[Series] Big tech ecosystem strategies: Evolving dynamics and countermoves (Part 1)

May 4th, 2021 | Behice Ilhan

Apple recently released one of its most anticipated software updates, App Tracking Transparency, which gives more control to Apple users over how their data is shared. Apple grounded this contentious decision within the company’s narrative of a commitment to privacy. Around the same time, Spotify announced its “Hey Spotify” feature. Many interpreted this addition as the final launch of another voice-command experience that was in the works since early 2019.

Analyzing these two seemingly disparate launches, and connecting the dots with some other recent news, reveals:

  1. The evolving ecosystem strategies adopted, maintained, and sustained by big tech companies like Amazon, Google, and Apple.
  2. The countermove strategies and tactics devised and executed by the content platforms like Spotify, Roku, or Epic Games against these ecosystem strategies of the big tech.

In this two-part series, we take a comprehensive look at funnel strategies adopted by big tech ecosystems, evaluate the countermove strategies and tactics against them, and analyze what it all means for competitors and the wider marketing/advertising industry.

Ecosystem strategies

A few tech and digital platform companies like Google, Apple and Amazon desire to create ecosystems around their brands. These ecosystems frame consumer choice and habitual purchase behavior as they dominate the entire path to purchase, from awareness (upper funnel) to decision (lower funnel). Consumers’ choice of content providers, products, financial and telecom services, etc. is shaped and bound by their compatibility with, or order-ability within, these ecosystems.

The big tech ecosystem strategies particularly concentrate on managing the top of the funnel – the beginning of the consumer decision-making journey – and do this by getting as close to the consumer as possible in order to be the first touchpoint and guide the consumer’s journey through the platform. We see two main strategies to control the upper funnel: (1) establishing a hub for search and (2) accessing biometrics data via wearables.

Establishing a hub for search
Where consumers search for products is a strategic battlefield in terms of controlling that top-of-the-funnel dominance and leveraging the search activity as a way to lead consumers deeper into the funnel within the ecosystem.

Google Search — Google’s early disruption of the search category, with cleaner aesthetics and more relevant and quick results, has ensured a global dominance and competitive edge for a long time. But, is Google still the first point of contact for consumers to start their purchase journeys? Is it the default search platform for consumers?

Amazon — According to recent reports, some consumers say Amazon is their default search engine, especially for particular categories. The back-and-forth usage of Google and Amazon as search tools varies by age, Prime membership status and frequency of Prime membership usage.

Accessing biometrics via wearables
Technology is getting smaller and closer to the body. If you need convincing of that, trace the trail of the phone from the street corner to your home, your car, your bag, your pocket and now on your wrist and in your ear (and soon as part of your vision delivered by mixed reality goggles). As technology gets closer to the body, the types (eg sweat, heart rate, sleep, iris, fingerprint), modality (eg voice, haptics, touch), and intimacy (eg on the body, in the body) of the data it collects expands.

Alexa — Via Alexa, Amazon has become closer to consumers compared to the proximity of a search engine. Consumer-to-machine (C2M) engagement via voice is comparably frictionless interactions for consumers rather than going to a computer or mobile device and typing into a search bar. Amazon makes this particular touchpoint more strategic via Alexa Custom Assistant by granting brands access to Alexa’s framework and, as a result, strengthening their upper funnel dominance. This custom assistant allows brands to create their own assistants with their featured voices, custom wake words, and other capabilities.

Amazon Halo — Aside from seeking to converge the healthcare and tech ecosystems, Amazon Halo is an effort to get closer to the human body to be able to integrate the physiological and emotional functions of the body into the Amazon ecosystem – without a screen like its counterparts Apple iWatch and Google FitBit.

These strategies are designed to engage consumers at the early phases of their consumer journey, to facilitate the decision-making processes and secure loyalty to their ecosystems. Proximity to the body helps these platforms access and acquire rich and layered consumer profiles and use data across devices, modalities, and touchpoints.

Now, let’s see how the other brands and content platforms are reacting to these data and upper-funnel dominance strategies.

Countermove strategies

Content platforms like Spotify, Roku, or Epic Games or Houses of Brands like Colgate-Palmolive, Procter & Gamble (P&G) or Unilever have realized that they are negatively impacted by the intensifying and cocooning ecosystem strategies of big tech platforms. This discernment pushed these platforms (although a bit late) to devise and execute some countermove strategies.

Hey Spotify [countermove to Siri/Alexa] — Spotify has launched a “new voice-controlled experience” called Hey Spotify to make it easier for Spotify users to “start, navigate, and search for their music and podcasts without using their hands.” Siri’s default music app is Apple Music and its capabilities to interact with Spotify are very limited. Spotify’s experience is bound by and cocooned within Apple’s or other tech ecosystems. With this new voice-activation feature, Spotify can directly touch the consumer, acquire voice data and free itself of constraints of Siri- and Alexa-driven experiences.

Roku [counternove to YouTube TV/Google] — As the distribution agreement between Google and Roku expired in April 2021, Roku decided not to carry YouTube TV in its channel store due to Google’s “unfair and anti-competitive requirements.” Roku made this decision public emphasizing the underlying reasons. Roku stated that Google “manipulates search results, impacts the usage of user data, and ultimately costs the user more.” Roku repeated their commitment to their collaboration with Google and requested users to reach out to Google to “not to require sensitive search data” and “manipulate user search results.” Leveraging consumers’ awareness of and sensitivity to tech companies’ privacy transgressions, Roku is trying to control its own user experience while still leveraging the benefits of the Google ecosystem.

Epic Games [countermove to Apple] — The conflict between Apple and Epic Games dates back to August 2020 when Epic’s Fortnite game added a direct payment mechanism in violation of Apple’s rules. Apple removed the game from the AppStore and Epic filed an antitrust lawsuit against Apple for establishing a monopoly. The battle is a great example of countermoves by content platforms against the big tech. Similar to Roku, Epic wants to be on the iOS system but wants to have a bigger portion of the ad revenue of its games.

Colgate, P&G, Unilever [countermove to Google/Amazon] — Houses of Brands are among those negatively, and majorly, impacted by big tech dominating the path to purchase funnel, particularly the top of the funnel. The majority of the Houses of Brands tend to focus on mid-funnel strategies to ensure they have well-developed product lines that satisfy different segments, for example, Colgate in oral care, Unilever in personal care or P&G in detergents. The individual brands don’t really have any digital footprint at the top of the funnel (eg consumers don’t search for the brands via the brand sites). Until very recently, they instead poured their budgets into building awareness. In 2019, however, Unilever started backing Mila, a beauty search engine. A recent Washington Post article reported that P&G is working with Chinese investors to “gather iPhone data for targeted ads, a step intended to give companies a way around Apple Inc.’s new privacy tools.” Colgate has created an e-commerce site for its new Co by Colgate line targeted at GenZ and young Millenials.

Content platforms and Houses of Brands have become more aware that these ecosystem strategies are changing consumer decision making and loyalty, and are producing and executing strategies to level the playing field. These strategies desired to maintain the direct and not mediated touchpoint with the consumer, especially at the earlier stages of decision making and establishing physical proximity to the human body to access and acquire the rich and multimodal data.

To read more about big tech ecosystem strategies, the implications for brands and marketers, and what’s coming next, check out part two in this series.

Behice Ilhan

Behice Ilhan

Dr. Behice Ece Ilhan is the Senior Trend Strategist at Mintel. Behice provides futuristic perspectives and opinions on trends and their impact on the brand landscape, which she utilizes to strengthen engagement with CPG and agency clients on storytelling and positioning strategies.