The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google

by Scott Galloway

In Q3 2016 results, Google had a 42 percent increase in paid clicks. However, the revenue captured (cost per click) declined 11 percent. Analysts mistook this as a negative. Declining prices are typically a reflection of loss of power in the marketplace, as no firm ever willingly drops prices. However, what we missed is that Google was able to grow revenues 23 percent that year and—here’s the key part—lower cost to advertisers by 11 percent.15 Whether you’re the New York Times or Clear Channel Outdoor, a competitor lowered its prices 11 percent. And word is it’s great at what it does and isn’t desperate at all. What if BMW was able to improve their cars dramatically each year while lowering prices 11 percent annually? The rest of the auto industry would have trouble keeping up. And, yes, the rest of the media industry, sans Facebook, is having trouble keeping up with Google. Google found $90 billion in the collection plate in 2016 and commanded $36 billion in cash flow.16 Several times Congress has debated an incremental tax on firms in sectors that appear to vastly outperform the S&P. Yet nobody has ever suggested extra taxes on Google. In many religious faiths, to not avert one’s eyes from God’s face is certain death. The same fate would probably befall the career of any congressman attempting to interfere with Google’s progress. Similar to other horsemen, Google tends to drive prices down, not up. Most consumer firms push in the other direction. They spend a lot of time...

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