Has Google Peaked?

Innovation, the Internet, gadgets, and more.
Oct. 10 2005 4:49 PM

Has Google Peaked?

Potential obstacles for the world's hottest tech company.

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Things are so frantic at corporate headquarters, a Google PR rep recently told me, that he didn't have time to answer questions; he did ask if I knew of anyone who wanted a PR job. As Search Engine Watch editor Danny Sullivan puts it, the fact that Google is getting into everything means that they run the risk of not doing some things well. If Google had invested more in blog search over the last few years, for example, it could have controlled the industry rather than playing catchup.

The recent announcement of an alliance between Google and Sun is another sign of potential future trouble. Usually when Google trumpets something, it has a product ready for prime time (even if it's a product that remains in beta for years). But despite the media froth about Google and Sun joining forces to attack Microsoft on the desktop, all the companies have agreed to do is distribute and promote each other's products—and without a plan to actually make it happen.

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Even if the press got it right, and Google and Sun are planning to create a network-based office suite to compete with Microsoft Office, they would undoubtedly experience a bumpy ride. Would the companies follow Google's model of giving software away in exchange for targeting advertisements? If so, can you imagine drafting a screenplay about vampires and being bombarded by keyword ads for stakes and garlic? Spooky (and annoying).

Besides, would fighting Microsoft for control of the desktop be smart? As risky as it may be to continue spitting out Web products that help disseminate its ever-growing inventory of advertisements, it's even riskier to take on Microsoft, whose market cap is three times the size of Google's. After all, Bill Gates has smashed upstarts before. (See Novell and Netscape.) Google would probably be better off figuring out another way to diversify its revenue streams.

Perhaps its own success is the greatest long-term threat to its business. Because Google gives away its products for free, it's a good bet that the day a company that charges for similar services gets forced out of business, it will sue claiming predatory pricing. The government probably wouldn't allow Ford to give away cars equipped with satellite radio just so it could pump ads to drivers; the courts might find that Google, by giving away software, is competing unfairly.

Who knows, maybe Microsoft would be the one to file the first lawsuit.

Adam L. Penenberg is an assistant professor at New York University and assistant director of the business and economic reporting program in the school's department of journalism. You can email him at penenberg@yahoo.com.