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Facebook and Google's ad addiction can't last forever

Parmy Olson
Parmy Olson2/6/2022 09:15 PM GMT+08  • 6 min read
Facebook and Google's ad addiction can't last forever
"The days of 20% growth will get harder and harder."
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Alphabet and Meta Platforms, the world’s biggest digital advertising platforms, once again raked in astonishing amounts of money in 2021. “So what else is new?” you’re probably wondering. Almost every year for the past decade, the companies also known as Google and Facebook set profit records.

But this week marked a troubling difference. Facebook’s announcement that user numbers had dropped for the first time laid bare a long-neglected vulnerability: Digital advertising accounts for 98% of Meta’s revenue, and it also accounts for 81% of Alphabet’s. Of the world’s five biggest tech companies, including Amazon, Apple and Microsoft, Facebook and Google are the least diversified.

Though conventional wisdom says that conglomerates shouldn’t put all their eggs in one basket, it is hard to knock a business model that has been so successful. After all, people were calling Google a one-trick pony back in the early 2000s because of its bet on ads, and that bet has paid off handsomely two decades later. “Through most of the first decade the concept that Google would make US$10 billion was inconceivable to people inside the company,” says Sridhar Ramaswamy, who ran Google’s ad business for about five years until he left in 2018.

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