Google is growing. And as it presses forward, running over multi-billion dollar companies like Microsoft and Yahoo, it also leaves countless other household names in its wake.
Before I explain how Google is bleeding revenue from companies that had no idea they were in competition with Google in the first place, let me explain where Google’s ambition originated.
Let’s begin with the obvious: Google’s core business is serving up search results. It was not the first company to do this, but it became clear rather quickly that it was the best. And in a free market, the best often wins – as long as it makes intelligent business decisions and has the capital to withstand legal and political pushback from more established competitors.
Almost from its start in 1998, Google has been able to handle the competition. They’ve had powerful resources on their side in the form of Stanford – the elite laboratory in which they were born – and the two most prominent venture capital firms in Silicon Valley, Sequoia Capital and Kleiner Perkins Caufield & Byers.
But more importantly, Google built up their own resources rapidly, with a core product that was much better than the competition’s (in large part because of its links-based algorithm) and a text-based advertising model called AdWords that was so successful, it revolutionized the online advertising industry itself.
So now it’s 2004 and Google is sitting on a bucket of cash. They’ve recently gone public and have a legal responsibility to act in the best interest of their investors. Besides entering other verticals like maps, cloud storage, word processing, and e-mail, they needed to continuously assert their market dominance in the vertical that made them famous in the first place: search. How to get better? Well, Google began by assiduously removing spam from their search results, putting the vast majority of the SEO (search engine optimization) industry out of business. By 2009, their search results were mostly free from spam, and they were the clear market leader – so much so that Yahoo literally gave up and outsourced their search results to the relatively new search engine Bing.
So where from here, Google? Well, if it couldn’t become a better search engine, it would dig a little deeper to get its users the answers to their search queries more quickly. You see, Google has always operated on a philosophy of “Do what’s best for the searcher.” As someone pointed out in the comments section of my last article, that philosophy is very similar to “Do what’s best for the investor.” Because when the searcher is happy, they keep using Google – and not just Google Search, but Google Maps, Gmail, Google Docs, Google Fiber, Android, and all the other Google brands. And when searchers are happy and using its products, Google – and its investors – make money. That’s how the world of Google goes ‘round.
That brings us back to the search behemoth’s brutal acquisitiveness – its Napoleonic invasion of nearby industries in a quest for market dominance. With its share of the search market growing only slightly each year, how can it keep chipping away market share in an industry where each percentage point is worth north of $1 Billion? That’s where this concept of giving searchers what they want more quickly comes into view. And to do this, Google has to “borrow” from the content of other websites. Here’s what I mean:
If you go to Google right now and type “thought leadership marketing definition” (without the quotes), you will see, above the search results, the definition of Thought Leadership Marketing as given by yours truly, Evan Bailyn. On the one hand, I’m very happy about Google placing a snippet of my article above the search results, as if my word were gospel given by the Wikipedian gods. On the other, Google has essentially made it unnecessary for people to read my entire article. They’ve given the searcher – who in this case is curious what the term “thought leadership marketing” means – exactly what he came looking for, and there’s not much reason to explore further. So if I’m the searcher, I’m happy. But if I’m me, I’m… well, mixed.
That’s because this concept of “exploring further” – making people dig just a little bit to find the answers they’re looking for, is what gets people to spend time on the websites Google promotes in its search results. And doing so brings an economic benefit to those websites. By taking away the need to click on the websites in its search results, Google is removing what is likely to be those websites’ largest revenue channel.
To illustrate my point more clearly, let’s take the online reference industry. How happy do you think Merriam Webster and Dictionary.com are that Google started giving out its own definitions of words, placing them above the organic search results? If I’m a reference company and I spent untold amounts of money to create a free, advertising-supported online dictionary (because, let’s face it, it’s my only business model since people stopped buying paper dictionaries), I’m literally watching Google eat up my business, search by search, dollar by dollar.
But the anger these reference companies feel must pale in comparison to the outrage that local review sites Yelp and Tripadvisor feel towards Google. In 2011, the two sites charged Google with illegally scraping their reviews, giving users the information they wanted on restaurants and hotels without them having to actually visit Yelp.com or Tripadvisor.com. If you looked at the search results back then, you could see their point: Google literally took their content and gave it out for free. But when the charges were brought to the anti-competition arm of the Federal Trade Commission, the FTC inexplicably decided not to pursue a lawsuit against Google. A Wall Street Journal article published last week noted that the Obama Administration has close ties to Google executives.
Today, when you search for a restaurant on Google, you can see why Yelp and TripAdvisor still aren’t happy: Google Local’s carousel dominates the real estate at the top of the page. And when you want to learn more about the restaurant within Google’s widget, it rather glaringly avoids linking to the two most information-rich local review sites on the Internet, instead directing people to lesser-known sites like viewmenu.com and kudzu.com. By the time you get to the organic search results, where Yelp and TripAdvisor are glued to the top spots, you can see the star rating and number of reviews for the restaurant without ever clicking onto the websites.
Google does something similar with all the big reference and review sites: Amazon for book searches, Rotten Tomatoes and IMDB for movie searches, and Wikipedia for celebrity and public figure searches. The latter is a non-profit, but the others aren’t. And it’s become clear from Yelp and Tripadvisor’s filing that these sites’ permission was never asked; in fact, the filing states that Google threatened to remove Yelp and Tripadvisor from its search results if they refused to cooperate.
I could go on, discussing for instance the multi-year lawsuit book publishers pursued against Google for scanning every book in existence and allowing long excerpts to be viewed online without the searcher ever having to buy the book. But you get the point.
As Google.com continues to evolve into a destination for, rather than a conduit to, the answers to the questions people are searching, it will keep stripping revenue from websites that act as resources to consumers.
So what does all of this mean for businesses? How does Google’s ambition to become a primary source of information affect companies trying to get their website noticed by potential customers?
Well, it means that you’ll need to be that information. You’ll need to become a thought leader in your industry. Most people don’t just want definitions, or a single sentence of information; they want clear, insightful explanations of the concepts they’re researching. If you can manage to publish authoritative content – in the form of blog entries, white papers, reports, infographics, and research papers – about topics potential customers and employees are interested in, people will find it on Google and become acquainted with your brand.
While Google has made it clear that they’ll continue giving searchers quick answers to queries about things like definitions, movie times, and restaurant ratings, they remain committed to referring them to authoritative websites when more in-depth information is needed. For example, if a searcher wants to know whether a traditional IRA or a Roth IRA is better, or what the architectural planning process of a water treatment plant usually looks like, Google will refer them to the industry website that can best answer their question.
And so, as I say in all my articles: keep publishing original thought leadership content. No matter how much Google changes, it will always promote the websites it considers to be authoritative. Perhaps just avoid starting a reference website anytime soon.