Digital data is the lifeblood of companies like Google, Facebook, and Amazon that deal with customers almost completely online. They live and die on this data, using it to improve the way they interact with customers every day. Such companies can afford to run big, expensive and complex data processing operations that crunch billions of pieces of data on what their online viewers are clicking on, viewing, writing about, and purchasing.
Because they deal with much larger volumes of data than the average company (which does not do the vast majority of its customers interactions online), Google, Facebook and Amazon can do lots of experimentation with much smaller volumes of data. They can work on insufficient data sets and pre-production/test versions of systems. Then they can modify them, introduce new ones, and unleash new online innovations that keep their customers in tow.
That is how these firms have been able to monopolize their markets. Google sites had 63% share of the U.S search engine market in early 2017, according to market researcher Statista. Facebook was on track to gain 78% of the U.S. social media advertising market in 2017, according to Statista. And Amazon’s share of U.S. e-commerce sales (43.5%) is six times the next biggest player’s (eBay, at 6.8%), says eMarketer.
That brings us to the topic of artificial intelligence. To be able to use AI well, a company must have a huge amount of digital data. Small companies, including startups, can have great ideas for new businesses that run on AI. But they have a huge data disadvantage when they compete against the big digital players.
Which makes me wonder: Will AI be a big competitive advantage for the big digital companies only?