One of the most common questions people ask about Google is whether the search-cum-media company is friend or foe. [1]
The answer, of course, is both. Like the guitar starship on the cover of a Boston album, Google looms. The company’s business is almost a carapace of computing power, surrounding any form of content and threatening to monetize it in the most effective way possible: advertising.
This dynamic frustrates traditional media companies to no end. But Google does have weaknesses. Below, five chinks in the great G Poppa’s armor.
- AdWords and AdSense — Google’s greatest strength and biggest revenue driver — to the tune of 99 percent — is its advertising scheme. But Google’s contextual ads are also the company’s biggest weakness. Spammers and made-for-AdSense site creators are constantly gaming Google’s system through the practice known as click fraud. And some AdSense publishers note that Google’s black box algorithms ensure that the company can bilk advertisers for millions. While Google says it has click fraud under control, it’s made some concessions. And if AdSense publishers continue to grouse, expect more equivocating — and changes? — from Google.
- Overreaching — Google scored a home run with text-based advertising, but its subsequent efforts at monetizing content have fallen short. Google’s project to sell ads in magazines floundered, but the company has recently redoubled its efforts and is selling ad space in newspapers. Google has been ramping up its audio sales force, and the scuttlebutt is that the company will soon sell advertisements in podcasts. Google’s success in these offline efforts will depend on its ability to sell to scale, whether in one medium or across media. But the technology is unproven, and there’s no guarantee Google will be able to target ads to consumers as effectively in offline environments. In the interim, the company may be vulnerable to established players or companies that specialize in a single market and/or medium.
- Copyright — In the eyes of some media companies, Google’s business relies on exploiting content the company doesn’t own. To technophiles and those who understand the flow of attention and Web traffic, Google is nothing but a highly effective guide to the wilds of Internet content. But the media companies that are accustomed to being at the top of the attention food chain — everyone from HarperCollins to Agent France Presse to, potentially, Mark Cuban and Howard Stern — are expressing their frustration through lawsuits.Google admitted its vulnerability recently in a recent SEC filing: “Courts in France have held us liable for allowing advertisers to select certain trademarked terms as keywords. We are appealing those decisions. We were also subject to two lawsuits in Germany on similar matters where the courts held that we are not liable for the actions of our advertisers prior to notification of trademark rights. We are litigating or recently have litigated similar issues in other cases in the U.S., France, Germany, Italy, Israel and Austria. Adverse results in these lawsuits may result in, or even compel, a change in this practice which could result in a loss of revenue for us, which could harm our business.”
- Mobile Carriers — Google is moving aggressively into the mobile phone market. The company’s strategy: provide useful mobile versions of its applications while helping carriers sell handsets and bigger data plans. The carriers, Google and the advertisers will all take a cut from the ad revenue.But the carriers, which are already grousing about net neutrality laws, may not consent to being just another channel for Google’s wares. And as Internet access increases on handsets, they may drive a hard bargain or cut Google out of the ad game altogether. After all, carrier reluctance made the so-called iPod phone unusable— who’s to say a Google phone would do any better?
- User Experience — Perhaps the least of Google’s worries, but a worry nonetheless, is how to make applications that lay users understand and actually use. Some of Google’s products, like News, Maps and Gmail, are very successful. Others, such as Google Video, Google Reader and Google Talk have faced adoption challenges. Many of Google’s products go unnoticed by the general public.Part of the problem is Google’s tendency to solve engineering problems instead of user problems. A good example is Google Video’s link within a video feature. The feature is great if you know about it and want to physically change a URL. But otherwise, it’s an accessibility nightmare. Another problem is Google’s tendency to come out strong with a beta release, but neglect to follow up with a release candidate.
Agree? Disagree? Leave your thoughts in the comments.
[1] The persistence of this question speaks both to journalists’ fondness for confrontational locutions and their predilection for posing obtuse questions. Most questions posed in headlines have complicated answers, a result that confuses more than clarifies (or creates additional questions, as any conversation should) and ensures that the headline will appear again in six to eight weeks.
