Author(s)
David A. Vise
Source
Foreign Policy, May/June 2006
Summary
This paper asks if Google is really a dominant economic force to be feared.
Policy Relevance
Google faces an uphill battle to maintain its strong position as it adapts to markets around the world and faces competition from Microsoft. The honeymoon is over.
Main Points
- Google is the leading search engine in the United States. As of early 2006, it is used for about 48 percent of Internet searches. Rival Yahoo is used 22 percent of the time. Google’s share is growing.
- But Google’s global position is much weaker, especially in China and South Korea.
- Google is not the next Microsoft. Microsoft had no Microsoft to compete against. Google must compete against Microsoft and its $40 billion deep pockets.
- Google fears Microsoft will embed search functions in the next version of Windows.
- Google has not been the most innovative high-tech firm. Yahoo and AltaVista were more significant pioneers in directories and search. Google dominates because it ranks search results best. Pay-per-click ads were invented by another firm and improved by Google; 3M pioneered management methods that give employees lots of time to work on side projects.
- Google’s problems with the Chinese government’s pressure to censor suggests that it will be hard to Google to maintain “moral” superiority. Google’s protection of user privacy is mainly to help protect its own trade secrets.
- Investors have become skeptical and stock prices fell as Google is reluctant to release future earnings projections. None of its new products have been blockbusters.
