Updated May 20th, 2016. Yesterday’s post was clearly in Beta.
Tim Cook wants to put a dagger in Google’s heart and this is how he could do it
They own the market. Google has a monopoly in search. Anyone who buys ads from the company or competes with them knows this. Heck, anyone who searches, knows it. It’s the reason I wrote seven years ago that Eric Schmidt is cozying up to Obama – to prevent them from getting sued and broken up.
They earned it. Having said that, the company was built on innovation and for the most part, they built the monopoly and competed against a crowded field of Lycos, Alta Vista, Yahoo and others to get to where they are.
Hypocrisy? Consider, both Staples and Office Depot are getting creamed on a daily basis because Amazon is taking share and driving profits out of their businesses. The DoJ just blocked their merger due to antitrust concerns. What? Google isn’t a monopoly but 2 office retailers who sell the same stuff as Target, Wal-Mart, FedEx stores, UPS stores, and thousands of dollar stores are? What is surprising is the progressive presidents are typically the ones suing companies over antitrust yet Obama who is about as progressive as they come, doesn’t seem to have any interest in Google.
Nothing to see here. Fast-forward, to today and finally, the EU is suing Google and the FTC is looking into suing them (again). In reality, no one expects the company that visits the White House more often than any other to be split up while Obama is in office. Get this, Google has visited Obama at least 128 times! Defense contractors in the top 50 in total, visited the White House only 89 times in the same period!
Some surmise the launch of Alphabet was done to allow the company to have a smooth transition when they are eventually forced to split up.
Alex, I’ll take “What is lobbying?” for $6.3 billion. By the way, can you guess which office supply company probably didn’t visit the White House enough over the last few years??
They should thank me for writing this. But Google actually has a defense against the antitrust charge – at least if Apple continues down its current path, it really could hurt the search leader.
Here is how.
Mobile is eating the world. Search is moving to mobile and Google doesn’t monetize smaller devices as well as the desktop due to screen size and other issues. As this transition happens, whoever owns the maps app has a tremendous advantage. Google has its own Maps and Waze apps while Apple has a single maps app which has improved greatly over the years. Isn’t it interesting that there were no antitrust issues when Waze was purchased?
Apple to the Google rescue. Motek Moyen at Seeking Alpha points out Apple is hiring 4,000 people to improve Apple Maps. He argues that Tim Cook doesn’t want people using Google Maps – I’d go further, saying Cook prefers people not use Google anything.
This is where the Google strategy comes in. The company seems to delight in giving away the technology others make money from.
Just a few examples. Microsoft makes most of its profits from Office so naturally Google started to give competing apps away for free. Apple became one of the most profitable companies in the world by designing a touch-based OS interface for mobile so of course Google gave away Android for free. In fact, if you want to get funded, investors ask, how will you compete with Google when they come into your space and likely give it away for free?
How it could work. Apple could do the same thing… Give away advertising for free but this could result in a situation where there would just be too many companies vying for attention on a screen. Instead, they could use the Google auction model but just not take in any profit from the endeavor – perhaps just a few percent to cover overhead. Alternatively they could rotate through all the advertisers – assuming there are enough eyeballs to see them all.
If this is successful, they could roll out their ad network to publishers and have a revenue split like Google does today but give even a higher percentage of the profits to the publisher.
Immediately, Google real-estate for ad placements could drop off.
What threat? Eric Schmidt has already argued that Siri could pose a competitive threat to the company’s search business… This is why Google has also entered the chatbot space. Then again, Siri hasn’t hurt Google’s pocketbook since 2011 when the comments were made. In that time, Hundreds of millions of devices have been sold with Siri embedded.
The enemy of my enemy… If Apple plays its cards right, it could get the advertising community to come on board with it and at least give Cupertino a shot at damaging Google where all of its revenue is made.
I believe most of this strategy is already being implemented by Apple – they have already tried and failed to take on Google with their initial foray into advertising but perhaps they need to learn from Google again and try the auction model.
Apple has the best customers. The ad world is crying out for alternatives and Apple is in a good position to provide them. Also, customers with the most money use iPhones, making these people a very lucrative target.
Worry less about ride sharing and more about search share. Motek says Apple should work with someone like DuckDuckGo. In 2014 I suggested Apple buy them so I am on-board with these thoughts. If you combine Siri and search and the best mapping solution, you become a formidable force.
Make search competition great again. This may be the only strategy which can damage the Google advertising monopoly- moreover, it could be the best defense for dealing with the President Trump DoJ which is looking more likely by the day.