Friday's Market Minute: Big Tech Hunting For Couch Cushion Change?

Big tech needs new tricks, so companies are turning towards what their rivals have to distinguish themselves and their revenue streams. Apple AAPL is making a bet on the metaverse that Meta Platforms (META) tried and gave up. Meta is taking advantage of legal rulings against the exclusivity of app stores on Apple and Android devices – The Verge reports that Meta intends to let E.U. users to directly download apps through Facebook ads, circumventing the long-standing walled gardens. The program could launch as soon as this year, starting with Android app developers.

Not to be outdone, Alphabet GOOGL is taking a note from Netflix (NFLX) on ads, which is a substantial part of its revenue (Google ads made up 78.1% of its total revenue in 1Q23). With Microsoft MSFT making a bold push into A.I. with its search engine, Alphabet is scrambling to catch up, and is looking for more ways to monetize. A juggernaut, Google’s ownership of YouTube allows it to compete with both social media like TikTok and streaming services. The Verge writes that YouTube is currently running a test where it pushes users with ad blockers to either allow ads or join the paid service YouTube Premium. A spokesperson even said that the YouTube could disable video playing if users ignored the nudges.

Big tech companies all seem to be grabbing for slices of the same pie: ads, user eyeballs, services fees. However, the more they diversify those revenue streams while pouring money into searching for the next great thing, the smaller those slices will get. Eventually, consumers will be squeezed dry – and where will they cut back first?

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