The Power and Reach of Google

The Power and Reach of Google

August 29

Last month nearly 18 billion searches were conducted and 12 million of those took place at Google properties. With a nearly 70% search market share in the US, Google dominates the search landscape leaving table scraps for other four companies to fight over. While Google has kept a tight hold of search, the landscape is changing. Social media and mobile bring new challenges to the market as well as opportunity.

Search market shares

Google’s domination of the search market.

Google continues to dominate search in the US

Google dominance is almost taken for granted, much like the Microsoft Windows monopoly of the 90s. This begs a few questions:

  • How does Google make money today?
  • Can Google parlay its success on the desktop to mobile?
  • What company poses the biggest threat to Google?

The Google Cash Cow

In the words of Google’s own CEO: “We generate revenue primarily by delivering relevant, cost-effective online advertising.”

While others like Alta Vista, Excite, WebCrawler, Hotbot, and dozens more decent search engines got into the search game earlier than Google, nobody recognized the advertising potential of search like Google. In simple terms, Google has mastered the business of linking people who are looking for a product to a business offering that product. A small auto repair shop in Rock Springs, Wyoming that would normally blast ads over radio, now has a way to reach the resident searching for “Rock Springs radiator repair” at the precise moment the service is needed. The auto repair shop owner gains a customer, the guy doing the search gets his car repaired, and Google collects a fee from the owner of the auto repair shop. This is a brilliant and revolutionary business model Google calls AdSense.

But Google didn’t stop with AdSense, which worked only on Google owned properties. Google also allowed website owners to join Google’s network and run Google-branded ads on third party sites. This was a godsend to many bloggers and website owners who were trying to monetize their work.  AdWords has grown so fast that it now makes up over 70% of Google’s advertising revenues. AdWords, more than any other Google product, is the cash cow competitors have been unable to replicate.

Mobile Changes Playing Field

Google is well aware of how Microsoft has struggled to transition Windows to a world filled with tablets and smartphones. Dominance on the desktop didn’t guarantee success in mobile. Google doesn’t want to see history repeat itself in search.

While Google holds down the dominant position in desktop search, mobile drastically alters the playing field and opens up a number of opportunities for others to exploit.

Take the iPhone for example. When Steve Jobs held it up for the world to see back in 2007, Google was Apple’s primary search partner. But times have changed. Today, every iPhone sold comes with Siri; an “intelligent personal assistant” you control with voice commands. Siri can now perform basic searches that used to go through Google, Bing, or Yahoo. And if Siri can’t find what you’re after, it now defaults to Bing instead of Google.

Siri screenshot

Siri can replace a stand-alone search engine like Google.

Siri can often take the place of a stand-alone search engine like Google

Google’s main weapon on mobile is Android which is far and away the most popular mobile operating system, and formidable competitor to Apple’s iOS. Google continues to release apps like Google Search for iOS and Windows Phone, but is merely an app on those platforms. By controlling Android, Google can dictate how search is implemented on over a billion phones and extend its reach by including services such as Google Now, which pushes information to you, as you need it. Sort of it a predictive contextual search, if you will.

So Apple has Siri, Microsoft has its Cortana personal assistant on Windows Phone, but none of them do search as well as Google, and search is still at the heart of these products. Also, Google Now is only available on Android devices which enhances their position in mobile.

Here Comes the Social

Assuming Google can maintain its dominant position in both desktop and mobile search, what should it be worried about, if anything? I propose Google should be very concerned about Facebook. This isn’t a new idea. Let me explain.

As the largest social media site on the planet, Facebook, knows a whole lot about each of its users. Think for a moment the sheer amount of information that you’ve put into Facebook over the years. In just a week’s time, Facebook knows that I attended a play in Las Vegas with my spouse, had a steak dinner at Smith and Wollensky, and attended my daughter’s piano recital at the college.

How does Facebook know all this? Well, I told it by posting photos or updating my status from those locations.

Of course, Facebook understands the value of this information sells it to advertisers who can then tailor specific ads to my tastes and hobbies. So while Facebook doesn’t have the number of properties that Google has (Google Maps, Gmail, YouTube), it does have millions of users who spend a lot time on its site adding personal information that’s of value to advertisers.  In a sense, Facebook has created its own ad platform where advertisers can reach users in ways and with information that wasn’t possible before.

Few companies can reach critical mass to complete with Google’s search products. Microsoft has tried and largely failed, taking market share from its partner, Yahoo. Facebook’s massive user base, and inherent information mining give it a platform on which to compete directly with Google. But Google is still the king of the jungle when it comes to search. And it’s hard to imagine that changing much over the next few years.

Top pPhoto credit: Wikimedia.