The problems facing Google

Google is dominant in its sector, yet its once-bulletproof brand exterior is showing a little bit of wear and tear.

By Simon Brew, 6 Feb 2009 at 15:57

There comes a point where, in spite of whatever promises you make to your shareholders and customers, it becomes really very tricky to grow that much any more.

Granted, under US law it’s a legal obligation to ensure you continue to deliver maximum returns for your shareholders, but once you’ve reached a dominant position in the marketplace, it becomes very hard to stay near the top. And while the old adage that 'the only way is down' is perhaps a little harsh, once you get to a certain size, there’s surely some truth in it.

Just look at Microsoft. In January, it’s seen its market share slip in the browser market to just over two thirds – down from a near-dominant position just a few years’ back – and even in operating systems, it’s now been reported that the market share of Windows is slipping under 90 per cent.

That’s still a huge number, but for such a dominant product, even the small slip in numbers is going to be cause for some kind of alarm. Plus, is it likely that Microsoft will manage to get it over 90 per cent again? That’s, perhaps, a debate for another time.

The Google Factor

One company, inevitably, that has enjoyed chipping away at Microsoft is Google. Through products such as its Chrome web browser, its collection of online applications and its dominant web search and advertising services, it’s come quite literally from nothing, to being the company that Microsoft aspires to be more like.

It’s done that partly off the back of playing itself against its Redmond opponent, too. Happy to see Microsoft cast as the big bad pantomime villain, Google has seen to be keen to provide viable alternatives wherever it can, and to make them as slimline and free of bloat as possible. All the while, the company’s founding principle of ‘Don’t Be Evil’ sits in the background.

And yet while Google is hardly at the point where you could accuse it outright of breaking that principle, there are cracks in its branding and perception starting to show, and for the first time, there are signs that a seemingly invincible company may be showing a couple of weaknesses.

Okay, we’re not talking anything that’s going to bring a proverbial house of cards tumbling down, but there’s a growing feeling that Google is facing some serious challenges to maintain its position and perception in the marketplace.

Size matters

Surely the biggest obstacle in its path – as Microsoft has found many times in the past – is its size.

Google has reached a point where it could be accused of being equally dominant in its key market sector as Microsoft is in its, and for the first time in 2008, it got to the stage where it was attracting unwelcome regulatory attention.

Thus, a spotlight was shone upon the plan by Google to join forces with Yahoo, which would have seen the latter utilising the former’s web search technology. As soon as it became clear that the chances of such a deal being rubber stamped by the US Government were slim – given just how much market share this would involve - Google pulled out, before any proper investigation could take place.