The year 2022 was not a smooth sail for the giants of the tech world. Quoting estimates from the Insider Intelligence, The Wall Street Journal reported on Tuesday that Alphabet’s Google and Facebook parent Meta (META) have been reported to account for 48.4% of US digital-advertisement spending in 2022, the first drop below 50% for the combined market share in the last eight years. According to the report, the Insider Intelligence estimates the combined number of the two companies to plummet further to 44.9% this year. Amazon (AMZN) recorded a total of 11.7% of US digital-advertisement spending in 2022 with TikTok at 2%, as per the report, quoting Insider Intelligence. Alphabet and Meta did not immediately respond to a request for comment by MT Newswires.
For the first time almost after a decade, the two largest tech companies in online advertising are no longer collectively leading in the majority of U.S. digital-ad dollars, a fall that several analysts expect to continue in the forthcoming years.
Meta and Alphabet have clearly lost their duopoly over the digital advertising market that they dominated for years, as the duopoly is hit by fast-growing competition from tech rivals Amazon, TikTok, Microsoft and Apple.
The percentage of US ad revenues held by Facebook’s parent Meta and Google owner Alphabet is projected to fall by 2.5 percentage points to 48.4 percent in 2023, the first time the two groups will not hold a majority share of the market since 2014, according to research group Insider Intelligence.
This hard hitting statistic will mark the fifth consecutive annual decline for the collective percentage Meta and Alphabet, whose share of the market has plumetted from a peak of 54.7 percent in 2017 and is estimated to drop further to 43.9 percent by 2024. Worldwide, Meta and Alphabet’s share declined 1 percentage point to 49.5 percent in 2022.
Jerry Dischler, head of ads at Google, told the Financial Times that fierce rivalry from new entrants reflects an “extremely dynamic ad market.”
Regulators in the US and Europe have added antitrust scrutiny such as pursuing Google for reportedly promoting its products over rivals, thereby limiting its monopoly and establishing competition in the market.
In December 2022, Facebook parent Meta was served with a complaint from the EU’s antitrust commission concerning the social network’s classified advert service is killing competition in the market and is harming company’s rivals. Tech groups are fighting more than ever for a share of the $300 billion digital ads market, even as companies worldwide are snipping on their ad budgets in order to cope with rising interest rates and high inflation.
Amazon and Apple have expanded their advertising teams. In July, Netflix announced it would partner with Microsoft to build an advertisement-supported tier of its streaming service.
Meta chief executive Mark Zuckerberg has put the blame for it’s recent revenue declines on Apple’s privacy changes that make it harder to track users and target advertising, as well as the growing popularity of viral videos app TikTok, owned by Chinese parent ByteDance.
“Four years ago, you wouldn’t be talking about either [TikTok or Amazon] in advertising,” said Dischler. “So it’s really telling that more and more people are acknowledging that advertising is a great and scalable business model.”
