009 AOL had

99 million unique visitors in the United States, which

would have been outside the top 15 in 2015. As internet

penetration approaches 100 per cent in the United

States and other developed markets, the biggest

companies are shifting from an acquisition-focused

strategy to one based on creating multiple touchpoints

and increasing users’ engagement and share of time

spent online. This is reflected by the diversification of

their activities.

Today, the largest internet companies operate across the

internet value chain (see figure 12). Google operates in

28 of the 37 categories across the internet value chain,

Apple in 22, Amazon in 19, and Facebook in 14. The

Chinese players are equally diversified: Baidu operates in

21 categories, with Alibaba and Tencent both in 17. The

first wave of expansion has generally been from their

core business into different online services and the

advertising and payments categories of enabling

technology and services. This has been followed by

entering selected user interface categories through

organic and inorganic moves. More recently there has

been a further move into connectivity and content

rights. Google has announced Project Loon, which will

use high-altitude balloons to beam connectivity to the

ground, while Facebook recently entered into a

partnership with satellite operator Eutelsat, with the

same goal of providing affordable connectivity to the

mass market. Amazon and Google YouTube are

investing in original programming, as are Tencent,

Alibaba, and Baidu.

Figure 12

Major players’ presence across the internet value chain

Number of categories where present in respective segment

‘Home’ category

Content

rights

(2 categories)

Online

services

(13 categories)

Enabling

technology

and services

(6 categories)

Connectivity

(3 categories)

User

interface

(13 categories)

Total

categories

where present

Google

Apple

Baidu

Amazon

Alibaba

Tencent

Facebook

Search

Smartphones

Search

E-retail

E-retail

Social

Social

1

1

11 4 3 9

28

7 3 1

11 22

1 11 4 1

4

21

7 5 1 5

19

1 10 2 4

17

1 8 3 5

17

1 7

3 1

2

14

Source: A.T. Kearney analysis

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