Google recently just acquired Fitbit, a company who pioneering the fitness tracker in the U.S. Google poured funds 2,1 billion USD (approximately 23 trillion IDR) to perform the acquisition.
Fitbit which was established since 2007 had become one of the companies major in their fields, other than its rival Garmin and Jawbone. While Google recently began to enter into the scope of fitness tracking around the year 2014.
In this scope Google just supports OS or operating system. But not with fitness tracker such as smartwatch. Special OS that Google have on smartwatch is given the name Wear OS. Until now, some smartwatches run this OS like; Huawei, LG, Mobvoi , and Fossil.
Under the main company Alphabet, the acquisition of Fitbit became one of the most expensive acquisitions. In June 2019, the Alphabet also have bought Looker, a platform of processing big data, for $ 2,6 billion USD. The strategy of mergers and acquisitions (M&A) Google, below the Alphabet, when it contains 230 companies stub and services.
Not just Google, Facebook also can be big and powerful as the model M&A’s. At least there already existing 79 companies and services are bought up. With the company’s pilot who already popular also purchased by Facebook. These include Instagram in 2012 (1 billion USD) and WhatsApp in 2014 (19 billion USD). With the M&A value some services are not announced to the public.
Amazon strategic style M&A style Amazon was quite significant. Amazon Web Service (AWS) gets the largest share of internet infrastructure service providers, which is 33%. Compared with Microsoft which amounted to 13%, and Google are pretty with only 5%.
Amazon’s most popular purchase was when they bought Goodreads in 2013 for 1 million USD. And years ago, Amazon bought quite expensive services and tools scan security Ring worth 839 million USD.
If a startup company used as part of Google, Facebook, or Amazon it would be fun. Because they can get privileged under big company, and markets globally. Ideals from ideation to scale-up also can become a reality. Startup can grow according to the desired concept.
Despite the fact that many startup that entered into the kill zone. Kill zone could be interpreted as a destroy competitor by see their potential and acquired them . Another strategy is for large tech companies to copy features, services, or startup access because of a minimal budget.
The venture capitalist companies pioneering quite worried to observe the kill zone. Because if their startup will be acquired by a large tech company. They could have bargained for low startups. If not, then consequently access to the infrastructure and access to digital is restricted.
Some examples of M&A that intend to tackle rivals of big tech companies often occur. Purchase startup TBH, Instagram competitor by Facebook rarely heard publicly. There is also the VPN Onavo application which is suspected to be spyware by iOS. And the dimming of the Oculus Rift VR product that Facebook bought last 2014.
Google also turns off the product/service after the M&A model is done. Some startups have been entered in the list of Google Graveyard among others: BumpTop, Fix Cloud, Rebang (specifically China), Fabric, Tez (specifically India), etc. Although in this list, there are also many Google products that end up sinking like G+ and Goggles.
Amazon retail giant is also doing M&A tactics in the kill zone style. The service shopping Quidsi who purchased 545 million USD in 2010. Closed by Amazon in 2017. The similiar fate experienced by Endless.com (2012) and then with Myhabit.com (2016).
With only a few companies technology great master of infrastructure, services, and protection. It could certainly be the case of monopoly or the concept of antitrust. Where consumers will become dependent on them. Changes to cost, services, and access are also referred to and returned to their power as market authorities.
The concentration of big economic companies techno is also accumulating politics power. For example, Facebook decision that not prohibit advertising campaign politics in their platform. Although Facebook movement is resisted by the Senate and members of parliament of U.S. Due considered creating propaganda of disinformation like last 2016 election.
European Union overwhelmed apply the rules as GDPR were not impacted significantly. Fines 1,5 billion EUR by European Union parliamentary on the practice of antitrust AdSense takes time 10 years more to be completed. Being billions of fine is only a fraction of Google’s income in the span of 10 years.
Amazon has the market and the strength of the economy major in the U.S. It is triggered predatory pricing or game price to tackle the price of competitors. Whereas in the year 2017, Amazon mastered the 46% share of e-commerce in the U.S. What happens is, Amazon dominate the market instead of government of U.S. Or is global monopoly of AWS in the service cloud-computing as example.
Startup worried when they want to scaling-up or widening their reach was overshadowed by the power of large companies. Being the investor is not able to do much. And they may be looking for safety by waiting for the return of the invested. The government in this case has not yet regulated many kill zones whose domino effect is create monopoly.
The concept of antitrust or monopoly trade is not a new term in economy. Antitrust is the law or regulation against trade habits that degrades competition or is considered unfair. The term antitrust is taken from United States law that originally created to combat cartel business. Cartels are an independent producer group whose aim is to set prices, to limit supply and competition.
Based on anti-monopoly law, cartels are prohibited in almost all countries. Antitrust laws do this by prohibiting monopoly, prohibiting unfair competition, and eliminating price discrimination and collusion. They also protect competition by blocking mergers that will allow a single company to dominate the market.
Another goal of antitrust policy is to protect the welfare of consumers who commit fraud and are unjust. The original antitrust law was intended primarily to maintain competition as if consumers would be protected during strong competition.
The next goal of the antitrust law is to protect small, independent business firms from economic pressures exerted by large business competition. The antitrust laws prohibit competitive prices, the practice of selling under the cost of producers to drive rivals out of business.
In the United States, a monopoly policy has been established by the Sherman Antitrust Act of 1890. This contract or conspiracy is prohibited because it impedes trade or, in the words of further action, to monopolize.
Kill zone of a startup that has been and is being going on into the phenomenon of ice mountain. Because of the concentration of economic and political are central on Google, Facebook, and Amazon right now is difficult to avoid. Finally so many parties are dependent on this giant technology company.