Google and Meta’s online advertising market share, which had established monopoly systems in the U.S. search engine and social media markets, fell below 50% for the first time in eight years. The big tech industry, whose monopoly system collapsed last year, turned to tight management for the first time in decades. This year is expected to be the most difficult year for the big tech industry as anti-trust regulations targeting them are spreading around the world amid sluggish main business. Last year, Google and Meta’s share in the U.S. digital advertising market fell below 50% for the first time since 2014. It was analyzed that Google and Meta’s share in the digital market has decreased due to the rapid growth of startups such as TikTok of ByteDance in China.
Amid concerns over a recession, “austerity” = Big Tech’s performance continued to soar for two years from 2020 due to the COVID-19 pandemic. As advertising demand is concentrated online due to the spread of non-face-to-face consumption, the core business profits of big tech companies have soared. However, concerns over an economic slowdown that began last year spread, which directly hit product sales and online advertising sales.Faced with stagnant growth, Big Tech is reinforcing manpower reduction and cost reduction. Amazon announced its plan to cut 18,000 employees earlier this year, and Google’s parent company Alphabet decided to fire 15% of its employees from Verily, an affiliate of the healthcare sector. Meta reduced about 13% of its total workforce through high-intensity restructuring last year.
A site that aggregates the job cuts of tech companies (Layoffs).According to fyi), the number of job cuts by technology companies reached 170,000 last year. The cuts that have continued since last year are expected to be a prelude to stronger restructuring. Analysts say that the prolonged Russia-Ukraine war and the subsequent continued global inflation and interest rate hikes will hamper the global economy. “The days when big tech makes money easily are over,” he said adding, “We will go through difficult times such as the ‘strongest fifth-class storm’.” “Technology companies that used to spend money like rock stars in the 1980s are now spending like the elderly within a fixed budget,” he stressed.
◆ All-round regulatory pressure in the U.S. and Europe = The global “regulatory crossfire” to prevent Big Tech from monopolizing is the biggest threat to Big Tech’s business this year. In the U.S., President Joe Biden took the lead in calling for bipartisan cooperation to reform big tech and prepare regulatory bills. Since this year, the House of Representatives, which has legislative and budget authority, has been handed over to the Republican Party, expanding regulations on major big-tech regulations that have been pursued so far, fearing that they could be put on hold.Congress and politics are also pushing for an “anti-trust package bill” that bans preferential treatment of its services on platforms operated by Big Tech such as Google, Apple, Amazon, Meta, and Microsoft, and a “21st Century anti-trust bill” that puts the brakes on mergers and acquisitions (M&A) attempts to exercise dominant power in certain markets or remove competitors. However, as the controversy continues over the level and scope of regulations, it has failed to pass the threshold of the National Assembly and is pending.
It is expected that regulations from Europe will also be tightened this year. Through the Digital Market Act (DMA) and the Digital Service Act (DSA), which were passed last year, EU regulators plan to increase the level of offensive to eradicate anti-competitive behavior of Big Tech and manage content. Big Tech giants Apple and Meta have been fined a large amount in Europe since the beginning of the new year. Apple was fined 8 million euros (about 10.8 billion won) by the French personal information protection and supervision body CNIL on the 4th for using personal information for advertisements without user consent. Meta was also fined 390 million euros by the European Union for using user information for targeted advertisements.In particular, it is also threatening that Germany, which is considered to have a stronger legal network than the U.S. and the U.K. in anti-trust regulations, is starting to regulate big tech with the introduction of new bills. Foreign media warned that Article 19a of the German Competition Act, which Germany has been in effect since January 2021, could be stronger than the EU’s DMA and DSA. WSJ predicted that the EU’s move could spread to other countries such as India, which is considering similar legislation, leading to a trend of strengthening regulations on big tech.
H.S HA
ASIA JOURNAL
