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Today, 40Tech is pleased to present a guest post by Kosmo from The Soap Boxers.
It has been 14 short years since Stanford students Larry Page and Sergey Brin founded Google. Since then, the company’s market value has skyrocketed to more than $150 billion and the company’s name has become a household word.
Photo by HarshLight
Like many successful companies, Google has decided to diversify rather than putting all of its eggs into the search engine basket. I personally use Google for:
- Search engine
- Advertising provider
- Website Analytics
- RSS Reader
- Webmaster Tools
That’s a half dozen tools that I use fairly frequently, and I’m not even a real “power user” – there are people who depend on Google products much more heavily. With Google having its hand in nearly every pie these days, have they grown into a monopoly that needs to be regulated or broken up?
They Could Put Me Out Of Business!
A friend of mine runs a successful blog and is concerned about the amount of power that Google has in the search engine space. A considerable amount of his traffic (and revenue) comes as a result of Google (as is the case for a great many bloggers). Changes in Google’s algorithms could result in his traffic being cut dramatically – costing him a considerable amount of advertising revenue.
While I can certainly empathize with my friend – since I also get a considerable chunk of traffic from Google – I happen to think that he (and others) are looking at this a bit backward. Who are the customers of Google’s search engine – the people searching, or the website owners? I see Google as the Lonely Planet guide to the internet – a travel guide to stops along the information superhighway. To take the analogy further, let’s say you own a restaurant that a popular travel guide reviews as a top choice for travelers. Suddenly, you’re booked solid and perhaps even think of opening a second location. Then, the next year, the travel guide doesn’t mention your restaurant at all – and traffic declines sharply. Can you be very upset at the publishers of the guide? Of course not – their job is to make the readers happy. Any benefit to you is incidental. It’s the same thing for Google – it’s nice if they drive traffic your way, but they don’t owe you anything.
Too Hard To Switch?
Is it too hard to switch from Google products, since they have their hand in everything? Earlier in this article, I mentioned that I use six Google products on a regular basis. How hard would it be for me to switch?
Search engine – If I wanted to switch to a different search engine, it’s pretty easy – just plug the URL of the search engine into my browser.
Email – I use Google’s mail servers for my own domain. Since these aren’t @Gmail.com addresses, I could switch by making a few changes to settings on my domain registrar’s site. I’ve done this before, and I can assure you that it’s not a very big deal. For Gmail addresses, this is more difficult, but that has always been the problem with email addresses – unless you own the domain, they generally aren’t portable. There are so many different providers of email service that it seems a bit silly to suggest that Google has undue influence in this market.
Advertising provider – I use Google’s Adsense program for the ads on my site. Google does have some competitors in this space, and I have experimented with a couple of them, and have always come back to Adsense (some of the competitors show ads that aren’t very relevant). I have a WordPress plug-in (WhoSeesAds from Ozh) insert the ad code on the fly. It would be child’s play to replace this code with something from Chitika or a different competitor.
Website Analytics – Google Analytics is one of three products that I use for analytics, and not the one that I rely on most heavily. I think it would be fair to say that I have already switched to WordPress Stats for most of my analytics.
RSS Reader – I really don’t need a lot of bells and whistles, so I don’t have much of a reason to switch to a different RSS reader. However, it seems that there is a standard called OPML that allows you to export information about your subscriptions and then import this information into a new reader.
Webmaster tools – Switching to a different provider would generally mean adding a small bit of code to my site.
In addition to being a user of these six Google products, I am also a former user of Blogger. I made the switch to WordPress back in April of 2009, at the urging of a friend who declared WordPress to be superior. I was able to easily import all of my old articles from Blogger to WordPress in a matter of minutes.
Unreasonable Barriers To Entry?
One characteristic of a monopoly is that their actions cause unreasonable barriers to entry into the market. Certainly, companies wishing to compete against Google have an uphill battle. However, it’s important to note the different between a high barrier to entry and an unreasonable one. There are many industries in which new companies face difficult barriers to entry. If I wanted to start a car company, it would be extremely expensive and quite difficult to succeed – but I can’t honestly say that Ford, Toyota, Honda, Mercedes Benz, or Porsche have a monopoly.
I even question exactly how high the barriers are. Bill Gates famously said that a kid in a garage could put him out of business. This could happen to any number of Google’s businesses as well. If someone is able to find a way to charge advertisers less than Adsense does while paying web site owners more, that would be a sustainable advantage that could be used to drive Adsense out of business. It is unlikely that any one company could completely put Google out of business, but that’s the whole point of diversification – and not the mark of a monopoly.
Bio: Kosmo is an aspiring novelist, vehement opponent of the designated hitter, student of true crime, and plays the keyboard for The Soap Boxers – an eclectic, team-written web magazine that touches on a wide variety of topics, including why strikeouts aren’t as bad as people think.
Evan Kline says:
I share the same fear of your friend. We get pretty significant traffic from Google on several topics, and our traffic (and revenue) would drop sharply if that would change. Although I think the main target of search is the user (the one doing the searching), I do think that Google is mindful of the site owners, as many of them use Adsense.
I’m no expert on the laws dealing with monopolies, but it seems like the ability to devastate such a large segment of the online world has to count for something, where one company has such an overwhelming percentage of search traffic. As users, we might be able to easily jump ship to another search engine, but I think that search competitors could end up in the same boat as Microsoft’s OS competitors if Google’s percentage of search would grow beyond the 60-70% that they have now.
November 9, 2010 — 3:52 pm
Kosmo @ The Soap Boxers says:
Several years ago, the very first Wendy’s location was forced to close down. Why? Because for years it had been situated near a popular tourist attraction (museum?) which drove traffic to the Wendy’s. The other business moved, and the Wendy’s lost a lot of business. You could say that the move devastated their business … but the benefit to Wendy’s had always been an indirect (secondary) effect for the other business.
What would the government do to cause more competition in the search engine market? It’s not cost prohibitive to enter the market. For a few bucks a month, anyone with the necessary coding skills can launch a search engine – it just takes a domain name and a hosting plan (yeah, you need to spend more money to scale the site if you get popular, but that’s different than merely entering the market). Sure, the marketing will take some work, but setting up the distribution chain is very cheap.
Don’t think Google search could be toppled? Go back 10 years in the time machine and look at who the dominant players in the market were. Remember when Yahoo was the absolutely best investment in the history of the world?
Then there’s the whole issue of search engine rankings being a zero sum game. Let’s say you and I have the two most popular pages on a particular topic. You’re #1 this month and I’m #2. Google changes its algorithm and you drop to 2 and I ascend to 1. OK, you got “screwed” by Google, but I got a benefit. Who is to say which site is better – it’s very subjective.
I do think that Google makes an effort to aid site owners. While they don’t tell anyone exactly how their system works (because that would be a recipe for disaster, and spam site owners would quickly abuse the system), they do say what constitutes good and bad practices and make it easy to get your site indexed with them.
November 9, 2010 — 10:59 pm
Squeaky says:
Kos….I would sure hope that Google would not ever be classified as a monopoly and broken up.
The whole idea of free enterprise is that it forces other to get better. If Google is the best or the biggest, it should force others to step up their game and make something as good or better than whatever service Google is providing.
I currently use Google as my homepage, Gmail as my email client, Google Voice, Google Latitude on my Droid, Google Buzz, Picasa, etc.
Name someone that does any of those things better?
Bing? MSN? Yahoo? Please.
If someone has a problem with the size or depth of Google, the answer shouldn’t be regulation. The answer should be to beat them at their own game.
I hadn’t ever thought about the revenue aspect until you both touched on that. Regulating Google sounds like it would impact several other small businesses as well. That tells me that it just isn’t the answer.
Squeaky…
November 10, 2010 — 11:10 am
Kosmo @ The Soap Boxers says:
@ Squeaky – In the thousand or so words in my article and response, I managed to miss one critical point.
A company can have dominance in the market because there is an uneven playing field, or they may have dominance because customers prefer their product or service.
I think many of the competitors to Google search have fairly strong name recognition. Microsoft had a pretty big media campaign for Bing, and they certainly have the money to make it a fair fight. For whatever reason, people strongly prefer to use Google search. Whether the superiority is real or perceived is irrelevant (that’s why companies have marketing departments) – you can’t (easily) legislate that a consumer make a different decision.
November 10, 2010 — 2:43 pm
Evan Kline says:
I hope I didn’t come across as advocating for a breakup of Google. (I’m a huge Google fan myself). I was just trying to point out that we hadn’t necessarily considered all the factors that might make Google a monopoly in the eyes of the law. Customer choice alone might not cut it, but, as I noted, I’m far from an expert in the laws dealing with monopolies.
November 11, 2010 — 1:23 pm
Kosmo @ The Soap Boxers says:
I think you raise some good points. And I suspect that you know more about the law surrounding monopolies than I do :) My formal education in law consists of two business law classes 15 years ago.
I think the ability to do harm is interesting for several reasons:
1) The issue of it being zero sum, that Google must elevate one site for every site they demote.
2) The question of what they owe to non-customers with whom they have no contractual obligation
3) The fact that I haven’t actually seen Google take steps in this direction. Would the government break up Google merely because the THREAT exists? Actually, if you think about it, it’s in the best interest of Google to have the best sites appear highest in the search results. If your Google searches start sucking, you’re going to jump ship to another search engine soon. Basically, they must maintain a level of integrity within their search algorithm in order to maintain their dominance.
November 11, 2010 — 9:52 pm
Squeaky says:
Not at all Evan. I think we’re all on the same page here.
November 11, 2010 — 2:54 pm
Maria Pavel says:
I wouldn’t call it a monopoly, yet. This is because they do have competition, but either that competition isn’t trying, or it doesn’t want to try, Google provides good service with (for most people) minor drawbacks like the losing of privacy.
It’s not really hard to switch, but what are the options?
March 1, 2011 — 8:10 am