“Great power involves great responsibility”
― Franklin D. Roosevelt
Google is arguably the single biggest part of the Internet but things are beginning to happen at their Mountain View offices that have me concerned. Very concerned actually. You know that feeling when you start seeing a story evolve that you have already read and seen before? I have, so let me explain.
It is the year 2000 and everyone is trying to recover from the Internet bubble that burst in 1999. Bill Gates has moved on from day to day operations at Microsoft and left the keys of the ship to a Microsoft Prodigy called Steve Ballmer. As soon as Gates leaves Microsoft, tension and dark clouds starts appearing over Microsoft and the occasional question of “Will Bill be coming back …” start making an occasional appearance in the press. (Gates never returned and spends his time doing philanthropy.)
For the record, Gates in my opinion is only rivaled by Steve Jobs and Jeff Bezos as founders who have taken the heat and ensured that their companies move forward. Amazon, Apple and Microsoft are the dominant players within global Internet companies whom are making considerable returns for their shareholders. Facebook and Mark Zuckerberg are not there yet as they are a private company. You might wonder why Google and their 2 founders are not listed here… simple they could not convince Wall Street pre-IPO that they could lead their company. Enter Eric Schmidt from Novell who ultimately became Google CEO in 2001.
Why am I reciting old facts? Well is it not interesting to note that since Schmidt moved to be Google Chairman and Larry Page becoming CEO, things have changed. The “Don’t be evil” motto seems to be a pipe dream.
“Don’t be evil.” That’s Google’s unofficial motto, in case you didn’t know. In 2004, when the company went public, its founders even based the company code of conduct on the phrase, which has since become known as the “Don’t Be Evil’” manifesto.
I wonder whether the changes were the reason for Schmidt’s departure.. Google seems far more aggressive, more sure of knowing what their users want and spending billions of dollars on acquiring companies to ultimate sunset them. The acquisitions are done so that their rivals ( Amazon, Apple, facebook and Microsoft) cannot acquire the companies.
VatorNews goes into alot of detail here:
The company filed its annual 10-K with the Securities and Exchange Commission Friday, showing that the company spent $1.9 billion in cash and stock acquiring 79 different companies during the course of 2011. While this amount is almost double that was spent in 2010, when the company spent over $1 billion for 48 acquisitions, this isn’t even taking into account its biggest purchase yet, Motorola Mobility for $12.5 billion, which it announced in August 2011, and is expected to close in early 2012.
Other notable acquisitions made by Google in 2011 include AdMeld for $400 million, Katango, and Apture, the latter of which did not disclose terms.
The sun-setting of products is a topic for another day but ultimately I would love to know how much of the software has actually been put into Google’s various products.. or has it mostly been a talent acquisition strategy?
Google had an initial mission statement which reads “Google’s mission statement is to organize the world’s information and make it universally accessible and useful” but since Page took over it seems to have become totally obsessed with social. The reason is pretty simple if you ask me – Inside the facebook walled garden Google cannot index the content and thus facebook has the potential to also go into search and advertising. Thus ultimately it is all about making sure that facebook is not in the position to take marketshare away from them. The same can be said for upstart search engines such as Blekko, DuckDuckGo and Yandex.
The thought about protecting market-share leads me to the fact that I believe that Google suffers from Innovator’s Dilemma. Can you name one product that they have built or acquired that has become successful? I can’t and I use almost all of Google’s products. I do not add Google+ here as it is a response to facebook’s domination in social and not something that can be seen as a logical extension to their current offering (search and advertising).
The idea behind Clayton Christensen’s Innovator’s Dilemma is that given huge investments in the status quo, market leaders often lose their positions to upstarts that attack the market with seemingly inferior technologies and low prices and then work their way up the food chain – think Xerox versus Canon in printers and copiers or the US auto industry versus Honda and Toyota.
So before I get to distracted, here are the reasons why I am thinking that Innovators dilemma has struck Google:
- They are using their dominant product (search) to plough into a variety of Internet related activities. By doing this they ensure that they take the market leaders out of the picture but still take their money via Paid Search Advertising (SEM).
- They are no longer a small company and can be seen as a corporate that has autocratic processes in their operations. Note what happened after Steve Yegge had that infamous rant.. The fact that he had to write a follow up post on Google+ says it all for me.
- They have lost an enormous amount of talent to other companies. Yes, people move around but Google have had a talent drain as staff have moved to Twitter, facebook and startups. If your top talent are looking at other companies that can give them stock options and not sticking around, that smells of a change of culture.
- Anti-competitive law suits seem to be almost filed daily and it is happening in various regions: Europe, US and Latin America.
- Occurrences of behavior that are not inline with the companies culture. The recent Mocality issue in Kenya indicates that the company is no longer under control from management and that normally is a sign that the company is getting too big. Can you imagine this happening in the early stages of Google’s march into their place of dominance. (Disclaimer: Mocality is owned & operated by my current employer)
- This is the hardest one to write. The once crown jewel (search) is getting less functional by the day. Google seems not to care too much about search but rather does algorithmic changes to alter certain parts of the general problem. Don’t believe me? Do a search and click through to page 8 – 10. It’s not pretty.
- Google are paying large amounts of money to ensure that they take the pain over certain legal misdemeanors. “Google will pay $500 million to settle federal government charges that it has knowingly shown illegal ads for fraudulent Canadian pharmacies in the United States, the Justice Department announced on Wednesday”. This reminds me alot of Microsoft having to pay large amounts of money over Internet Explorer being preloaded on computers sold in Europe.
As this blog is focused on eCommerce you may wonder the relevance of this post:
Google Product Search
Comparison shopping is under threat due to Google Product Search. The fact that Google is placing products from Google Product Search into search results is of huge concern to me. Pushing down results from other comparison shopping engines and putting their Adwords costs up, to be seen by users seems to be the case. One other thing to consider is that organic search plays an integral part in the Comparison Shopping Engine ecosystem. So a few Panda algorithm changes plus Google’s own Comparison shopping product is creating a lot of hurt for all.
This has led to a number of court cases:
The court case that featured MyTriggers from Ohio seems to have turned to a Google victory.
MyTriggers.com, an Ohio-based shopping comparison search Website, accused Google of giving preferential treatment in its search results to Google’s own services. It also accused Google of making unfair agreements with other sites to exert control over search advertising.
“MyTriggers is reviewing the decision and considering its next steps,” myTriggers.com attorney Jonathan Kanter said in an email on Thursday.
ShopCity.com, filed a complaint against Google with the Federal Trade Commission in November 2011, which is investigating whether Google’s business practices violate U.S. antitrust and consumer protection laws. ShopCity began speaking out earlier this past fall.
“When a company begins competing directly with Google, in a market where they are not yet the dominant player, Google will make it very difficult to succeed,” said ShopCity.com co-founder and CEO Colin Pape. “In the process, Google harms consumers by steering them away from relevant results, solely for Google’s own financial benefit.”
Fairsearch.org came about when Google acquired ITA. Flight bookings seems to be on Google’s hitlist and everyone involved with the vertical is concerned.
Google Faces EU Antitrust Complaint From French Shopping Website
Google Inc. (GOOG) faces an antitrust complaint at the European Commission from Twenga, a French shopping-comparison website, which says the world’s largest search engine may have abused a dominant position.
Bastien Duclaux, chief executive officer of Paris-based Twenga, said Google’s services “should not benefit from any privileged treatment” in the company’s search rankings. He said Google updates since late 2010 have demoted Twenga in favor of Google’s own shopping-comparison service.
Yet, since the launch of Google Shopping’s service in Brazil in October, the company strongly suspects Google to favor its own price comparison service against competitors. According to Buscapé, this happens in two ways: when Google showcases images of Google Shopping’s products in its search results, and when it ranks general search results on a specific request.
Disclaimer: Both Buscape and Bondfaro are owned by my current employer.
How does this get resolved?
I wish I had a proper answer. I hope all the Goverment regulators will ensure that a speedy resolution is found, as the longer it takes to handle Google, the longer they have time to dominate search and the various other verticals. Remember Microsoft dominated for a long time and then got fined.
For the various comparison shopping engines it will mean that you will have to provide a better experience for your users and work on building a relationship with them. Going the extra mile will ensure that users will come to your website and not to a Google property. The same can be said to your clients whom have listings showing on your comparison engine.
Google needs to decide what it wants to do; is it a media company (which I think it is) or a search engine. As a long time Google user I am spending more time not being logged in as I don’t want the behemoth to track me. I have switched off all history and mechanisms to ensure that they know as little about me as possible. I have also begun to use DuckDuckGo and Blekko more when it comes to online research as I find their results to be better. If the new Google is going to continue on this current line then I think it creates and opening for a new disruptor to come…. Will history record that Larry Page was CEO of Google during it’s downward spiral?
Disclaimer: I want to make it very clear that these are my own thoughts and do not represent the views of my current employer.