Tuesday, August 18, 2009

The Google reality and business model

I came to read really a god article. It's all about the Google business strategies and business model. It describes why Google is succeeding. There are many negative aspects associated with the Google business model. Really a beautiful article but author may be biased sometimes...

Galen Ward: Google is supposed to be an unbiased search engine, but they are hurting consumers by using their dominance to become a king maker for their own, increasingly inferior products.

Google's search results are the ultimate world flattener: a website that creates fantastic content where consumers can zoom past name brands and websites with enormous marketing budgets in the search results. In the post-Google world, traditional marketing is dead and content is king.

Startups can flourish -- growing on ideas and content alone instead of through expensive TV commercials.

But Google is eroding the meritocracy they helped create, and the search giant abuses its power when they promote their often inferior services outside or above search results.

From removing map options to aggressively inserting YouTube clips into search results, from giving websites with Google CheckOut special designations to pushing their mediocre real estate search, Google is using their ostensibly open, egalitarian system to aggressively promote their own in-house products.

And the more aggressively they do it, the more it hurts the startup ecosystem and consumers alike.

Some case studies:

Google Maps is a fantastic product that blew away techies and had no technical rivals when it launched. But no one used it.

When maps were included in the Google search results, they included links to the most popular mapping sites on the web - Yahoo Maps and MapQuest.

Just two years ago, MapQuest still had twice Google's traffic. Google shut them off and only Google maps links appeared in search results. Today Google Maps dominates.

Google maps is clearly a superior product. But unlike a lot of other superior products, it got outside-the-search-results treatment.

YouTube is another example. Until recently, other sites had vastly superior video quality and featured longer videos. While YouTube dominated the market for user submitted videos, Google pushed it overly aggressively in search results.

Google Checkout offers more evidence.

Checkout solves a problem that consumers never had: it lets you give Google your credit card and shipping information and confusingly lets you then instruct Google (a search engine?) to pay for stuff at participating online stores, instead of just typing in your credit card number. After trying to win market share by paying consumers to sign up, it withered.

So Google inserted an ever-growing icon next to advertisers who accepted Google Checkout (the only icon allowed in paid search results).

As with Microsoft (see: Active Desktop, MS Bob), even Google's monopoly couldn't guarantee success on initiatives that no one actually wants: Paypal is growing at a faster rate than checkout.

And then there's Google Real Estate.

Google has had real estate search for a couple of years now (and they've pushed it at the top of the search results). But with the recent update, they've introduced another special "Google Box" above search and paid results on Google Maps.

Google real estate is the king of inferior products. It has around 50 percent of the homes for sale at any given time. Some of the data is out of date. And they pass you off to random sites to get details about any given house. (Disclaimer: I know a lot about this because it competes directly with the company I founded, Estately).

So why should you give a shit?

Even the antitrust suit against Microsoft was "misguided," right? Wrong.

Without the fear of another DOJ suit, Microsoft would have snuffed Google out faster than you can say "Netscape." And Google can snuff out competitors with their dominance too.

But like Microsoft in the 90s, Google's dominance hurts competition and consumers in a less obvious, but much more significant way.

It makes it hard for startups to make long-term investments in areas of the web that Google may one day tackle: Google can kill a comparable or superior product overnight (or nearly cut traffic in half) through otherwise unattainable and unbuyable search results.

And Google doesn't have to win every battle to hurt consumers. It only takes a veiled threat of Google entering a market (Microsoft's infamous "vaporware") to give entrepreneurs pause.

Google says that "competition is a click away," but that response is very similar to Microsoft's old stance on browser competition - "A new browser is only two clicks away."

I'm not sure what the best solution is.

Google is innovative and any court-ordered limitation on cross-promoting Google products would probably leave consumers worse-off.

But (sorry Microsoft) out-innovating Google probably won't either. As with Windows, Google search is so familiar and trusted that consumers won't switch for comparable or slightly better results from somewhere else.

Galen Ward is co-founder of Estately, an online real estate search company based in Seattle. Opinions expressed in guest posts are those of their authors, and don't necessarily reflect the views of TechFlash or its staff.