Let's Google it!

Google, a company which was founded by two Stanford University PhD students in 1998, is one the most recognised brands in the world and probably the company most associated with the Internet. Its main product is its search engine called as we all know....Google (that I extensively use to check out recipes and find restaurants), which is the global market leader (90%market share, see figure 1). In the last years it has had a business development strategy of going into other Internet services like e-mail (Gmail), document and spreadsheet software (Google Docs), and location-based services (Google Maps and Google Earth), and also of investing in other companies to develop and integrate with Google products, like YouTube - bought for $1.65bn in 2006 for online videos, operating systems (Android) and online advertising (DoubleClick, bought for $3.1bn in 2008, and recently AdMob, bought for $750m in 2009).


Figure 1 - Google search engine market share:
















However, Google is now a company of nearly 20,000 employees, $23,651bn in revenues in 2009 and a market capitalisation of $155bn, and it is beginning to face a number of problems…


Privacy issues

Every time we use Google search engine we provide individual data about our choices and preferences simply by putting in words, pressing “search” and using the results of the search. Google monitors these searches and uses this information not only to improve its products but as well, importantly, to sell online advertising (97% of Google’s 2009 revenues!) to other companies . Most users have probably not been aware of this and, even though most data we provide might not be “private”, it is “personal”, and people may not be happy that this is being used for commercial uses like advertising (indeed, each time i google a restaurant where to go or a recipe, on the right side banners start popping up suggesting me things about food I might be interested in). Indeed, Google (alike Facebook which is also having troubles in this area) may be pressured in the future to explain better how it uses the data we provide it with and give us more control over what it does with this data .

Providing global Internet services

Even though Google comes from a country with a strong tradition of free enterprise, the global scale of the Internet means that Google has to respect the laws of other countries in which its services are used. Examples of recent problems that Google has had with different laws are:
•Google’s decision to step-back from China, possibly the most promising Internet market in the world, because it did not want to continue censoring search engine results;
•Google’s problem with the YouTube service in Italy: where three of its employees have been legally condemned for not eliminating an abusive video from YouTube.

Dominance of Internet markets

Google is the dominant company in Internet search engines and it is using this strength to enter other Internet markets. This can be problematic from an antitrust perspective if Google uses its power to reduce the competition in other markets where it has a strong presence like the online advertising market . Like the problems that Microsoft has had in recent years with antitrust authorities over its practice of bundling other products( eg Internet Explorer with its Windows operating system) Google may be pressured in the future to adopt business practices that stop it from hurting competition in the markets it is dominant.

Google is today a household name across the world and its company motto, “Don´t be evil”, summarises for many people what the Internet is and should be about. However as Google matures it will face many challenges similar to ‘normal’ companies and how it responds is likely to determine a lot of its future success