Despite the Internet being hailed as the great equalizer of all things a study of the U.S. online market shows that just five companies are controlling the majority share of all online monetary transactions.
The Russell 3000 Index, which measures the performance of the largest 3,000 U.S. companies, shows Internet giants Alphabet, Amazon and Facebook have 70% of the industry’s total market value of $1.5 trillion, and that Internet profit is even more concentrated than revenue is.
Google subsidiary Alphabet has taken in $16.4 billion in net profit over the last year, accounting for two-thirds of the aggregate net income collected by all Internet companies. Facebook is trailing Alphabet, claiming 11 percent of the industry’s total net income.
In comparison, Amazon, which many associate as the online commerce giant, shows its profits over the last 12 months are just 1.3% of the industry’s total.
Investors looking to profit from the Internet and technology revolution, appear to be sticking to the big three that just keep on keeping on. Because of this smaller players just can not get a foothold. Online coupon provider, Groupon, which even at its height was just a smallish Internet company, has faded as the online leaders get even more dominant. The Russell 3000 ranks Groupon as the 11th largest Internet company by revenue, but its shares have lost two-thirds of their value over the last year.
Even Yahoo, which has the public appearance of being an Internet titan, only manages to bring in 1.6 percent of the Internet industry’s revenue, while online streaming service Netflix accounted for only 2.1 percent.
It must be pointed out the Russell 3000 only takes into consideration publicly traded companies, so there are other broader technology companies that are up there in online business but are not considered Internet companies. This includes Microsoft which is a major rival to Amazon for cloud services for businesses. It’s Bing search engine has 20 percent U.S.. market share.
With the big three growing, experts say they can almost be considered a cartel which can easily destroy any small companies that stand in their way of complete internet dominance.