AKA, Who Wants to be a Trillionaire? Ok, maybe not a trillionaire, but running a company with a shot at getting to the trillion dollar status, has been there, or is damn close or potentially able to get there? Notice that Apple, Google, Amazon and Facebook – four of the FAANG stocks – all have something in common: they all have 100M+ plus users, and are “trusted” platforms – “trusted” being an odd choice of words here, in our case, but work with us.
While Netflix is also part of the FAANG stocks and ergo potentially a trillion dollar player, the company is now experiencing something less than that Silicon Valley-venerated hockey stick growth, as Netflix reports slowing subscriber growth for the first time, which is also part of our point here.
According to Bloomberg News, “Tinder joined a growing backlash against app store taxes by bypassing Google Play in a move that could shake up the billion-dollar industry dominated by Google and Apple Inc (Tinder Bypasses Google Play Joining Revolt Against App Store Fee).”
In other words, Tinder just potentially joined the race to the trillion dollar mark and possible few-nicorn status.
Here’s how it works:
You’re Apple or Google and have a stranglehold on app discovery and distribution. So you charge some 30% on each transaction in the App or Google Play store.
30%, Gracie. On each and every transaction, for the life of the customer. Easy money. Silent partner with tentacles on your wallet.
Tinder is merely the latest to sidestep Google Play. According to Android Authority, “Spotify and Netflix have also been critical of Google and Apple when it comes to the cut that the respective app stores take from app revenue. Epic Games — the company behind the smash-hit game Fortnite — made headlines when it decided to side-step the Google Play Store entirely for the Android version of the game, likely in part to avoid that revenue sharing policy.
“…Tinder is almost always in the top-ten when it comes to non-gaming money-making apps on the Play Store, with the app earning a record $275 million last year. From January 2012 to August 2018, Tinder made more money from the Play Store than Netflix, Pandora, and HBO Now. While the cut Google makes from Tinder is a drop in the bucket as far as its overall revenue, this is still a big problem for the search giant.
For the record, it seems Google/Alphabet is not at all happy with Tinder’s move. See our visual here, and damn, must be that pesky algorithm again, what, eh? After all, we are all well aware of the fact that Google doesn’t manipulate search results for its own purposes.
And so much for ‘trusted.’
The Trillion Dollar Playbook:
To become part of the $1T column, you must have some 100M users who trust you with their payments/credit card information. Amazon aside, being able to garner recurring monthly payments is always a plus, but Amazon has recurring purchases, too, and saw the future way before almost anyone else, implementing ecommerce at a time when it was laughable to believe that anyone would submit his or her credit card information online: Amazon started as a trusted internet transaction platform and grew from there.
In case you haven’t been paying attention, Microsoft , a very traditional software company, figured it out last year and brought its many properties – Skype, Office, Xbox, Mindcraft, LinkedIn, et al – under one log-in, thus aggregating all of its disparate users – and the stock is up some 40% in the last six months.
It’s not merely all about eyeballs – it’s about owning them and not giving away that user information or a percentage of your earnings to a third party, such as Apple, Google or Facebook. Hockey stick growth can’t last forever. Monetizing/adding value is what helps to fuel continued growth. Just ask Facebook, eh, publishers of the world? They have it all, except for a trusted payment mechanism. Can you say ‘Libra?’
There seems to be a movement against the heavy fees that the app aggregators are levying and towards companies keeping their customers – and their earnings – to themselves. Tinder finally took the plunge and kudos to them.
Seems that after all this time, they have at long last decided to swiped right. Onward and forward.