This week marks a huge change in the world of technology and the events which have taken place will forever change the landscape of the market as we know it. News of Microsoft and Yahoo finally finding a way to work with one another means search has become a two-horse race. In addition there is the potential for Microsoft and Yahoo to better monetize their assets as their combined share of the search market is now attractive enough to convince advertisers to give them a try. Moreover as this network has less advertisers driving up bid prices, there is high likelihood that advertising ROI will be higher with Microsoft/Bing/Yahoo than Google.
Having said that Yahoo has proven in the past that their corporate culture is still stuck in the dotcom days when money flowed like water with minimal effort. Amazingly Yahoo is still one of the most valuable destinations online and the company has had problems turning this mass of eyeballs into increasing piles of cash. Companies born into natural monopolies quite often have these sorts of issues and Yahoo shareholders who haven’t sold out hope new CEO Carol Bartz will change the company around. This is a monumental task but so far at least she got the Microsoft deal done and to be honest it is impossible to fathom why it took so long as the companies have such a huge common enemy in Google.
Microsoft too was stuck in bureaucracy hell which kept it from growing as rapidly as it could. I use the term was because Microsoft seems to be reenergized and has come out swinging with competitive retail stores to Apple, a big push to speed up the rollout of Windows 7, TV ads taking on Apple and finally this Yahoo search deal.
So Google has a large competitor which at the moment will be in disarray due to the merging of two bureaucratic corporate cultures, technologies and sales forces. I don’t predict the next 12 months to be a problem for Google and in fact I can see them gaining share while Microhoo or Yahoosoft figure out how to bring the pieces together.
What this means for Google however is that they have more pressure on them. If they screwed up something a few months ago, I am fairly certain neither Microsoft or Yahoo could capitalize on it. Now however with Bing and the momentum of the Microsoft/Yahoo deal, there could be a marketshare shift if there is a misstep by the search leader.
Coming at Google from the opposite end is Apple who is increasingly finding the company at odds with its business model of making huge subsidies from hardware sold. At this point Android is a minor threat to Apple – Google Voice however with its ability to insert itself between the customer and the carrier is a real threat.
Apple did an about-face – accepting and then rejecting the app. And Google is upset about it. Apple claims the application duplicates functionality inherent in the phone but this can be said for many apps and is a convenient excuse made by Apple and no one believes it. Nor should they.
A link forward (added and deleted from Twitter) from a Google exec shortly after this news was released pointed to a satirical article mentioning that Apple results could be left out of Google search results as the Apple site duplicates the functionality of other sites. Touché.
The official explanation was that the Google Voice app duplicated functions on the iPhone, but many think the rejection order came from AT&T. The application would allow users to make calls and send SMS messages for free using the app, threatening the profits of AT&T.
The Google Voice application is still available for Blackberry and Android phones.
Google’s official explanation for removing Apple from its search results came from Vice-President in charge of search, Marissa Mayer, “Those search results duplicate a lot of the functionality of other sites. For example, people can find cell phones on many other sites. We just think this makes it easier for our users.”
Exclusion from the search results could mean lower profits for Apple, as 90% of visitors reach their site by typing “apple.com” into Google.
Mayer denied that this was a direct response to Apple rejecting the Google Voice application. “It’s just a coincidence,” said Mayer.
Steve Jobs hinted that another strange coincidence might occur soon. “Safari may be getting a different search engine, just saying,” said Jobs.
The news gets worse for the search leader as Google has found its ally – Apple (after all the Cupertino company has chosen not one but two Google apps to be preinstalled on iPhones — Maps and YouTube) turning on it. Then there is the strengthening of the competition in search.
Is Google in trouble? Nope, not today and not for a long while. But for the first time we see a momentum shift of major proportions against the company and from various fronts. Other companies who hate Google – and the list of organizations with wrecked business models who blame Google grows by the moment, will start to gravitate towards the company’s’ competitors slowly at first but more quickly over time. eBay and Amazon for example are a couple of companies who aren’t thrilled with the control Google has over their businesses. I am sure the launch of Google Checkout caused some sleepless nights for execs at both ecommerce companies. Signing some big Bing deals may be a good way to at least fell better about themselves.
Again, Google’s model isn’t broken. As long as they keep innovating and rapidly rolling out new and innovative features and services they are in a great position.
The war is far from over but the battle lines are being drawn deeper than ever and we will begin to see a cascade of new and interesting alliances formed, often to hurt Google.
It will be fascinating to watch how this plays out but I see all of the above as great news for those people who crave innovation. Tech will get better for sure and all the benefits which come with better tech are assured for years to come.