How Google Could Commoditize (Nearly) Everything

Sooner or later Google's honeymoon period with the consumer will end. That will be around the same time their stock takes a dive.

I predict 2 things will happen in the future. Google will dominate every vertical on the web or the US & EU will force a break up of Google into separate companies.

Amazing how Google is like an octopus getting smartly its tentacles every where in the WWW, they have the power of telling people how or what the world is like... Does this sounds familiar to you? "Seeing the world through the eyes of GOOGLE..."

Either that Jeremy or future generations will be born from Googlepods and fed with Googlejuice during the gestation period. All families will be required to have a picture of Larry and Sergey on the living-room wall !

Great article Aaron - and somewhat doomsday / bigbrotherish in its predictions. Im still convinced that Microsoft will sort their act out before this kind of scenario happens and we get to a commoditized data monopoly, although I know that from previous posts you probably dont agree with me.
Paul

Another great doomsday controversy by Aaron which is simply unrealistic. No country can allow itself into such a stranglehold. If they did, Microsoft or Walmart would own us by now (I mean literally own us). Sherman Anti-Trust act and similar acts in Europe were simply designed to prevent these doomsday scenarios. You should also have seen MSNBC's doomsday predictions on Yahoo this morning on TV. The guest analyst was commenting on the new shakedown of its top executives. He commented that Yahoo might take as little as a year to be put on the chopping block. And its number one candidate for buy out - you guessed it, Microsoft. Talk about a showdown.

Doomsday how, exactly? Seems perfectly reasonable to me, given G's current ability to positively turn their hand to anything that has significant mindshare on the web. I don't think we'll ever see them as some great, all-encompassing corporation because they're *so much better* at marketing / selling their 'experiences' than anyone else.

I've had a thought for quite awhile now, and some of your thoughts on why they wouldn't want to get into physical products and where they might gain presence in the offline world really brings those thoughts to a new level.

Google has taken the "information age" to a new level. We've all known it is the information age for a long time and that viewing business from this point of view and dealing in this information was where the power was. Scary and brilliant at the same time, it would seem that Google has taken this from the abstract and viewed it literally. A far greater power than anything else will be the one who holds all of the information, or considerably more than anyone else.

Forget anti-trust... in many ways they are able to access this information both directly and indirectly, through their own services and information gained through offering services and partnerships with other businesses. And much of it, in a way that is free. Imagine governments trying to step in and say, "No, you can't offer this or that for free. You must charge people to use this." Talk about an uprising! I guess we can all hope that the motives are all as altruistic as we hope, otherwise, we may all wake up some day and wonder what the heck happened. Doomsday theories, perhaps. But every now and then you need to examine the far out, crazy theories just to keep everything else in check.

Google cellphone w/scanner = google untethered - the ultimate consumer device!

Imagine the ability to scan the barcode of any product in your home or at the store and get reviews, nutritional information, availability, warranty, price comparisons...with the ability to order it on the spot.

Or, How about an iPod scanner accessory for the pending WiFi portables, with the same functionality...

That's the Google gravy train to get on!

Am I missing something or is Google nothing but a search engine with advertising clipped on?

Yes, of course they're super dominant right now but I really don't see too much in the way of 'barriers to entry' for someone (or others) to take them on at their own game. The internet is still very young so let's not forget that.

It won't be easy but it's not impossible either.....

PS. What about if MSFT gives its new OS (not Vista, the one after that) away for FREE and builds the internet so tight into it MSFT becomes like a black hole, ie there's little you can do to escape.

Hi Alex
I don't think that would go too far with Microsoft...that would be like an AOL. Why Google does so well is they make it seem as though we are in control and they brand their relevancy as some sort of democracy. If Microsoft tried controlling the web they would be called out on it. Google does so well because they have so much leverage and few people see / realize the extent of it.

Aaron.... excellent point. Google is cleverly employing the same strategy that perhaps most of our mothers and housewives of generations past have employed for eons....

the best way to control and get what you want is to let the other half believe they are in control and it was their idea to begin with.

Google is an innovative source that does alot of good, they are beggining to convert the suns rays into electricity but they are missing out on a truely untapped source of energy, webmaster frustration.
If some how they could capture the energy of the whines, moans, and swearing of webmasters they could really make an impact.

Google is searching millions of pages put up there by millions of people. It would be a step forward if they were to add content themselves or possibly reward others for doing so giving the net superior content and some direction. The book project is good, that kind of thing...great swathes of new information, an engine that actually produces something.

Hi hsmauberley
But as they add their own content they scale out costs, and create internal customers which could make them more inefficient and make it harder to make relationships with copyright holders and content producers.

Google wants to influence the markets without having to take on all the costs of actually being a physical market participant in all the markets.

Hi Pat
nice troll comment :)

I can't believe how much negative emotion has now shifted from Microsoft to Google. I almost find folks now getting sympathetic for the Microsoft's and EBay's of the world.

In particular I like the first comment that Google's honeymoon is almost over and their stock will then fall. First, I sure wish I had a 10-year honeymoon. Too bad I don't have that much vacation built up. Secondly, consumers not using Google to search is like saying Madison residents will now only use side roads to get to work. Not gonna happen. And as long as we continue to use the beltline (HWY 12/18) to get to work, the billboards will continue to have prime advertising value.

Google's stock is safe, my friend. Worst case scenario: they'll do a stock split like Microsoft, at which time MSFT's stock hasn't moved for years. Then again, that just may coincide with Google's entrance into their markets ;=)

I agree that Google has to much power these days. But then again I think about how it was before I started to use Google. Now I live in Norway, so it might be that the situation was different in the US but here is how i remember it from 1997:

MSN: Crappy search engine, slow (probably because of the connection :-).. ) but gave me result that was not related to the search.

Netscape: Same as above

Altavista: Back then i used Altaviste a lot, since they powered the local serach engines in Norway. Such as: Kvasir.no, Sol.no, start.no etc...

Yahoo: Got really popular because of the free email, but didn't really break through in the Norwegian market.

But with Google, a new era started. Just after a year, most of the searches in Norway was done with using Google. Why? Because, it was simple to understand and use.

Since the beginning Google has always developed and done thing differently. They have added new features to the search that was missing before. They have gone from being an underdog to become a leader in the market.

And due to their market position I believe that more and more people will start to pick on them. But I really love the idea behind Google, that the information should be free, and that the technology has now boundaries.

From a marketer point of view, Google is developing to an "one stop shop". But I don't think they will have this position for ever. Technology is getting cheaper for every day, and there is always room for other players that can offer and do thing differently.

But information fused with ads is not the same as free information.

"There ain't no such thing as a free lunch". We had the free lunch for a long time. And now it's Googles time to get their money back.

I don't think the debate should be on whether Google should use ads to make money or other commercial activities. But the concern should be "how much of the information is free, and how much of the information will be free in future".

My point is not just how much is free, just that it never was free and never will be. As ad servers (we call them search engines) get better at collecting data the blend of ads and content will only get more aggressive.

Google's story will be interesting once it is finally written.

In one version, I see a company imploding on itself after a series of bad stories, which would most likely involve something along the lines of Google and the Patriot Act or Google using the information it collects in a way that creates distrust between it and the public (the Big Brother scenario). Or the stories could revolve around an onslaught of lawsuits for copyright violations due to its recent acquisition of YouTube.

In a second version, Google actually does well and turns itself into the next Microsoft (okay, for all of you saying it is already the next Microsoft then I would refer you to the Pets.com, or any other stock during that period, prior to the bubble bursting). If Google can keep itself out of hot water then it might have a chance.

In the third version, Google falls somewhere in the middle and joins the ranks of Yahoo and is just another player on the front.

In my opinion, the story on Google is still largely unwritten. It's "don't be evil" mantra was already challenged in China (opinions vary on how the company handled the situation), and in many ways that very mantra could be its downfall. People love Google. A couple of grad kids that took a company from their dorm room to Wall Street, and they made billions in the process. But the love they experience today could turn cold tomorrow.

Let's face it, two guys developed a better mousetrap based on what was relatively a simple concept that any grad, med or law student knows, but these guys applied that concept first to a search engine. And I salute them for it! But, now as the honeymoon seems to be expiring it is going to be extremely interesting to see what happens.

Will Google know our every move by evaluating our click streams? Or, will it get blown out by the next kid on the block? Don't think Google can't get blown out? Remember, there was a day that AltaVista was going to be IT, Netscape was going to be the King of the Internet, and the countless other stories of "this time it's different."

Now, with regard to Google's stock price, it is my understanding that they did not make a lot of friends with their debut on Wall Street between their initial filing and auction process (not to mention the problems during the quite period). However, I also understand that their P/E is not in bad shape (actually, my understanding is it is pretty good right now). The problem is that if people stopped using Google (if you say it couldn't happen then I would caution on never saying never) then ad revenues drop and the stock tanks. Maybe the win the race and have other revenue streams to fall back on that can support the current stock price and allow it to continue to climb, but that's just speculation.

But one thought; if Google's users pull back for whatever reason what happens to that P/E, and in turn, the stock price?

Don't know how this is going to turn out, but it sure is going to be interesting to watch.

Danny

"But information fused with ads is not the same as free information."

I'm not sure I'll side with you on this one Aaron - either that or you didn't elaborate enough. I don't pay a dime to Google if I don't want to. The information is 100% free to the end user who is searching for a new pair of shoes, for example. Unless of course the ISPs continue trying to dig into Google's pockets - then we will all pay.

Are you looking for "separation of search and ads"? I wouldn't see the point in such a business model. Google is like a super highway, and as I mentioned, such adjacent real estate is valuable. I'm not going to put a billboard ad on some dead end country road, now am I?

I hear ya Danny, my friend. The PE isn't bad at all right now. And unless folks stop finding what they need on Google, their earnings will only go higher. Now, that isn't to say that the bidding process will peak at some point in time. I mean, there are only so many words and phrases in the dictionary, and as the bidding continues to rise, the smaller kids will start heading over to Yahoo! and MSN. Makes sense - that will result in CPC's declining in Google due to less competition, and folks will once again go back to their Google campaigns. I liken it to having multiple credit cards - we all are familiar with the balance transfers each year from one card to the next because of the 0% introductory APR. Well, we've also seen the Big Three giving out anywhere from $50 - $100 when you open an account with their advertising platform. Folks are running where the deals are, and in the meantime Yahoo! and MSN will only continue to improve and rates faster than Google will innovate.

Parity will probably come sooner than later.

Hi Allen
I am not talking about a separation just between content and ads.

I am also talking more about
- preventing certain types of content from being financially viable to create
- killing off certain business models
- creating and reinforcing a framework which encourages certain types of formatting and certain biases
- teaching publishers to blend ads in content
- ad automation and targeting which heavily plays off of inherent human psychological flaws and triggers

Allen,

You make a great point with the smaller kids going somewhere else to play. If Google has about 1/2 the traffic, but I can capture the other 1/2, at a lower price, using a combination of MSN and Yahoo then from a small business perspective I have just gained the same viewing share at a reduced costs. In short, the same amount of traffic/exposure for less money.

I agree that you could very well see a situation where Google, Yahoo, and MSN customers play off the engines to get the best deal.

For example, if I see that Google and Yahoo are at each others throat and the deals are there then I've put my resources in front of about 75% of the traffic. If it is an MSN/Yahoo war I go there. In other words, I can swtich back and forth with where I find the best deals.

Aaron,

Great post...you got people thinking and talking!

Danny