In recent years,
IT
, smartphones, IoT, etc. have become widespread in our daily lives, and GAFA is behind this. Although GAFA’s services play such an
infrastructural
role that they have become a part of our daily lives, some have voiced their concerns that they may hinder the growth of other companies.
However, there may be many people who do not know what kind of company GAFA is in the first place, or why it is attracting so much attention. Therefore, in this article, we will explain the overview of GAFA, its business model, and the reasons why GAFA is attracting attention worldwide. We will also explain Japan’s movements regarding GAFA regulations, so please use this as a reference.
GAFA is an acronym for four companies.
First, let me explain the overview of GAFA. GAFA is an acronym for four global IT companies: Google, Amazon, Facebook (currently Meta), and Apple. Pronounced “Gafa”, these four companies make full use of IT to provide infrastructure and play the role of
a platform
that is indispensable to daily life. It is sometimes called “GAFMA” with the addition of Microsoft, but here we will introduce the market capitalization and business model of each GAFA.
Google
Google is a company founded in 1998 that provides the search engine “Google”. By creating a Google account, you can use Google Docs to create documents and Google Spreadsheets, which is an alternative to Excel. We also provide the keyword planner necessary for placing advertisements and Google Analytics, which allows you to analyze website access. In other words, it is characterized by providing a wide range of services, from infrastructure roles on the web to placing advertisements.
Market capitalization
The market capitalization of Google’s parent company Alphabet is $1.98 trillion as of November 2021. Looking at the data for the past six months, market capitalization has been increasing steadily, and it is expected that it will continue to increase in the future, given the expansion of services and the overwhelming amount of data that competitors cannot match. I am.
business model
Google’s business model is based on data about users accessing the search engine and users who have Google accounts. Typical examples include listing ads and retargeting ads, which allow you to target ads to users in a specific region or age group. We also offer services such as YouTube Ads, which allows you to place ads based on the segmentation of users viewing YouTube. In other words, Google derives most of its revenue from advertising.
Amazon
Amazon is the company that operates “Amazon”, the world’s largest e-commerce site. You can purchase all the goods you need for your daily life at low prices, and it functions as an essential infrastructure for your daily life. In addition, in recent years, Amazon Alexa, an AI assistant that plays the radio, reads out books, and plays your favorite music, has been attracting attention.
Market capitalization
Amazon’s market capitalization is $1.86 trillion as of November 2021. The founder, Jeff Bezos, is famous for being the richest man in the world, with an estimated net worth of over $200 billion.
business model
Amazon’s business model derives a large amount of revenue from commissions from buying and selling on the e-commerce site Amazon. Additionally, it is characterized by its wide range of services, including the subscription service Amazon Prime, which distributes content such as movies, and the aforementioned Amazon Alexa. Although it is not well known, we also offer financing services.
Facebook
Facebook (currently Meta) was established in 2004, making it the youngest company in GAFA. We provide Facebook as a service, one of the world’s largest SNS, and it is said that there are over 2.5 billion active users worldwide. Since we have quite detailed user data, we are developing a business that takes advantage of user data.
Market capitalization
Facebook (currently Meta) has a market capitalization of approximately $960 billion as of November 2021. Although it has the smallest market capitalization among GAFA, it is still a threatening number from a global perspective.
business model
Facebook’s business model mainly consists of acquiring detailed data from users registered on Facebook and distributing advertisements after segmenting them. Because it holds detailed personal data such as university graduate, age, marital status, hobbies, etc., it is often used by companies that want to target specific users with advertisements.
Facebook is also famous for its acquisition of Instagram. Facebook is also known for aggressively acquiring companies that pose a threat to itself or that it believes can be effectively utilized, and by developing them into high-quality services, it completely crushes other companies in its industry. In 2012, it acquired a messenger app called “WhatsApp.”
Apple
Apple is a company founded by Steve Jobs, a world famous person, and provides hardware such as the iPhone. It is known for developing applications and operating systems such as MacOS and iOS.It also has iCloud, which allows you to share and access various things on the cloud, and the App Store, which allows you to download applications. ‘ is also one of the popular services.
Market capitalization
Apple’s market capitalization is $2.63 trillion as of November 2021. It is also famous for always competing for first and second place in the world market capitalization ranking.
business model
Apple’s business model is diverse. In addition to providing hardware such as the iPad, MacBook, and iPhone, Apple also offers the iPod, which can play imported music.
It is also characterized by its multifaceted business, including “iCloud,” which allows you to edit various things on the cloud, and “AirPods,” which are earphones equipped with a noise canceling function.
Why the world is paying attention to GAFA
So far, we have explained GAFA’s market capitalization and business model. From here, I will explain two reasons why the world is paying attention to GAFA.
- The world’s largest platform
- plays a role as infrastructure
Let’s look at each in turn.
The world’s largest platform
Each has one of the world’s largest platforms, such as Google’s search engine, Amazon’s e-commerce site, and Facebook’s SNS. Since customer information can be obtained from these platforms and new businesses and services can be developed based on the information, the current situation is that there are no competitors.
plays a role as infrastructure
GAFA also plays a role as infrastructure around the world. You can purchase all kinds of goods on the shopping site Amazon, and you can also consume content on YouTube and SNS every day. GAFA has become indispensable in meeting personal desires and demands in daily life.
Japan’s movements in GAFA regulations
Earlier, I explained why GAFA is attracting attention all over the world, but it is also true that GAFA is considered dangerous. This is because GAFA owns big data and monopolizes the market through its platform. Furthermore, since GAFA is headquartered in a country with low tax rates, the amount of tax paid is surprisingly low. For these reasons, GAFA is viewed as dangerous, but in Japan, the following two moves are being made regarding GAFA regulations.
- antitrust law
- Basic Act on Promotion of Public and Private Data Utilization
I will explain each in turn.
antitrust law
Previous antitrust laws existed to regulate transactions between businesses, stipulating that service providers and consumers must be on equal footing. However, in 2019, the Fair Trade Commission clarified the standards for interpretation of the Antimonopoly Act. It clarified that antitrust laws also apply to the acquisition and use of personal information by platform operators. As a result, the illegal acquisition and use of personal information by platform operators is considered an “abuse of a dominant position” and is therefore considered an illegal act.
Basic Act on Promotion of Public and Private Data Utilization
The Basic Act on Promotion of Public-Private Data Utilization is a law enacted in 2016. The law allows public and private data to be used in a wide range of fields and allows administrative procedures to be carried out online, making it no longer easy for specific organizations or companies to monopolize personal data. Therefore, there are high expectations for the law to counter the big data held by GAFA.
summary
In this article, we have explained the overview of GAFA, its market capitalization, business model, and why it is attracting attention from all over the world. GAFA has one of the world’s largest platforms and also holds big data, so it also plays the role of infrastructure.
Businesses that are at the cutting edge of the times are always developing, so why not use GAFA’s future movements and business models as a reference when coming up with ideas for starting a new business?