10 Challenges that Threaten Google’s Dominance

by Clint Boulton

At 11.5 percent market share, you may not consider Bing much of a threat to Google’s search plot. But part of why Microsoft has been weaker than Google in search has been its failure to scale search queries. This is no longer the case. Moreover, Bing has become more of a shopping engine, which could be very useful for millions of users.

Microsoft Business Productivity Online Suite, which has more than 1 million users, certainly threatens the growth of the successful Google Apps collaboration platform, used by more than 2 million businesses. Microsoft’s brand is trusted in the enterprise, so many existing Exchange customers will jump to BPOS instead of Google Apps. Azure threatens everyone’s cloud because it is pervasive.

Speaking of Android, that fine mobile OS is currently fragmented among Android 1.5, 1.6, 2.0 and 2.1. Many users are often disgruntled because they have to wait for phone makers and carriers to upgrade their phones over the air. Despite a rigid development system, Apple’s iPhone has sold millions and its iPhone 3GS is still considered a superior device to the Google Nexus One. Android isn’t a failure, but it has yet to seriously challenge the iPhone.

We’ve seen this before. While Google was building Android, Apple released the iPhone almost three years ago. Google is building Chrome Operating System, but Apple has already released the iPad. Chrome OS netbooks aren’t due until December 2010, which means Apple has more than half a year to saturate the market with its tablets. If the iPad takes off like a rocket, will users even want to buy netbooks come Christmas?

Google’s stand versus China over censorship and a cyber-attack against Gmail users may be noble, but was it a sound business decision? There are 400 million Internet users in China, most of them mobile. How will Android fare if China’s business leaders turn frosty and refuse to work with Google?

A privacy catastrophe by any measure, even if millions of people flocked to check it out in February, the FTC is investigating this social networking service. Google won’t say how many Gmail users use Buzz, though some say activity is falling.

OK, so why does the world’s leading social network threaten the world’s leading search engine? Eyeballs! Facebook is doing on the social Web what Google has done in search. More than 400 million people use it all over the world. Moreover, as Facebook improves its search technology, it may keep users from leaving the site because users will be able to find what they want from friends. This means more time in Facebook and less in Google, which is, of course, deadly for Google in the long run.

While Microsoft and Yahoo were casually tending to their users, Google came from out of nowhere and took their flocks. We don’t know who it’s going to be (maybe Facebook), but some startup is going to swoop in to eat Google’s lunch. High-tech is evolving. Search is becoming more social. People want to use smartphones (and perhaps tablets) instead of desktops and laptops. Company X will develop a killer app and supplant Google on the Web.

Government hawks are circling Google, from the DOJ’s opposition of Google Book Search to the FTC’s scrutiny of Google Buzz and its proposed acquisition of AdMob. In Europe, companies are catching the European Commission’s attention about Google’s alleged anti-competitive practices. Evidence appears weak in the early run, but if companies keep after regulators enough, they will have no choice but to take action. It worked versus Microsoft. Google will spend millions defending itself in courts all over the world. Is it just the cost of doing business? Perhaps.

Google’s success and data-hungry desire to feed its machines make it susceptible to many opposing forces, from rivals in various Internet markets to governments all over the world. Microsoft found itself in a similar position more than a decade ago and was taken down a few notches by the government. Ultimately, Google can weather all of the threats, but it will get banged up.