Why is it more and more difficult to make Internet products?

Andrew Chen, head of Uber's user growth, said in an article on his personal blog that it has become increasingly difficult for mobile Internet products to achieve user growth because the technology growth cycle we are currently in is coming to an end. So, what implications does this have for startups?
Trends explored in this article include:
It seems that all of a sudden, entrepreneurs and investors are starting to move into new fields—genetics, vertical take-off and landing flying cars, cryptocurrencies, AI, the Internet of Things, etc., trying to find new opportunities. To understand this phenomenon, it is necessary to recognize the trends described above. After all, if you can't grow in an existing market, then you need to move quickly into a new one, as Glader puts it:
At the end of a cycle, technology markets tend to be characterized by a rapid diversification of the types of startups that receive funding. For example, after the explosion of mainstream Internet markets (Google, Yahoo, eBay, PayPal) in the late 90s, there was a sudden diversification trend in 2000-2001, people began to invest in P2P and mobile devices, and then in 2002, 2003 , people are starting to pay attention to clean technology, nanotechnology and so on. From the perspective of return on venture capital investment, these industries have finally failed.
Nanotechnology, clean technology belonged to the previous cycle, now we are going to talk about the next cycle.
1. Platform solidification
The Google/Apple duopoly on apps is more concentrated, closed, and less rich (from a growth perspective) than the web, which means mobile is more difficult to enter. The app store functions like a leaderboard, offering some must-install apps and recommending some featured apps, all of which are driving the "winner-take-all" nature of the mobile ecosystem.
It's no wonder that the charts in the app store have become rigid over the years, with Facebook and Google now controlling multiple spots in the top 10 of the mobile ecosystem:
If you want to launch a new app, how do you deal with this situation?
With the reduction of growth opportunities, the channels for paid customer acquisition have also become saturated.
2. Customer acquisition channels are approaching saturation
Paid acquisition is still a useful method if you can find an untapped audience with a high ROI. However, this approach only works if costs don't increase and there's not much competition for the same inventory. Sadly, this good thing no longer exists.
Let's take a look at how Facebook's average daily active user (DAU) revenue has increased over the past few years:
Of course, there are many factors driving this growth, such as relevancy, targeting, etc., but one key reason is: The competition to advertise on Facebook is increasing.
In 2017, there were more than 5 million advertisers on the Facebook platform, compared to 4 million in the third quarter of 2016 and 2 million in 2015. During its first-quarter 2017 earnings call, Facebook told investors that it expects ad revenue to be near a saturation point, despite a big jump in revenue in the first quarter of 2017 compared to 2016.
Currently, Facebook has 2 billion users, a year-on-year growth rate of 17%. Whether it can provide more advertising opportunities depends on whether the user base can continue to grow, or whether users can spend more time on Facebook.
3. Advertisements are ignored
Internet users are getting smarter. Today, most invite systems are far less valuable and effective than they were 10 years ago (Dropbox’s invite system was amazing when it first came out), and users not only ignore ads, but often ignore the invite mechanism and virality.
In her new Internet Trends report, "Queen of the Internet" Mary Meeker says one-third of people in some countries are using ad-blocking features, and that it won't be long before ads reach as many as 6 billion monthly active users (MAU):
Source: 2017 Internet Queen Report
This is the 2017 edition of "The Law of Inferior Clicks". I proposed the "Law of Bad Clicks" a few years ago, when email marketing click-through rates were already declining:
And the click-through rate of traditional banner ads is getting closer and closer to zero:
These trends are troubling, pointing to the fact that some channels are experiencing lower user engagement, and we haven’t discovered exciting new channels to replace them.
4. Advanced tools lower the operating threshold
As advertising has grown, the use of tools like Mixpanel, Leanplum, Optimizely, and more has become more commonplace, closing the data-driven gap between companies.
10 years ago, we valued the total number of registered users, but not MAU, DAU or other more granular indicators. One of the key features of Mixpanel is that it lets you see group-based retention rates. Engineers, data scientists love it, and it can create simple diagrams like this:
In the B2B field, the same phenomenon occurs. With the help of some tools (Mixmax, Outreach, insidesales.com, etc.), tasks that used to be laborious are also made easier. But as a result, the competition has also become more intense. The tedious tasks become automated and simple, and inevitably more people will enter the field.
As a result, all participants became more efficient. Everyone has a better understanding of customer acquisition and retention for their products. Everyone has learned to increase the lifetime value of users by looking at data, and they are bound to spend more money on advertising.
5. Opponents become more agile
In the past, startups could benefit from being “big, dumb, and slow” by their competitors. It's different now, everyone is getting smarter and faster, and so are the competitors. Whereas before, your competitors might have to wait a few years to react, now Facebook, Hubspots and Salesforce can copy your new ideas anytime.
For example, Facebook quickly replicated Snapchat's features into its own Messenger, Instagram, Whatsapp, and other core products:
And this doesn’t just happen in consumer products: Dropbox vs Google Drive, Slack vs Microsoft Teams, YesWare vs Hubspot Sales… the list goes on.
6. From fighting "boring time" to fighting Google/Facebook
When the App Store first launched, an app’s competitor was actually people’s “boring hour.” Mobile app developers want you to be able to use their apps during boring times (waiting in line, commuting). But nowadays, getting a new user for your app means letting him give up his current favorite app.
As the cycle draws to a close, competition among companies is increasingly a zero-sum game.