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Google-Amazon Video Exchange Has Limits

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In April, Alphabet’s (GOOGL) Google and Amazon (AMZN) agreed to set aside some of their differences to cooperate in distributing their digital video services. The deal involved Google returning its YouTube service to Amazon’s Fire TV platform. In exchange, Amazon agreed to bring its Prime Video service to Chromecast and Android TV devices. The Google-Amazon video exchange ended a long-running standoff that saw Google pull YouTube from certain Amazon devices.

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YouTube is now available on Fire TV, and Prime Video has landed on Chromecast. However, Prime Video availability on Android TV remains limited because Amazon is rolling out Prime Video to Android TVs on a manufacturer-by-manufacturer basis. Licensing issues are thought to be behind Amazon’s case-by-case Prime Video rollout for Android TVs.

Google and Amazon tap into each other’s strength

Although Amazon is bringing its Prime Video service to Android TVs gradually, the Google-Amazon video exchange allows the companies to tap into each other’s strength. This is because Prime members will have more devices to stream Prime Videos. Prime members are Amazon’s most valuable retail customers. They spend on average of $1,400 on Amazon retail shopping annually. That figure is more than double the $600 average spent by regular Amazon shoppers. Amazon is always looking for new ways to keep them happy.

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Amazon’s Fire TV is one of the most widely used video-streaming devices in America. Therefore, bringing YouTube to Fire TV accords Google another opening to expand its video service distribution. Google mostly makes money from YouTube through advertising. YouTube was one of the key revenue growth drivers for Google and its parent, Alphabet, in the second quarter.

Remain fierce rivals

Inasmuch as Google and Amazon are cooperating to broaden the distribution of their respective video services, they still compete in many areas, namely cloud computing and digital advertising. Currently, Amazon dominates the cloud computing space with a 33% market share. Microsoft (MSFT) is in second with a 16% share, and Google comes third with 8.0% of the market.

In advertising, Google and Facebook (FB) dominate. Alone, the two control 60% of the US digital advertising market. However, Amazon is steadily gaining, eMarketer estimates show.

This year, eMarketer estimates Google will generate $103.7 billion in digital advertising revenue globally. It expects Facebook, Alibaba, and Amazon to generate $67.4 billion, $29.2 billion, and $14 billion, respectively.

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