By the end of the 1990s, four companies—Yahoo!, Microsoft, AOL, and Google—had emerged as the leading forces on the Internet, each with a different business angle. AOL attempted to dominate the Internet as the top ISP, connecting millions of home users to its proprietary Web system through dial-up access. Yahoo!’s method has been to make itself an all-purpose entry point—or portal—to the Internet. Computer software behemoth Microsoft’s approach began by integrating its Windows software with its Internet Explorer Web browser, drawing users to its MSN.com site and other Microsoft applications. Finally, Google made its play to seize the Internet with a more elegant, robust search engine to help users find Web sites.

Since the end of the 1990s, the Internet’s digital turn toward convergence has changed the Internet and the fortunes of its original leading companies. While AOL’s early success led to the huge AOL–Time Warner corporate merger of 2001, its technological shortcomings in broadband contributed to its devaluation and eventual spin-off from Time Warner in 2009. Yahoo! was eclipsed by Google in the search engine business, but tried to regain momentum with its purchase of Tumblr in 2013.

In today’s converged world in which mobile access to digital content prevails, Microsoft and Google still remain powerful. Those two, along with Google, Facebook, Amazon, and Apple, are the leading companies of digital media’s rapidly changing world. ²³

Microsoft

Microsoft, the oldest of the dominant digital firms (established by Bill Gates and Paul Allen in 1975), is an enormously wealthy software company that struggled for years to develop an Internet strategy. Although its software business is in a gradual decline, its flourishing digital game business (Xbox) helped it to continue to innovate and find a different path to a future in digital media. The company finally found moderate success on the Internet with its search engine Bing. With the 2012 release of the Windows Phone 8 mobile operating system and the Surface tablet, Microsoft was prepared to offer a formidable challenge in the mobile media business.

Google

Google, established in 1998, had instant success with its algorithmic search engine, and now controls more than 66 percent of the search market and generates billions of dollars of revenue yearly through the pay-per-click advertisements that accompany key-word searches. Google also has branched out into a number of other Internet offerings, including shopping (Froogle), mapping (Google Maps), e-mail (Gmail), blogging (Blogger), browsing (Chrome), books (Google Book Search), and video (YouTube). Google has also challenged Microsoft’s Office programs with Google Apps, a cloud-based bundle of word processing, spreadsheet, calendar, IM, and e-mail software. Google is now competing against Apple’s iTunes with Google Play, an online media store with sharing capabilities through Google’s social networking tool Google+ (Google’s challenge to Facebook).

As the Internet goes wireless, Google has acquired other companies in its aim to replicate its online success in the wireless world. Beginning in 2005, Google bought the Android operating system (now the leading mobile phone platform, and also a tablet computer platform), mobile phone ad placement company AdMob, and mobile phone software developer Motorola Mobility. (See “What Google Owns” on this page.) Phones and tablets that run on Android also have access to content on Google Play. Google continues to experiment with new devices and plans to release augmented-reality glasses in the future, which would layer virtual information over one’s real view of the world through the glasses. Google’s biggest challenge is the “closed Web”: companies like Facebook and Apple that steer users to online experiences that are walled off from search engines and threaten Google’s reign as the Internet’s biggest advertising conglomerate. The competition heated up in 2012 when Apple dropped Google Maps as the default map app for iPhones and iPads in favor of its Apple map application, cutting Google out of ad revenue and data collection of Apple device location searches.²⁴

Apple

Apple, Inc., was founded by Steven Jobs and Steve Wozniak in 1976 as a home computer company and is today the most valuable company in the world. Apple was only moderately successful until 2001, when Jobs, having been forced out of the company for a decade, returned. Apple introduced the iPod and iTunes in 2003, two innovations that led the company to become the No. 1 music retailer in the United States. Then in 2007, Jobs introduced the iPhone, the world’s first smartphone that streamlined and redefined the way users access media content. Converging entertainment, computing, and communications, the iPhone transformed the mobile phone industry, and with Apple’s release of the intensely anticipated iPad in 2010, the company further redefined portable computing.

With the iPhone and iPad now at the core of Apple’s business, the company expanded to include providing content—music, television shows, movies, games, newspapers, magazines—to sell its media devices. The next wave of Apple’s innovations was the iCloud, a new storage and syncing service that enables users to access media content anywhere (with a wireless connection) on its mobile devices. The iCloud also helps to ensure that customers purchase their media content through Apple’s iTunes store, further tethering users to its media systems. (For more on Apple devices and how they are made, see “Global Village: Designed in California, Assembled in China”.)

Amazon

Amazon started its business in 1995 in Seattle, selling the world’s oldest mass medium (books) online. Since that time, Amazon has developed into the world’s largest e-commerce store, selling books, but also electronics, garden tools, clothing, appliances, and toys. To keep its lead in e-commerce, Amazon also acquired Zappos, the popular online shoe seller. Yet, by 2007, with the introduction of its Kindle e-reader, Amazon followed Apple’s model of using content to sell devices. The Kindle became the first widely successful e-reader, and by 2010 e-books were outselling hardcovers and paperbacks at Amazon. In 2011, in response to Apple’s iPad, Amazon released its own color touchscreen tablet, the Kindle Fire, giving Amazon a device that can play all of the media—including music, TV, movies, and games—it sells online and in its Appstore. Like Apple, Amazon has a Cloud Player for making media content portable, and offers an additional five gigabytes of free Cloud Drive space to all users, to use however they like.

Facebook

Of all the leading Internet sites, Facebook is one of the “stickiest,” with Americans staying on the social networking site, on average, about 20 percent of their overall time online.²⁵ Facebook’s immense, socially dynamic audience (about two-thirds of the U.S. population, and over one billion total users across the globe) is its biggest resource, and Facebook, like Google, has become a data processor as much as a social media service, collecting every tidbit of information about its users—what we “like,” where we live, what we read, and what we want—and selling this information to advertisers. Because Facebook users reveal so much about themselves in their profiles and the messages they share with others, Facebook can offer advertisers exceptionally tailored ads: A user who recently got engaged gets ads like “Impress Your Valentine,” “Vacation in Hawaii,” and “Are You Pregnant?” while a teenage girl sees ads for prom dresses, sweet-sixteen party venues, and “Chat with Other Teens” Web sites.

As a young company, Facebook has suffered growing pains as it tried to balance its corporate interests (capitalizing on its millions of users) and its users’ interest in controlling the privacy of their own information at the same time. In 2012, Facebook had the third-largest public offering in U.S. history, behind General Motors and Visa, with the company valued at $104 billion. Facebook’s valuation is more of a statement of investors’ hopes of what the company can do with one billion users rather than evidence of the company’s financial successes so far. And as evidenced by its plummeting stock price during the following weeks of trading, Facebook’s next move and future area of growth is still somewhat uncertain. As Facebook moves forward, one of its shortcomings (and what Google and Apple control) is its mobile interface. In an attempt to build its mobile business, Facebook bought Instagram, a photo sharing mobile app for iPhone and Android, in 2012 for $1 billion.