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(preserving 38 per cent gross margins
from selling hardware), and it controls
the distribution of apps to consumers
(taking a highly lucrative 30 per cent
cut of revenue generated through the
App Store). These companies have built
these dominant positions by providing
value to their users, saving them time,
effort and money. It is interesting
that despite regularly highlighted
controversies, users struggle to depart
“You are going to see
advertising taxes on
Facebook, Google
and Apple, because
governments need money
and you’re displacing other
forms of revenue. That’s
definitely going to happen”
these services en masse in the absence
of equally convenient alternatives.”
Double-edged sword
Yet the growing influence of these
companies could prove to be a
double-edged sword as a minority
of customers begin to use their
powerful technology for morally
questionable purposes – for example,
hundreds of major brands including
Coca-Cola and Unilever have pulled
advertising from Facebook in the
past few weeks over its failure to stop
“hate speech”. While David Coombs,
head of multi-asset investments at
Rathbones, believes this boycott to be
something of a red herring, he says
societal disillusionment with these
platforms means greater government
intervention is inevitable, describing
social media companies in particular
as “in the eye of the storm”.
TRUSTNET