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Google: Brilliant strategy or costly mistake?
Google (GOOG), the dominant company by far on the internet has been gaining ground on its opponents for years and now stands as the undeniable giant in the search industry. No matter who tried the game, no company has been able to even worry Google. And with Google using its influence to enter other fields such as mobile operating systems and a suite of software to rival Microsoft’s prized Office solution. That has started to get some very aggressive companies on Google’s tail and from what I can see, Google has two main possible downfalls. Now of course, these would not be company killers and there is no sign of Google’s death. But Google does not want to be on the defensive, especially with regulators.
The first is of course monopoly worries. So ironic that Microsoft is now complaining that Google is abusing its monopoly as the roles were the complete opposite only a decade ago. But times change and Google now has almost absolute control over the internet. Think Google is not worried? Think again. They did back out of a Yahoo advertising deal a few months ago when told that the justice department would look into the deal.
The second and less obvious possible downfall is the privacy issue. Over the years, the public has become increasingly worried and interested in the privacy issues. Google does not want to be associated with abuses in privacy.
A few years ago, Google made the headlines when it announced that its Google email program would incorporate ads based on the content of the emails. Over time, the issue became non-existent and Google moved on. But now, Google has announced they would start building profiles about its users in order to be able to display ads that would match their interests. That is one step further than anyone has gone and it will be interesting to see if this raises legal issues or raise any attention from the media that could force Google to pull back or alter this change. But if it does not, there is no doubt that Google could generate a lot more money through advertising if it knows all about the user, his emails, his interests, etc. You can read their official post about the change here.
Overall, I do think that this presents Google with a lot more opportunities (and I am personally currently involved in a trade on Google) and I doubt that it any issues raised will be significant enough to have to take a step back. But it is always interesting to see how far a company is willing to go. In the future, could Google even use physical tracking (through their mobile software) to further enhance their user profile?
FD: Zach has no position in GOOG
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