Iii) Google

. Google has become an engine of change. It started as a powerful Internet-based search engine. In fact, it has "democratised" information by allowing the free flow of information, knowledge and ideas. It has continually reinvented itself via innovations such as Gmail, Assense, Google Earth, Google Maps, Google News, Google +, etc.

"...the company excels at IT and business architecture. It continually conducts experiments to test its system, and then improvises and improves, and it has a backbone of people who are actually analytical..."

Richard Branson, 2008

. In addition to being the world's number 1 search engine, it is expanded to other industries like media, telecommunications, consumer electronics, advertising (it is the world's number 1 advertising company), publishing, automobiles, etc. In 2014 it had around 40 products. It focus is on developing new ways to work, play and organise digital information.

· Dynamics in digital marketing are changing - there is a swing away from desktop to mobile as the fastest growing area of digital advertising; it is around half of mobile ad spending (2014) but these ads have less impact than targeted social media ads

· Google has been losing market share to the likes of Facebook, ie Google market share is falling below 40%. Facebook, which has a higher ad market share on mobiles than on desktops, has seen its click-through rate triple since 2013.

· Other players are getting into mobile advertising, eg

 - Snapchat (a popular photo-sharing app is launching ads)

- Yahoo! is trying to boost its mobile offerings with its acquisition of Flurry

 Google is re-inventing itself as it owns

. YouTube which has 1/5 of US digital video ad revenue; attracts 1 b. users monthly; its music videos are very popular (2014)

. Android internet software (from mobile phones to tablets, home appliances, watches, automobiles, health monitoring, TV, etc)

. Google wallet (collecting customer transaction data & replacing credit cards for purchases via smart phones), etc

. Driverless cars

. Uber (on-line, non-licensed car booking services)

. Skybox Imaging (satellite operator & fibre-optic cabling connection including submarine cable linking Asia to the US)

. Robotics

. purchased Magic Leap (US$ 542 m. - augmented reality technologies)

. cardboard viewer (2016) (virtually reality via app)

. Project Fi (phone service launched in 2015) to compete against Verizon, AT&T and other US wireless service providers; it is attempting to blend several communication tools and multiple ways of calling people like cell phone calls, online (VOIP), etc into a single phone number and service. It has limited use as only in the USA using Google's Nexus 6 phone. It will allow for a greater overlap with Google's expanding world of devices and services. It will mix traditional wireless technology, where calls are rooted through cellular towers, with the wireless Internet service found in Star Bucks, airports, etc. Also, it is teamed with Sprint and TMobile to provide the traditional wireless service and will allow talk and text on phones, tablets or laptops. It is considerable cheaper than the traditional cellphone carriers.

In late 2015 Google changed its name to Alphabet and in Jan 2016 was the first time its market capitalisation exceeded Apple.

Some problems facing Google (The Lex Column, 2015) are

i) anti-trust investigations like EU anti-trust investigation into Android, ie the EU anti-trust regulator's claim it has illegally abused its market dominance (2015).

A record US $ 5 b. anti-trust fine against Google for bundling its apps on Android and undermining its competitors, ie

"...Bundling those apps help Google collect data about mobile users and ensures a wide audience is using Google products, which means a company can show more ads to more people - the lifeblood of its revenue..."

Tony Romm 2018

The EU regulator is still looking at other areas of the company, including search and advertising.

This now means that Google will have incurred around US $ 8b. in fines in around 12 months. An earlier fine (US $ 2.7 b) relates to the company favouring its own shopping-comparison tool while disadvantaging in its rival's offering.

Also, an anti-trust dispute in Russia has prompted Google to change its design to offer people a choice of search engines on the Chrome browser when they set up their phones.

"...increase scrutiny helped knock Microsoft from its perch atop the tech industry more than a decade ago..."

Tony Romm 2018

This distracted Microsoft from understanding the changes in the way people use technology, such as the rise of mobile phones.

As with Microsoft, the regulators are trying to create opportunities for new technologies and new innovations to emerge.

NB regulators in EU and the US examine competition differently

"...The US focuses on harm to consumers, while Europe is more receptive to harm to competitors..."

Tony Romm 2018

ii) search revenue is slowing down from around 13% to 8% currently and losing market share to rivals like Baidu and Microsoft

In 2014 Google mobile ads had dropped by 17% in two years. Google owned around 80% of the US$ 2.24 b. search market.  By 2016 the revenue generated by US mobile market turns around US$ 18 b. but Google's share had dropped to under 70%.  The difference is explained by how we are more fragmented in the way we search, ie Google gives us the answer to everything but won't necessarily be able to help us find the best restaurant in one click.  Thus the rise of the niche apps. Even though Google is losing market share, it is not losing its revenue.
It is estimated that people are spending 34 hours monthly using the Internet on smart phones compared with 27 hours on desktop

iii) revenue from desktop searching still exceeds mobile search; smart phone users search less and when they do they tend to do it within apps

iv) increase capital expenditure, eg from US $3.3 b. (2012) to US $11 b. (2014)

v) Google Failure (Motorola Mobility)

Google purchased Motorola Mobility for US $ 12.5 b. in 2012 and sold it to China's Lenovo Group for less than US $ 3 b. two years later as it didn't produce appealing products that could compete with iPhones (Jess Macy Yu et al, 2017)

How Google operates

The way Google acted to increase its share of the around $US2 t global travel revenue gives an indication of how it operates, ie with its enormous financial capacity it uses its
"...popularity as a search engine to decimate competing content providers..."
Stuart McDonald (Travelfish) as quoted by Tony Boyd 2019f

An example is
"...Digital publisher Stuart McDonald had a thriving online travel advice business employing 15 freelance writers and five full-time journalists......travel to McDonald's digital version of the lonely planet guide in Southeast Asia was hit hard when Google made changes to the way it presented travel search results. Travelers could find snippets from Travelfish website but when they click through they were directed to Google's preferred search results which included sites paying to be at the top of the list and sites optimise for the all-powerful Google algorithms......traffic to Travelfish has halved from around 1.5 million sessions a month over the past 18 months......revenue from advertisers and affiliates plunged..."
Tony Boyd 2019f

Google has broadened its array of travel products and integrated them with existing products. For example
"...In May, Google revamped its Google Travel Business and made it easier for users to navigate between Google Flights, Google Hotels and Google Trips. Naturally Google Travel Suite is being integrated with Google Search on Google Maps..."
Tony Boyd 2019f

As Google's mission is to eliminate intermediaries that don't add value, Google will enter the industry and do a better job of serving up aggregated current information on the current industry players.

In mid-2019's it is claimed
"...Google had 95% travel search market..."
Graham Turner as quoted by Tony Boyd 2019f

This dominance could result in airlines having no choice but to deal exclusively with Google.

Other concerns are around the lack of transparency in the way Google's algorithms operate in the travel industry.

On the other hand there are some large successful, independent players in the business, like Expedia (owns Expedia, hotels.com, Travelocity, Orbitz, Trivago & Hotwire - valued at US$ 20 b.) and Booking Holding (owns Priceline, Kayak and Booking Holdings - valued at $US 83 b.)

"...Better trip planning and organisational products will also continue to cement Google in the travel search and organisation process......making it more difficult for the online travel agencies, hotels and emerging alternative accommodation players to pull away from spending on Google..."
Brian Novak as quoted by Tony Boyd 2019f

China and beyond

After being banned in China, in mid-2018 Google bought into the Chinese second biggest e-commerce player, JD.com (owned by Tencent) and plans to expand into other parts of Asia. This will help JD to fight its larger and better-known rival Alibaba and it helps Google compete with Amazon who has moved swiftly into India and Japan and has minimal presence in other parts of Asia.
"...the idea that Google, search company which makes money from advertising, is being challenged by Amazon, an online retailer, is hard for many to fathom..."
Angus Grigg 2018

"...More commercial searches done on Amazon as a starting point for research activities than done on Google..."
Kent Walker as quoted by Angus Grigg 2018

Also traditionally separate categories such as search and e-commerce are rapidly converging.
"...for Google to play in this space it needs logistics and warehousing capabilities of JD, which in turn is trying to match the offshore expansion of the traditional rival Alibaba..."
Angus Grigg 2018

Google brings to the partnership extensive international user base and strong marketing capabilities which will help JD better target consumer preferences; on the other hand, JD brings its delivery, warehousing and all-round logistics capabilities

Other Google partnerships

- Walmart (in mid-2017 Google formed a partnership with Walmart to offer the retailer's products on its online shopping site)

- Carrefour (a French supermarket chain that is collaborating online and has a high techs store in Shanghai)

In summary

Google started as an Internet-based search engine with information-based services. Their mission is to organise the world's information and make it universally accessible and useful. It has expanded to other industries like media, telecommunications, consumer electronics, advertising, publishing, automobiles, etc. They have around 40 products (2014) like YouTube (video sharing service), Panoramio ( map-based photo sharing), Scholar (academic papers search), Blogger (blogging platform), driverless cars, Chromocast (television streaming), Google Glass (wearable technology), etc. They continue to look at new ways to use digital information. Their concept of innovation is about creating change in a way that creates value like making users' lives easier.

"...start-ups have a bias for disruptive over incremental innovation, so it's those people who can change entire industries with a new product..."

Maile Carnegie as quoted by Paul Smith, 2014a


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