Google’s Dilemma: How Big Is Too Big

If you needed any confirmation that Google dominates the Search field, the latest search figures will convince you. As Forbes tells us, comScore’s February Search Query results have Google increasing its share from 67.0% in January to 67.5% in February. Microsoft edged up from 16.5% to 16.7% while Yahoo! decreased from 12.1% to 11.6%.

Even more dramatically, shows the following data for the Mobile/Tablet Search Engine Market Share in February, 2013.

Search Engine Total Market Share
Google – Global 86.77%
Yahoo – Global 5.31%
Bing 1.93%
Baidu 0.69%
Ask – Global 0.36%
AOL – Global 0.03%

These results happen of course because Google is doing a fine job in search. However with that comes enormous power in influencing whether a particular online property will appear in those search results.

When a company becomes as big and powerful as that, it raises a question on what controls should be put in place over the company. Getting bigger may not be the most useful company goal. If the company takes unilateral actions then it may well unite a strong coalition of the opposing forces. This aspect of strategy came to mind in thinking about Google’s strategy given all this current buzz about Google closing down its Google Reader service to the chagrin of many influential inhabitants of the Web.

As Michael Porter, perhaps the best known strategy guru, has said, strategy is all about saying No. That could be seen as the equivalent of what the best known management guru, Peter Drucker, said – Focus, focus, focus. However saying No is a much more hard-edged concept. Is that approach beginning to have any credence at high level in Google, particularly given the government reactions in certain jurisdictions.

Government Controls on Google

In the USA, in January of this year, Google agreed to change its business practices to resolve FTC competition concerns in the markets for devices like smart phones, games and tablets, and in online search:

Landmark agreements will give competitors access to standard-essential patents; advertisers will get more flexibility to use rival search engines. Google Inc. has agreed to change some of its business practices to resolve Federal Trade Commission concerns that those practices could stifle competition in the markets for popular devices such as smart phones, tablets and gaming consoles, as well as the market for online search advertising.

In Europe, there is a current antitrust investigation and EU regulators foresee a Google antitrust settlement by August concluding a two-year investigation into Google (GOOG). The European Commission – the EU’s executive arm – has been examining proposals put forward by Google to resolve complaints from more than a dozen companies, including Microsoft, that Google was using its market dominance to block competitors.

What is Google’s Strategy

The title of this post, How Big Is Too Big, is intended as a question about strategy. A.J. Kohn wrote that Google’s underlying strategy is pretty simple, can be set out in 7 words and is seemingly harmless: “Get people to use the Internet more.” There is no short summary from Google on its strategy but we can perhaps infer how it might be described by distilling some of the Google pronouncements over the recent past.

What Has Larry Page Been Doing Over The Last Two Years

Larry Page, one of the two founding partners of Google, took over the reins as CEO in April 2011. A New York Times article some 6 months later suggested he was working to trim a bloated ship. The situation was described as follows:

Google is not yet 15 years old, but in tech years, it is an aging giant that moves a lot slower than it did when it was a hot start-up. It is being pushed around by government regulators and competitors like Facebook, Apple and Amazon, which are all vying for people’s online time.

His 2012 CEO letter stated:

I’ve pushed hard to increase our velocity, improve our execution, and focus on the big bets that will make a difference in the world. Google is a large company now, but we will achieve more, and do it faster, if we approach life with the passion and soul of a start-up.

Improving execution could only come about through focus and by the spring cleaning exercises that he described in April 2012 and further in March 2013.

We have so many opportunities in front of us that without hard choices we risk doing too much and not having the impact we strive for.

In all of this the long term direction seemed to be unchanged and these efforts were all geared to achieving improved operational effectiveness. There is no suggestion that Google intends in any way to limit its natural growth in pursuing its simple mission.

The Importance Of Competition

The key determinant in whether Google should consider limiting its growth aspirations are really determined surprisingly by the competition. If other search engines provide realistic and strong alternatives to Google, then even though Google may have a majority share of the search market there is active competition to ensure it does not use its dominance against the common good. Currently the Bing search engine seems to be attracting a steadily growing portion of search queries. On this basis, Google should feel at ease with its current strategy of pursuing its natural growth.

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  • Google’s CEO must be kidding:

    “It is being pushed around by government regulators and competitors like Facebook, Apple and Amazon, which are all vying for people’s online time.”

    Yeah, right. Like that burdensome $25,000 fine? What a joke that is for a company like Google. People need to wake up, already. Google is the most dangerous entity to our freedom – including the freedom to make a living and have free choice – that EVER existed.

    Internet users have handed them a monopoly they can use to destroy any and all they choose and limit what we can find. They are testing only giving us 10 pages of results, so if what you want to find can simply be pushed down that far? It ceases to exist as far as the Internet is concerned.

    We have choices right now. Use alternatives that are independent. There ARE other search engines. for example. Besides that, focus on buying LOCAL and only from non-corporate stores. If you need something not available locally, but it online from an independent seller NOT AMAZON.

    We are collectively handing all the profits and all the power to Google and their big brand buddies like Amazon. We DO have a choice – right now. If we do not exercise that choice we may NOT have a choice down the road.

    SAVE the URLs and ideally the IP addresses of any site you feel is important to you because in the future you may NOT be able to find them in a search engine. (Because small independent search engines use the crawlers controlled by corporate entities – and the results are easily censored to filter out small business.)

    This is NOT a joke. Google’s CEO has said:

    The internet is fast becoming a “cesspool” where false information thrives, Google CEO Eric Schmidt said yesterday. Speaking with an audience of magazine executives visiting the Google campus here as part of their annual industry conference, he said their brands were increasingly important signals that content can be trusted.

    “Brands are the solution, not the problem,” Mr. Schmidt said. “Brands are how you sort out the cesspool.”

    Search for that quote to see where it has been published. They also once said (and I am looking for the exact quote), that their dream would be to provide ONE search result for any search. I don’t know about you, but I prefer to make my own decisions. Not have Google make them for me.

    • Gail, you do right to suggest we should not put all our eggs in the Google basket..That quote about brands appeared in an AdAge article in October, 2008.

      It was part of a speech directed at all the Brand owners, so that may have influenced what he said. Since then it’s not clear that Google has pushed the Brand concept all that hard, although it looks as though it is showing Brand names in search results recently.

      For me, the saving grace in all this is that social media are beginning to have a much bigger influence on the visibility of websites. Poor old Google is trying so hard to make Google Plus a popular social medium but it seems to remain a somewhat complex and confusing world for mass audiences.

      • Hi Barry,

        I originally saw and commented on that quote and additional data Aaron Wall put in his post on SEOBook Big Brands? Google Brand Promotion: New Search Engine Rankings Place Heavy Emphasis on Branding.

        The problem is that it isn’t so simple not to rely on Google because they have a monopoly on search and nothing converts as well as search.

        When I managed AdWords accounts for dozens of small businesses, I had access to all their analytics data and also their back end reports. They consistently received 65-98% of their traffic directly from Google and if I had thought to do case studies I know I would see that the search traffic converted vastly higher than traffic from any other source.

        The first thing I did in every account was turn off content ads. Until you are buying ALL available search traffic you should never spend money on content UNLESS testing proves it converts.

        I agree that since that speech was directed at brand owners it was more honest than something intended for the public. There is abundant evidence that Google is favoring brands over small businesses in both search results and in Google Base / Product search. The Farmer / Panda update primarily slapped competitors to Google including shopping comparison sites, map sites, etc. See Google Farmer Update aka Panda Slaps Google Shopping and Google Maps Competitors.

        Google intentionally hides products even when we search for a specific store. Small businesses frequently rank all year for their money keyword phrases, and then during peak holiday sales periods all of the sudden brands like eBay, Target, Amazon, Office Depot, Wal-mart, etc. outrank them on products those chains don’t even sell. Engraved gifts are a major example of that. There are screen captures showing this in Why eCommerce Sales Decline and Fluctuate – And What to Do to Increase Your Conversions and Profits.

        • You’re right, Gail. Google Search is so effective that probably more than half of all traffic for almost all websites comes from Google. Whether you like them or not, you cannot afford to ignore such a large proportion of your visitor traffic. … and as you say, undoubtedly the conversions to sales are higher for such search traffic than for run-of-the-mill traffic.

          The new twist in all this is whether the two Google founders are now having to be more responsive to the needs of their public shareholders. Larry Page is now on a cost reduction program as we see with the coming shutdown of Google Reader and several other properties. Is there also an equal pressure to push advertising revenues up as much as can be done. Perhaps Google is beginning to operate much more as a typical big company. There’s no time for altruism as expressed in that ‘Do No Evil’ mantra. As they say, follow the money.

          • We must all get beyond what corporations SAY and focus on what they DO. Whenever these are not aligned, what they DO is the TRUTH – not what they say. I worked for IBM for 23 years and management decisions made no sense to me because they often damaged what the company SAID their goals were. Once I realized their true goals, I could finally understand why they made what we all knew were bad decisions regarding our customers.

            While Google claims they are all about advertising and money, in reality this is about POWER and control. If Facebook, Google, Bing, Yahoo, etc. only wanted to build profiles on us to show us more relevant ads that would not be such a grave concern (although even that can cause serious issues for people who are not “out of the closet” regarding who they really are – what they read, what they like to do, etc.

            Few really want EVERYONE to know every detail of their lives. Most do not share with their employer or their boss what they may share with their closest confidant. Today they ARE sharing those things because EVERYTHING we do is being recorded and can be data mined should someone choose to do so.

            If people cared about their freedom and privacy and wanted REAL choices, they would stop handing these corporations so much power. The end result of letting Google expand their ever-growing monopoly is a company store to go along with the coming one world government and one world religion.

            Wise people everywhere who do not want to be controlled are creating relationships and communities that operate outside the mainstream system. We need to encourage people to stop automatically using Google.

            We must support alternatives now or there can be no alternatives. If all you care about is price they can’t compete with Google giving everything away for free – and in that way you enslave yourself.

            Google is not recently evil because they are now publicly traded. They have had a plan from the start and have always been evil. Truly ethical people would never thing up a slogan about something that is not in their lives. Can you imagine an Amish or Mennonite family business using the slogan “Don’t Be Evil”. They don’t think about evil.

            For evidence of Google’s intentions, look at the post where I collect concerns about Google: SEO, SERPS, Is There a Google Search Engine Fairy? and pay special attention to the short (2 minutes 46 second) video at the top about what Google already controls.

            Ask yourself what they have to do with power companies, DNA, biotech, and health care. Then note that is NOT a NEW video. It aired over three years ago on ABC in Australia. Imagine what they have acquired and patented since it was made.