3 Reasons Why Google Might Lose Market Share

In discussing the question of why Google might lose market share, I am reminded of Yahoo, Alta Vista, Excite and other once high flying websites which have either disappeared completely or have become also-rans .

All three of those sites are still technically around by the way and Yahoo is even still pretty popular, remaining in place as the third most popular search engine after Google and Bing (albeit a very distant third from Google but only about a percentage point behind Bing).

Others such as Magellan (now owned by Excite which in turn is now owned by Yahoo) and Deja.com (now owned by Google) have gone the way of Pets.com (now owned by PetSmart).

In other words, while Google is currently a high flying website and the most popular search engine on the web, it is of course possible and even, dare I say it, likely, that it will lose market share as time goes on. Heresy you say? I still recall a film made just a few years ago which today is a bit amusing where a guy was engaged in time travel and told his future son to remember the word “Yahoo.”

Google Has Become too Big for Its Own Good

Google is too big for its own goodProbably the single biggest problem that Google has is the problem that every startup company dreams of having someday: they’ve gotten really big. Google was once the new kid on the block. They could afford to shake things up and try radical ideas in order to make their presence known and if it didn’t work, well they’d try something else.

In fact, this is the advice that I regularly offer to would be entrepreneurs: don’t be stuck in a single vision of how your business needs to be run. Your customers will tell you what to do and how to do it so that you can actually create the kind of business which will make you some real money. And those who are most successful often don’t recognize their initial concept by the time they become successful.

Heck, who would think that the original Google algorithms would still work today? It’s only because they tweaked their algorithms constantly that they were able to create a world class search engine. The thing is, these days they have to tread much more carefully. Google is no longer the new kid on the block and the search engine is their cash cow.

There used to be an old saying, back when PCs were still mysterious things that came in beige boxes and had CRT monitors: nobody ever got fired for buying IBM. In other words, stick with what’s known and what people are comfortable with and you’ll be okay. Experimentation is the sort of thing that rocks the boat and can cause the major company to implode.

Google today needs to be the people who worry about not getting fired and they thus go ahead and buy IBM (even though IBM hasn’t really done personal computers for a number of years, the analogy still holds). They cannot afford to take radical risks with their search engine and try something completely new and different because that would rock the boat and potentially destroy earnings.

Newer and smaller competitors by comparison, or a newly revitalized Yahoo, if they can figure out how to do it are less likely to worry about trying to stick with the same old same old. They can afford to try radical risks and see what happens because they are able to say, well, if it doesn’t work, we’ll just try something else.

This by its very definition puts Google at a severe disadvantage. They need to be innovative to stay ahead of the competition and to keep up a great search engine but at the same time, they also need to worry about not rocking the boat too much and alienating those who have come to expect a certain standard of quality from the Google search engine.

Heck, look what happened with the recent Penguin update. For the first time in a few years, Google Bowling is back as a possible method of doing SEO and it’s wreaking havoc with Google’s   search rankings. They don’t want to encourage over optimization but at the same time, they have no way to figure out who did the over optimization and this may well encourage some people to jump ship.

Look at a small competitor like Blekko though and they can afford to try radically new ideas, where they don’t even index millions of sites for every possible keyword. They weed out the very best and the rest don’t even appear in their results to begin with.

Search Going Social

Microsoft scored a big point when they recently began to start integrating Facebook into their search results. The fact is that search has become highly commercialized and as a result, people are looking for more personal results. What could be more personal than seeing whatever it is that your friends happen to be doing for the thing you are searching for?

Now I know that some people believe that social networking is way too hyped and that it is really the province primarily of a younger generation. I myself, as a Gen Xer have never understood the mass appeal of Facebook, even though I have an account and several hundred “friends,” most of whom I couldn’t name if my life depended on it.

However, the fact remains that we are the aging dinosaurs of the Internet world and the younger generation has grown up with the web and with things like Facebook and Twitter as natural parts of their own world. Gen Y and the Millenials are more comfortable with these things and they are the ones who are driving new sales these days.

Add in the sheer numbers – Facebook does have around 1 billion members (about one out of every six people on the planet!) and it’s easy to see that whatever you think of social networking, it is here to stay and will continue to have an impact.

Now this is not to say that Google has stood still. They created the plus one program a couple of years ago and the created Google+ more recently, but let’s face it – even if they manage to sign up 100 million users for these services (and that would be a massive achievement. They are nowhere near those numbers), they would still have just 1/10 of the number of members that Facebook has.

This simple fact puts Google at an almost permanent disadvantage. They are unlikely to be able to get Facebook to agree to let them use their material in sidebar search results since Facebook sees Google as a direct competitor and much of the Facebook world is a walled garden which cannot be indexed by Google’s search spiders anyway.

Microsoft and Yahoo Still Have Money

lots of money

Yes, Google is a big company. And yes, Yahoo has been hurting a lot lately. However, let’s not forget one very simple fact: for all that Yahoo has been bruised badly, they are still, even today, worth hundreds of millions of dollars and they still, even today have tens of millions of daily visitors to their properties.

Microsoft’s Bing may be the latest iteration in a long line of efforts to create a viable alternative to Google’s search hegemony, but let’s not forget that Microsoft has awfully deep pockets and they have the ability to keep throwing money at the problem until they figure out a way to get it right and beat Google.

Nobody should forget after all that Netscape Navigator was the premier web browser for a great many years and that Internet Explorer was considered an extremely buggy also ran. Today of course, IE is still the most popular web browser on the planet (followed oddly enough by Google’s Chrome with Firefox from Mozilla running a close third). And Netscape? Except for people of a certain age, that name evinces blank stares.

In other words, Google may have deep pockets right now, but they also still rely almost exclusively on revenue from their Adwords program and from the search engine. They make precious little money from other kinds of properties and this means that they have a great big Achilles heel.

Microsoft and even Yahoo can simply divert money from other parts of their businesses and outspend them and outmaneuver them. And even if Google pours more money into their search engine program, they still need to focus on expanding the base of their business so that they are not reliant so heavily on making money just from search.

Microsoft and Yahoo don’t have that problem to deal with and as such, they can push Google and force them to spend more money defending search than they otherwise might have to spend.

Bottom Line

Nobody knows the future of course and I certainly cannot tell anyone with any degree of certainty that any of the three problems I outlined above are definitely going to cause Google to lose market share. However, I can tell you that the signs do point to real possibilities and there are real chances that things could happen that Google doesn’t want to see happen. Stay tuned.