What the Breakup of Big Tech Could Mean for Marketing
April 24, 2019
As data privacy issues continue to spiral out of control, there’s a call for regulation to protect user privacy.
An earthquake could soon shake the marketing landscape. If you listen to many of the 2020 presidential candidates, concerns about privacy, and the potentially damaging effects of social media and search engines on democracy, could lead to the breakup of big tech.
While this outcome may seem far-fetched, it’s worth remembering that in the late 19th and early 20th century, successive presidents came together with congress to pass antitrust legislation that fractured a company perhaps even more powerful than Google or Facebook: Standard Oil. Today, you only need to look across the pond at the war European governments are waging against big tech to understand where the battle lines might be drawn here in America.
So what would marketing look like in this potential future? And how should companies and brands prepare for the possibility?
How to Break Up Big Tech
First of all, even if the government got up the nerve to pursue antitrust lawsuits against big tech—and we’re talking mostly about Google, Facebook, and Amazon—there is no guarantee they would be successful. We only have to look back at the government’s previous failed attempts to breakup perceived tech monopolies: the lawsuit against IBM that was filed in 1969 and ended without resolution in the 1980s, and the one against Microsoft that began in the 1990s but dragged into the 2000s. Both cases were eventually dropped after years of courtroom battles, and after millions of taxpayer dollars spent.
The point is, there is legal and public momentum building towards a reckoning, whether that day comes in 2020 or in the years beyond.
Both cases also highlighted the central problem for bringing any antitrust lawsuit: most judges read antitrust laws narrowly as protecting consumers against the inflated costs that can result from a monopoly. In the cases of IBM and Microsoft, that argument could never be convincingly made. The same goes for the current crop of tech behemoths, and perhaps even more so—Facebook and Google are free, and Amazon offers consumers even lower prices than traditional retail.
However, there might be other, more fruitful paths for big tech’s opponents to explore. In Adweek, Kelsey Sutton points out that the Federal Trade Commission, under orders from a more aggressive administration, could pursue legal action based on “unfair methods of competition” or “unfair or deceptive acts or practices.” In fact, the FTC charged Facebook in 2011 for violating a FTC consent decree. Sutton also suggests that individual states could bring lawsuits against big tech companies for violating their own state antitrust laws, or for violating present, or future, data privacy laws. The point is, there is legal and public momentum building towards a reckoning, whether that day comes in 2020 or in the years beyond.
The Future Marketing Landscape
Let’s say, for example, that Facebook is unable to escape the death spiral of weekly revelations of privacy abuses, and finally the government steps in—what would such as intervention look like? And what would the resulting marketing landscape look like?
One can assume the government would order Facebook to spin off Instagram and WhatsApp. This act alone would instantly transform the data landscape. By losing the ability to combine data between platforms, Facebook would become a “walled garden,” meaning the user data would be confined to only Facebook users, reducing the granularity currently available for ad targeting on Facebook. Overall, this would make media spends less accurate, and waste much more apparent.
The same remedy could be applied to any of the tech giants. Google could be forced to spin off YouTube, its cloud storage, or any or all of its healthcare or energy verticals. Amazon, according to Elizabeth Warren’s plan, would be forced to sell Whole Foods and Zappos, and it would no longer be able to sell its own private-label products on its own platform. The upshot of these moves would be this: the more big tech companies are forced to shrink or limit their footprints, the less data they could accumulate about users. Providing data on YouTube activity is a lot less valuable than taking that YouTube data and combining it with data from Waymo, Verily, and Google Search in order to gain a much more precise and holistic picture of consumer habits.
In an effort to get ahead of this possible future, Mark Zuckerberg recently announced his vision for the future of Facebook: merging Facebook Messenger with Instagram and WhatsApp. The stated goal of this move, according to Zuckerberg, is to create “a simpler platform that’s focused on privacy first.” This new cross-platform messaging platform would feature end-to-end encryption, which would be made possible by the unification of the back-end technical structures of the apps. While they would remain stand-alone apps to users, they would essentially share the same roots, allowing for greater (theoretical) security, and also for greater data collection. This would break the promise Zuckerberg made to European regulators to keep WhatsApp separate from Facebook, at least in terms of what really matters when it comes to data privacy.
Providing data on YouTube activity is a lot less valuable than taking that YouTube data and combining it with data from Waymo, Verily, and Google Search in order to gain a much more precise and holistic picture of consumer habits.
In a recent piece in Wired, Nicholas Thompson makes clear what Facebook’s real play is: “Bringing all those platforms together into something new.” This move would make it harder to break up the pieces of Facebook if they all merged into the same entity.
What Brands Should Be Doing Now
If the big tech breakup does happen, the new landscape would look a lot like marketing circa 2010. Owned media would be a primary focus. Brands would still be able to tap into social networks, but e-commerce ads would be much less efficient because brands would no longer have the ability to hyper-target consumers as they can today. Thus, brands would want to run more lead generation ads to curate their own primary customer data. Website visitor data would once again become all-important. Basically, brands would have to do the hard work of understanding their audiences as deeply as possible instead of relying on analytics and cross-channel user metrics from Facebook or Google.
At Britton Marketing & Design Group, we have years of experience working with home goods and fashion brands, especially those purchased primarily by women, so we don’t have to rely only on data to know how to market a brand’s products.
For marketers, old school activation tactics, such as direct mail, could once again present a higher ROI than the less efficient version of banner ads. Brands would have to rely on marketers that offer channel-specific expertise instead of agencies that have become do-it-all, one-stop marketing shops. Consent-based activation could once again become the primary way brands get in front of their consumers—using a brand’s in-house primary data, marketers would help brands target existing consumers, which wouldn’t involve the waste and fraud that are so prevalent today. At Britton Marketing & Design Group, we have years of experience working with home goods and fashion brands, especially those purchased primarily by women, so we don’t have to rely only on data to know how to market a brand’s products.
We also have deep knowledge and an institutional understanding of the consumer segments that welcome brands such as Pyrex, Arhaus, Peter Millar, Vera Bradley, and Dutch Boy into their homes. And we specialize in marketing to what we call the New American Middle, a massive and influential group of consumers that base their purchases on values more complex than just a price tag or a glossy ad campaign.
Beyond this expertise, we just don’t believe in the guesswork inherent in many digital agencies. Instead, we help brands leverage their own primary data to get meaningful messages in front of their consumers. At BMDG, we are ready for the future. Are you?
Imagery: Unsplash, Adweek
If your brand is trying to figure out how to take back your valuable consumer data from increasingly untrustworthy social media companies, contact BMDG and we’ll start a conversation about how to put your brand’s destiny back in your hands.