Case study summaryGoogle began as a simple search engine in 1998 by two Stanford University students, Larry Page and Sergey Brin (Mendoza, 2016). Less than two decades later it is a global force as a market leader in online references and tools, including Internet searches. The industry in which Google operates is expanding and innovating rapidly, with Google and competitors increasing their scope of operations, refining their methods, adding new products as well as refining revenue models most of which are dependent on advertising (IBISWorld, 2015). This lucrative industry brings in approximately $31 billion dollars in revenue, and annual growth is over six percent (6%) (IBISWorld, 2015). Google’s main competitor is Bing, the search engine developed by Microsoft, although Yahoo was once a major competitor (IBISWorld, 2015). Both Google and Bing have benefitted from Yahoo’s decreased market share, putting them in stiff competition with each other (IBISWorld, 2015). Search engines such as Google wield enormous power by directing Internet users to websites (Mendoza, 2016). The large market share of Google has led to some complications for the company due to allegations of antitrust law violations (Mendoza, 2016). An investigation was begun in 2010 by the U.S. Federal Trade Commission as competitors have accused Google of being harmful not to competitors, but rather to competition in markets due to its direction of users through search results (Mendoza, 2016).
Strategies and objectives
Strategies and objectives of Google include horizontal and vertical expansion as well as diversification. Google has been growing at a dramatic pace, and it has expanded into several different fields and industries. It has pursued both horizontal strategies, ensuring that Google is available in many languages and nearly every country in the world, as well as product expansion into maps, books, videos and other specialized searches. Vertical expansion has included the development of various hardware solutions intended to work with its online products. One example of this is the developing partnership with the Hyundai Motor Company in order to explore partnerships in the creation of driverless cars and autonomous driver services that might lead to the launching of a new service which competes with companies such as Uber and Lyft (Auto Business News, 2016). In the past it has attempted strategies to compete with all major Internet companies, including the failed Google Plus to compete with Facebook on social media (Arthur, 2014).
Google in five years
If Google continues to successfully lead the market in supporting Internet users, it is possible that hardware research, design and manufacturing will increase, which may see Google pursuing aggressive market strategies for traditional tools like phones and tablets as well as new technologies such as driverless cars, medical equipment and even glasses that work as a computer screen. There is an increased risk for Google with such a strategy, as unlike online tool development, the production and sales of hardware requires physical testing, storage and shipping for delivery to the customer. Another outcome over the next five years might be a loss of market leadership and share of users, should competitive strategies be successful. In that case Google may fade out of use much the same way that AOL or Myspace has.
As the CEO of Google I would be extremely cautious about further diversification of the product lines, as I would rather focus on ensuring that the existing product lines keep up in a rapidly changing world which has considerable competition. The asset management aspect of vertical expansion into physical products alone carries considerable risk, and with split attention it is possible that Google will lose the focus on maintaining market share in what has made it so successful- its search engine and provision of reference tools. Recommendations also include responding the allegations of its competitors regarding breach of antitrust laws. Google needs to carefully consider ways forward, as the allegations touch on the core of its revenue model- providing high search rankings to customers who pay for its advertising services. There may be a need to innovate with regard to the advertising algorithms or the business model itself in order to ensure that competitors are not able to use this legal strategy to restrict Google’s main revenue earning methods.
Managing the strategies of competitors
The competitive strategies used by the company’s main competitors include the constant refinement of products to increase market share, innovations into new projects and products as well as direct attacks such as the allegations of breach of trust which have been made against Google. In order to combat competitor strategies, it is important for Google to keep focused on its product while fighting against offensive competitor strategies. The most harmful strategy has been the allegations of antitrust in courts in the United States and the European Union by major Google competitors including Microsoft, Yelp, TripAdvisor, and others (Bork & Sidak, 2012). Managing this strategy by competitors involves ensuring that there is a robust and adequate legal defense, as well as continuing to invest in the quality and innovation of its offerings (Bork & Sidak, 2012). One method would be to partner and collaborate with others who have indicated that the allegations represent the use of anti-competition laws such as the Sherman Act to protect competitors, rather than ensure there is vibrant competition in the market which leads to the best possible situation for consumers (Bork & Sidak, 2012).Competitors will not need to win with regard to the antitrust action if the legal battle, along with the many diversification strategies currently in development by Google, lead to the company falling behind in its main product line.
- Arthur, C. (2014). Digital wars: Apple, Google, Microsoft and the battle for the Internet. Kogan Page Publishers. CSU Online Library.
- Auto Business News. (2016). Hyundai in talks with Google. August 18, 2016, Auto Business News. CSU Online Library.
- Bork, R. H., & Sidak, J. G. (2012). What Does the Chicago School Teach About Internet Search and the Antitrust Treatment of Google?. Journal of Competition Law and Economics, 8(4), 663-700. Retrieved from: http://jcle.oxfordjournals.org/content/8/4/663.full.pdf+html
- Busch, W., & Moreno, J. P. (2014). Banks’ new competitors: Starbucks, google, and Alibaba. Harvard Business Review. Retrieved from : https://acnprd.accenture.com/t20150523T041957__w__/pl-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Industries_14/Accenture-FS-Banking-Everyday-Bank-HBR.pdf
- IBISWorld. (2015). Search Engines Market Research Report, NAICS 51913a. CSU Online Library.
- Mendoza, D. K. O. (2016). Antitrust In the New Economy Case Google Inc. against Economic Competition on Web. Mexican Law Review, 8(2), 1-29. Retrieved from: http://www.sciencedirect.com/science/article/pii/S1870057816300324