Google's Rise

Google's rise and its dominance of the Search Engine market has been quite incredible. In terms of its multinational reach and host of related spin off services, Google is arguably the dominant company of the Internet at large. At current count, there are 522 product listed that Google offer aside from its core web search business.

It's sometimes hard to imagine a world without Google and the gamut of its incredibly useful web services and applications. Google Search aside, you can now look up satellite images from your own street in seconds, watch and share videos with people on the other side of the world, create 3D architectural drawings, write and host blogs, view who's visited your website and where they were from plus lots, lots more; and all free at the point of use. That's right: for FREE! It's fantastic from a user's perspective; never before has technological empowerment been so accessible and so cheap.

Who suffers?

But is there another viewpoint to all this? It's quite possible that there is, and one should probably spare a thought for the companies with whom Google is in competition with. Not that you should necessarily feel pity for all of those in Google's sights; in many ways you have to accept that technology and markets move on and if you don't keep up with it as a business, you're history. Witness Microsoft struggling to keep up with Google and Google's direct competition with both Windows (Chrome OS) and Microsoft Office (Google Apps). Apple are also now in direct competition with Google as the Google Nexus One hits the shelves next to the iPhone, a development which forced Google's CEO Eric Schmidt resign from the board of Apple.

Google's business model

While Google doesn't always "win" when it enters a new market (note its failure to dominate the Social Networking market as Facebook races ahead), Google's Ad-funded business model means that it can offer services for free, which in turn means that any new market into which it enters and where paid services once ruled, it stands a pretty good chance of seizing a large market share by competing on cost alone.

And this is where Google sometimes worries me. If a company with such a monopoly and business model can come along to virtually any internet based product and start offering it for free as a loss leader for their core AdWords product, is any internet or communications business actually safe?

Robert Thomson of the Wall Street Journal once remarked "Google devalues everything it touches". He was referring specifically to how Newspapers and journalists were being devalued by Google dividing "content quantitatively rather than qualitatively." My thoughts extend to not just content providers but to service providers. Take SatNav company Garmin for example, whose shares fell 18% in October 2009 on news that Google was launching a free satnav for it's mobile devices. Great news for users like me who will be able to get satnav without paying for it as an extra service, but one wonders how I would feel if I were on the board at Garmin or TomTom. One could argue that in the face of competition these companies will need to update their business models, but they don't have the ad-funded infrastructure to fall back onto, so where do they go from here?

And if I had shares in Rightmove, I might be worried about the news that Google intends to launch a UK Property Portal soon. Estate Agents will be able to list their properties on the portal for free, while Rightmove charge around £325 a month. But again, for the users (in this case Estate Agents and house sellers) this is great news of course, as it lowers the overheads of selling your home.

Best start hoping your industry isn't next...

While I am tempted to compare Google's expansion into new industries to a company such as Tesco, who are widely lambasted for causing small high street shops to close, as they themselves expand, I don't think the comparison would hold entirely up to analysis. In many respects a lot of the companies that Google go up against perhaps follow business models that had potentially short shelf-lives anyway and one shouldn't worry but instead rejoice as more and more services become free thanks to those clever souls in the Googleplex.

That is, of course, until it's your industry into which Google has just entered.