How long will google's magic last

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How long will google's magic last

  1. 1. How long will Googles magic last?“GOOGLE is not a conventional company. We do not intend to become one,” wrote Larry Page andSergey Brin, the search firm’s founders, in a letter to investors ahead of its stockmarket flotation in2004. Since then, Google has burnished its reputation as one of the quirkiest companies on theplanet. This year alone it has raised eyebrows by taking a stake in a wind-energy project off the eastcoast of America and by testing self-driving cars, which have already covered over 140,000 miles(225,000km) on the country’s roads. Google has been able to afford such flights of fancy thanks toits amazingly successful online-search business. This has produced handsome returns for the firm’sinvestors, who have seen the company transform itself in the space of a mere 12 years from a tinystart-up into a behemoth with a $180 billion market capitalisation that sprawls across a vastheadquarters in Silicon Valley known as the Googleplex. Google also stretches across the web likea giant spider, with a leg in everything from online search and e-mail to social networking and web-based software applications, or apps.Much of its growth has been organic, but Google has also splashed out on some sizeableacquisitions. In 2006 it paid $1.7 billion for YouTube, a website that lets people post videos of theirchildren, kittens and Lady Gaga impersonations. The following year it snapped up DoubleClick, anonline-advertising network, for $3.1 billion. More deals are likely. Google is bidding for Groupon, atrendy e-commerce business, using some of the $33 billion sitting in its coffers.Related Topics:* Technology* Search Engines* Science and technology* Internet* United StatesAll this has turned Google into a force to be reckoned with. But now the champion of theunorthodox is faced with two conventional business challenges. The first involves placatingregulators, who fret that it may be abusing its considerable power. On November 30th the EuropeanUnion announced a formal investigation into claims that Google has been manipulating searchresults to give an unfair advantage to its own services—a charge the firm vigorously denies. InAmerica, Google faces a similar investigation in Texas and is also battling with a bunch of online-travel companies who have been lobbying the government to veto its recent purchase of ITASoftware, a company that provides data about flights.The other challenge facing Google is how to find new sources of growth. In spite of all theexperiments it has launched, the firm is still heavily dependent on search-related advertising. Lastyear this accounted for almost all of its $24 billion of revenue and $6.5 billion of profit.Acquisitions such as YouTube have deepened rather than reduced the firm’s dependence onadvertising. Steve Ballmer, the boss of Google’s arch-rival Microsoft, has derided the searchcompany for being “a one-trick pony”.Ironically, investors’ biggest worry is that Google will end up like Microsoft, which has failed tofind big new sources of revenue and profit to replace those from its two ageing ponies, theWindows operating system and the Office suite of business software. That explains why Google’sshare price has stagnated. “The market seems to believe this could be like Microsoft version two,”says Mark Mahaney, an analyst at Citigroup. News of the formal EU antitrust enquiry will no doubtinvite further comparisons with Mr Ballmer’s firm, which fought a long and bruising battle withEuropean regulators.
  2. 2. Is such a comparison fair? Those who think it is point to several changes that could damage Google.The first is the rise of new ways in which people can find information online. They include socialnetworks such as Facebook, which saw traffic to its site in America surpass that to Google’s sitesearlier this year , and apps offered by Apple and other firms that help people find informationwithout using a web browser.Contact A-1 Technology for Facebook Apps Development.

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