Google, Apple, Facebook and Amazon: Why is the business model of the "GAFA Group" questioned?

These are the big four, the Internet giants, digital imperialism at its best. And they are part of our everyday life.

Google

,

Apple

,

Facebook

and

Amazon

(GAFA) dominate the technology market although this may change soon. The question is how.

The US government is currently examining the power of its leading technology. That is why he has just announced a large-scale survey, which will be prepared by the Federal Trade Commission and the Ministry of Justice, during which he will collect the testimony of the leaders of the four companies and will ask politicians to review internal reports.

He will focus on the idea that "

Internet

It's broken, "said David Cicilline, chairman of the panel of experts on competition in the House of Representatives, during a press conference.

This is the first major investigation of this type conducted under the Donald Trump administration. And this happens at a key moment.

Although the GAFA Group's shares have declined since the announcement of the new Monday, the wave of criticism of privacy breaches, misinformation and anticompetitive practices continues to intensify.

Facebook is accused of having bought and copied its rivals (in addition to spreading fake news); Amazon, monopolize sales on the Internet and use "spy" speakers; on Google, to filter their own ads in the search engine; and Apple, being a monopoly, what its director Tom Cook categorically denies.

But how does the GAFA Group really work and how has it accumulated so much power?

The term "GAFA", although little known outside the field of technology, is not new.

"This acronym stands for the four major high-tech companies that influence and dominate the world," said American technology writer and consultant John R. Levine in the French edition (2014) of his famed best-ever seller, Internet for dummies ("Internet for dummies"). The term was beginning to be known in the European country.

"They are the subject of criticism, especially for a sensitive topic: their very particular approach to taxation," said Levine at the time, referring to concepts such as "tax evasion" and "
its ability to pay taxes almost non-existent ".

It does not seem that this question has changed too much.

Washington's next survey of the Silicon Valley giants is to point out that they have to pay additional royalties.

"Too powerful"

"One of the things that everyone is talking about today is the platforms, which connect those who need something with those who have something on the Internet, and that is precisely the business model of the GAFA. " Chris Skinner, expert in FinTech (Financial Technology) and author of Digital Human, the fourth generation of humanity ("The Human Digital: The Fourth Revolution of Humanity," 2018), told BBC World.

"For example, Facebook connects those who have content with those who have media, and Google, those who have questions with people who have answers," adds Skinner.

"This model becomes incredibly powerful."

That's because, he says, "if you manage to create a platform, you can take advantage of it and reduce cost margins and control."

"This is the starting point for federal investigations, which wonder if these organizations are now too powerful."

The recent launch of Apple's first credit card, which indicates that it does not use your data, or the digital currency that Facebook is expected to launch this month is testament to its economic strength. And, according to Skinner, it also reveals an "intense struggle for privacy" between Apple and Facebook.

The Washington lobby

In the European Union, they are more and more
more fines to Google, Apple, Facebook or Amazon for violating the privacy of their customers.

However, in the United States, this has not happened as often. The explanation, says Skinner, is the lobbying system in Washington.

"Internet companies have invested millions of dollars in lobbying in Washington, which has allowed them to avoid antitrust measures," Skinner says.

"It is very interesting to see how the Ministry of Justice is currently discussing the idea of ​​a possible break-up or investigation," he added.

"This lobbying has been so powerful that for 25 years we have never seen anything like it."

BAT, GAFA of China

But the GAFA phenomenon is not unique to Silicon Valley. Its main competitors are China, the current "technological enemy" of the United States, with a gigantic potential market of about 1.4 billion people.

But these companies have a different model than the United States, because in the North American nation, the regulations are very different.

"In China, we can bring out what we call super applications, as if we had imagined the merger of Facebook, Amazon and PayPal," says Skinner.

Pamela Parker, the Asian producer of the BBC, agrees.

"China has its own version of the GAFA Group: BAT and it includes China's three technological giants:
Baidu, Alibaba and Tencent, "says the reporter, some add a fourth to the group: Xiaomi

"Almost everything you do on the Internet in China is related to one of these companies," Parker adds. Baidu would be Google's equivalent of China, Alibaba would be Amazon – but much bigger – and Tencent is the world's largest video game company.

However, according to Skinner, the big difference is that the technology giants in China "work with the government, while in the United States, they do it in a confrontational way."

"These are private companies that the government can not control."