Is Google Becoming Too Powerful? - Case Analysis

Case Analysis

Is Google Becoming Too Powerful?

Introduction

Google was founded in 1998 by Larry Page and Sergey Brin with the goal of organizing all the information of the web so that it can be easily retrievable and accessible to users. The search engine quickly became the most popular on the Internet. In late 2000, Google introduces the AdWords, platform for contextual advertising, a way for Google to monetize page views. AdWords brought billions of advertising revenue to Google that helped them to continue growing and expanding into many Internet services (in many cases through acquisitions) including online productivity, cloud services and mobile technology. Acquisitions helped in expanding their user base, and provided access to talented young professionals.

Google is using its financial strength to hit many of the traditional markets. Google sales ads in newspapers, magazines, radio, and, even on TV. Its suite of online office software, is threatening Microsoft Office domination. It is also disturbing the traditionally strong telecom industry with efforts to provide free wireless Internet access. Simply said, Google has become the largest and most efficiently financed Internet company.

Google Competitive Advantage

Google business model, can be broke down into three data inputs: relevancy of results, speed of search and cost of executing a search query. Although a typical Google query is often useless, users do not care because the results are extremely fast, and if wrong, they can easily start over. Time to results usually prevails over quality which might be offered by competitive search methodologies (Bing for instance). Google invest billions in its infrastructure to keep it fast, and thus protect its ad-based cash machine.

Google achieves extremely high search speed by indexing the Internet quite well. In order to deliver the search results from this index at a very high speed, Google maintains an infrastructure of fine-tuned specialized hardware and extreme bandwidth. Process-optimized infrastructure ensures low cost of executing a query. Google's infrastructure remains a big barrier to entry for its rivals.

Google is setting up the architecture for media and commerce in today's digital world. Google is building a map out of tens of thousands of servers around the world that handle enormous amount of data, in order to address the immense expansion of Internet. Google gains more knowledge and more power with each new search. It puts Google in a position to define how does the world looks like and where does the it goes.

Problems and Challenges

Google's explosive growth raises many questions, including potential challenges from regulators. By most measures, Google enjoys a search monopoly.

One of the observed issues is the use of their 'PageRank' technology. The way it is assigned to web sites is a trade secret. Some aspects of Google's algorithms seem to penalize entire categories of web sites that compete with Google. Examples include news aggregation services and shopping comparison sites, which compete with Google's own aggregation and comparison services.

Threatened by the regulators, Google made some changes to its Universal Search behavior, to include more results from 3rd-party services.

Privacy issues are among the top issues. Most of the Google technologies such as Google's immortal cookie, recording of Internet IP address, the time and date, search terms, and browser configuration, retention of all data indefinitely, Google's toolbar are there to collect user date without even slightly notifying the user.

Another known issue was the copyright issue, when Google began digitizing of books from various libraries in 2004. Google did not ask publishers' permission to copy the books and make parts of them publicly available.

Probably the broadest concern Google's presence