With earnings season in full swing for many companies, one observation has become apparent: the biggest Internet giants are hogging the majority of the online dollars.
A look at the Internet Software and Services and Internet and Catalog Retail industries within the Russell 3000 index shows that five of the world’s biggest tech companies have collected 70% of the industry’s estimated $300 billion in revenue over the past 12 months, according to a USA Today analysis of data from S&P Capital IQ.
Those five companies—Amazon (AMZN), Google parent Alphabet (GOOG), eBay (EBAY), Facebook (FB), and media conglomerate Liberty Interactive (QVCA)—are shoving other smaller players into a long-tail competition for the rest of the cash pile. Further concentration of power can be seen at the top, where Amazon and Alphabet alone hoarded 57% of the total revenues brought in by Internet-based companies in the last year.
When it comes to net profit, Alphabet’s $16.4 billion over the past 12 months occupies two-thirds of the aggregate net income collected by all Internet companies in the Russell 3000, an index that measures the performance of the largest 3,000 U.S. companies, and represents around 98% of the investable U.S. equity market. The big three alone of Amazon Alphabet and Facebook also represents 70% of the industry’s total market value of $1.5 trillion.
Already, the effect of having to race against such imposing online companies has been seen in several tech companies’ earnings reports: Groupon’s (GRPN) stock price tanked this week after releasing weak guidance for the future, and Twitter (TWTR) also lowered its forecasts in its third-quarter financial statements.