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Google and the Problem of Success

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Google is fortunate enough to be facing a serious problem in 2010: they have achieved such a high level of success that their own market dominance and sheer momentum has become the biggest threat to their future.

As the company has expanded their focus, their infrastructure, and their payroll, they've evolved into something almost unique -- a stable, profitable disruption engine that enters and permantently changes dozens of other industries, pretty much at will. Only Apple can really compare to the sheer impact of Google, from alternative energy to DNA research to online marketing.

Of course, many of the setbacks Google has faced this year have been symbolic and small. They've recently had a whopping $6 billion buyout offer get very publicly turned down by Groupon, and they lost a privacy case in Pennsylvania for a whopping $1 settlement. Still, legal experts are warning that the real impact of that case will be as a foundation for future lawsuits. For now, though, it's just a small victory for a couple with the unlikely name of Aaron and Christine Boring. (Seriously.)

They've also been faced with much more serious threats, like the recent Chinese attack on their data servers. Part of the colossal WikiLeaks intel was a message explicitly identifying the culprit: Li Changchun. As the fifth most powerful man in China, this would be equivalent to Secretary of State Hillary Clinton being directly linked to planning and authorizing an attack on a foreign corporation. As you would expect, though, Chinese media have been awfully quiet about this story. Google has been quiet about it, too -- they've never made statements or answered questions about who they thought was responsible for the breach.

Google's international problems get worse: they're currently facing an antitrust investigation from the European Commision. The allegations are familiar to Infomarketer readers because they've been long-standing rumors here in the online business world...basically, that Google has been penalizing their competitors when it comes to Google search results and page rankings. Although this would be news to approximately nobody it was proven true, it would also be a potential legal disaster. A financial disaster, too -- in 2004, the European Commission handed Microsoft a fine for 656 million dollars.

There's been a popular meme going around this month about a coming "War" between Facebook and Google, and there are important details beneath the hype. A recent Daily Mail article plays up the personal lives of these billionaire rivals, but there's not a lot of business substance there. The real goods this week came from the Wall Street Journal, who printed an article that sharply questions the value of Facebook ads:

"In September 24% of all online display ads in the U.S. appeared on Facebook—more than twice as many as any other publisher. Yet Facebook is far from capturing a quarter of the wallets of major marketers. The company accounts for just 9.5% of the spending on display ads in the U.S., according to research firm eMarketer Inc."

A much more serious rivalry is being fought out in the realm of mobile devices, as Steve Jobs and company continue to lose ground fast to Android. The most important factor for 2011 is how soon Apple will release the iPhone technology over to Verizon -- until then, expect Android to charge right past iPhone on it's way to competition with Blackberry's RIM for the number one spot.

Meanwhile, in Siddarth Shah's excellent Predictions for 2011 article, he strongly recommends getting more involved with Bing: "Optimize your Bing campaigns. Bing should now represent 20-25% of your volume. Ensure that these campaigns are running optimally with full keyword coverage, if you haven’t done so already." Food for thought! He also predicts that CPC will continue to go up -- the whole article is worth reading.

What's Your Call?

Could Google become a victim of their own success? Spending on online advertising just keeps going up, but will that be enough to keep Google's profit margins going? What would you you be doing differently with a few months in the CEO's chair?
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