How Alexa, Siri, and Google Assistant Will Make Money Off You
While helping us get things done, virtual assistants will also give tech companies valuable new insights into our lives.
Apple, Amazon, and Google say their virtual helpers—Siri, Alexa, and the less snappily named Google Assistant—can make our lives easier by acting on our commands to book cabs, order pizza, or check the weather.
But like all the other free-to-use goodies that tech giants offer up, these new personal assistants must also earn their keep. The companies aren’t saying much about exactly how their automated personas can boost their bottom lines, but they have clear potential to open up new lines of revenue. Perhaps most important, they could significantly increase the data that companies have on our preferences and everyday lives.
“A deeper profile of the customer is possible,” says Sridhar Narayanan, an associate professor of marketing at Stanford. “Already Google and these others have a lot of information about us—this is one new source that is different.”
The virtual assistant contest between the tech giants can be traced back to 2011, when Apple launched Siri, an app acquired as a startup the previous year. The app has been widely seen as less useful or revolutionary than Apple originally claimed it would be (see “Social Intelligence”).
But speech-recognition and language-processing software have recently improved, and the companies have become more ambitious.
Amazon’s Alexa assistant made the $200 Echo wireless speaker, launched in late 2014, into a surprise hit that’s estimated to have sold three million units in the United States. Among other things, Alexa can cue up music, reorder things you have previously bought from Amazon, and connect with third-party services so you can do things like summon a ride with Uber using your voice.
Google will release a similar device, Google Home, price unknown, with its own Google Assistant inside later this year (“Google Finally Launches Siri-Killer in Pivot Away from Conventional Search”). Apple is also believed to be planning a home device of its own, and to be preparing to let Siri control third-party services (see “Apple Wants to Make Siri Far More Powerful”).
A useful and popular virtual assistant could help a company’s bottom line directly by selling devices such as phones or home speakers. In the case of Amazon, making it easier to buy things is a crucial part of the company’s strategy. And if a virtual assistant such as Siri can send business to third-party services such as food-delivery companies, it could take a cut of the transaction.
But as with so many products from large tech companies, the data unlocked by virtual assistants could be even more lucrative.
Google’s search ads business rakes in billions by aligning the interests of marketers and consumers. People are likely to click on ads for goods or services closely related to the thing they’re searching for, whether that’s a plane ticket or a dollhouse.
Google’s head of search, John Giannandrea, demurred when asked recently how his company’s assistant would make money.
But a back-and-forth conversation with Google’s assistant about, say, vacation destinations could reveal more about what you want and like than a handful of conventional searches, says Narayanan—particularly when combined with other information Google can access about consumers. In the future, Google could include paid messages among the list of recommended products or services shown on a person’s phone after he asks the Assistant for help finding a business or service.
“Something like this would be highly valuable to marketers,” says Narayanan. “More information helps them decide, ‘Is this person worth bidding on, and what information do I provide?’”
Similarly, Alexa could improve Amazon’s feed of information about customers by expanding their points of contact with the company beyond just shopping. That could help the company’s personalized recommendations, a crucial part of its business.
Still, the deep-pocketed progenitors of these virtual assistants probably aren’t very concerned about their business models just yet, says Steven Tadelis, a professor at the University of California, Berkeley, Haas Business School.
“Right now these are complementary products that enhance an already existing relationship that the consumer has,” he says. That and the need to keep pace with competitors is enough to justify launching the technology and seeing what happens. “I wouldn’t be surprised if two or three years from now they find ways to monetize that we couldn’t even dream of,” he says. Such opportunities will only manifest if the virtual assistants win a loyal user base. It is still unclear whether many people will find Google Assistant and Alexa useful enough to engage them in a broad range of tasks. Apple is widely seen to have overstated the usefulness of Siri, which many people don’t use or go to for only certain narrow functions.
Making conversational assistants live up to the hype should be possible by pulling together the right streams of data on people and surroundings, though, says Norman Winarsky, an executive in residence at Relay Ventures and a cofounder of Siri. Software can’t understand the context of a person’s query or conversation as accurately as a human, but it can cheat by looking at information about his or her past activity.
Narayanan agrees, and says that could tilt the playing field in Apple and Google’s favor (although Apple has said it avoids mining customer data). The two companies’ mobile operating systems and related services could provide a broad view into people’s behavior that makes it easier for their assistants to appear smart. “Amazon has some unique insights into shopping habits, but unless it comes up with some partnerships, it could be a little bit handicapped compared to the others,” he says.