Further Evidence Of Google’s Dominance Being Diminished?

Posted on July 20, 2007. Filed under: Technology |

Well I just read that Google missed second quarter earnings expectations. Although earnings were up 28% it clearly failed to meet investor expectations as the stock fell 5% in after hours trading. Is this a sign of further trouble in the short term? Probably not. But this is clearly another indicator and further evidence to suggest that Google’s dominance in search may be on the decline.

Google isn’t just losing web search engine market share but they are now beginning to disappoint financially. To me it suggests that maybe other players in the market are starting to level the playing field and beginning to hurt their earnings if not directly, at least in a somewhat indirect and tangible way. Google’s acquisitions have been widely reported and here is a good list of them. Over the years one can see that their acquisitions have increased dramatically. Here is a link to a graph from Mashable showing Google’s acquisition by year from 2001-2007. This at least suggests that there has been a strategy at Google for some time to distinguish itself from its competition through acquisition.

These disappointing earnings are possibly an indicator that Google’s attempt to maintain it’s advantage and distinguish itself from the competition through acquisition may be a failing strategy. As the above shows, it’s apparent that Google’s focus may have strayed from innovating from within to innovating through acquisition and this may be having an negative impact on its bottom line in several ways. First, and most importantly maybe some acquisitions were not wise and may have had a directly detrimental impact on its earnings. Second, it’s been readily apparent to me for a while that the relevance of Google’s search results are not what they once were or could be. Is it possible that by focusing so much on acquisitions that Google has inadvertently neglected what is truly important and that is improving its search results. Could this be the real reason why Google’s web market share declined in June? I don’t know for sure but it’s an interesting topic for debate.

Here are some other links to give you a different perspective on Google missing earnings expectations.
Google Earnings Up 28% but Miss Expectations
Google is human, earnings miss

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One Response to “Further Evidence Of Google’s Dominance Being Diminished?”

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I think Google is in trouble unless the make some changes. Google made some poor decisions this over the last 24 months and its starting to have an effect. YouTube has yet to prove its value and with the inability to protect copyrights of content, there is big trouble in the future.

But I think what has affected Google the most in the last 6 months is the failure to acquire Napster and Yahoo! making some very strong updates to their interface. Google has always been a non-flashy company, however even just some minor alterations to the interface would go a long way.


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