Internet Behemoths Start Looking Alike (GOOG, AMZN, IACI, YHOO, RNWK, AAPL)

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Includes: AAPL, AMZN, GOOG, IAC, RNWK
by: The Stalwart

The Stalwart submits: In August we wrote:

With Google's (GOOG) foray into email (last year) and now chat, slowly and slowly each major Internet company comes to resemble the others more and more. And Google's not alone in its horizontal expansion. Amazon (NASDAQ:AMZN) and Interactive Corp (IACI) have gotten into search. Yahoo (YHOO) is expanding its commerce operations, as well building its own distributed advertising network. There's a lot of market cap in these behemoths, and a lot of unnecessary redundancy.

That was six months ago. Microsoft and Amazon have announced plans for adsense-like advertising networks. Google started selling videos, and via Google Base product is targeting eBay as an intermediary of exchange, though that is still in a larval state.

And really this is just the tip of the iceberg. Yesterday Techdirt reported that Amazon wants to start a music subscription service, similar to RealNetworks' and Napster's, though clearly aiming square at Apple.

There's plenty more things that have been done, and numerous rumored products on the horizon in areas like VOIP, financial transactions, rich media advertising, etc.

Now typically, you'd expect to see margin compression in an industry with many similar players, but will that happen here? Cost, typically, isn't a point on which these companies compete for customers (though in some areas it is). Even when selling to advertisers, since much of the pricing is set at auction, companies couldn't reduce their costs even if they wanted to. So maybe it doesn't matter that there's not much differentiating between companies, though it still seems to warrant caution.

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