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Google: Humbly Going Forward

As the European Commission is pondering which measures it wants to take to penalize the anticompetitive behaviours of Microsoft, a comparable business, though smaller in size, is no less aggressively starting to take a dominating position in its market.

Google started off as a two-person start-up. It developed optimal Internet searching algorithms that can index, catalogue, and parse pages with mind-numbing efficiency and capacity. As one of the few Internet success stories in recent memories, Google grew from a humble research-focus operation into a highly anticipated Wall Street milking cow. In a few years, Google emerged from obscurity into the most popular search engine for Internet users. Its search capabilities became highly respected in the industry, and much of its phenomenal growth can be attributed to partnerships with established Internet heavyweights. One of the most marketable partnerships was with Yahoo!, who had incorporated Google into its portal service, helping countless computer users get acquainted with the speed and simplicity of Google. Yahoo! has just now realized the full impact of this partnership, which had repositioned its own search services as second-rate.

Now this partnership has expired. However, Yahoo!, together MSN and other industry players involved in web searching are playing catch up to Google, with the Google-train showing no sign of slowing down. Google is implementing improvements to their systems on a regular basis, and the number of pages that Google is officially indexing is already beyond the need of regular users.

Google is fully aware of how lucrative this dominance can be. To capitalize on its ubiquity, Google is going back to a business model that many web services have long given up on: online advertisement. It works for Google because of the sheer traffic volume it processes on hourly basis. Traffic, if used correctly, linearly generates profit. By properly targeting the audience using search keywords and website content, Google provides users with ads related to what they are looking for, which translates into higher likelihood of the users clicking on them, which in turn adds money into Google’s coffers.

The true power of the Google ad service is not restricted to Google’s own website, but rather with its vast affiliate advertising network. Even though affiliate program is nothing particularly new, its reach is overwhelming. Many webmasters have signed up for Google’s program because of its simplicity and high royalty payout. Instead of classifying participating websites into broad categories and serving general purpose ads, Google is able to harness its Internet crawling capabilities by indexing every single web page that displays Google ads, and feed them ads that are only relevant to their content. By giving webmasters ads that their viewers are more likely to find useful, this increases the incentive for more webmasters to jump on the Google affiliate wagon. Such grand scheme is paying off generously, and some of the most respected websites on the Internet such as Economist.com and Webster.com are complementing their own systems with Google banners.

For now, Google still projects an image of coolness among seasoned and new Internet users. There are few critics of Google, with most voices in the industry sounding excited about Google’s stellar rise. But that does not mean there are no naysayers. Already, Google-critical websites, such as Google Watch, are popping up over the Internet. Some predict, with a certain degree of cynicism, Google’s imminent demise, while others base their arguments on speculations over Google’s technical limitations. Such alarms, false or justified, keep webmasters on their toes as they increasingly rely on the revenues generated by Google ads.

Granted, there will always be people who irrationally hold grudges against certain products or services. However, this also points out that the squeaky clean image Google once had as a geeky underdog fighting a war for the little guys is in danger of being corrupted. In its stead is the perception of a giant of a company that is amassing all the data that are indiscriminately entered by millions of users every day and creating a large customer behaviour database. Not that this is something that is being done, but people distrust large corporations, and Google is becoming one with a lot of power over the way people find things and conduct their daily business. For many businesses, a better ranking on Google search means rapid pouring in of business, whereas an inferior ranking could obscure the company for good. At least online.

There is also the fear and the danger of relying overly much on one company as the provider of information. Things that show on Google will have a disproportionate importance than those that do not. A minor unintentional side effect of an algorithm could easily block or promote information of a certain nature. This becomes an escalating problem as Google imminently goes public and starts to serve the interest of shareholders instead of web users.

All speculations aside, Google still needs to be careful with its overzealous expansion. There is healthy competitive pressure in the search engine industry that should keep Google in check. At the same time, Google needs to be careful not to be tempted into using its leverage for questionable uses. Trust and respect from customers are two of the most valuable attributes a company can earn. Google has them now. It would be a shame to let those slip away.


March 7, 2004

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