Google looking for trouble

It's weird to consider possibilities that Google is storing up trouble for itself in the longer term after its staggering rise on the stock market last week in wake of stellar Q1 results (see story below). Nevertheless, there are several issues that could trip the world's biggest online search and advertising company - if and when regulators start paying proper attention and when the online advertising market finally starts to level out.

 

The first is the change to its keyword policy. From May Google will allow anyone to buy trademarks as keywords. This means that anyone will be able to buy a brand name as a keyword at auction and ensure it pops up in the appropriate sponsored search results. However, once a consumer clicks on the advert, the link will take them to a rival's site.

 

The concern is that this will rapidly inflate the cost of keyword-based advertising as brands are obliged to bid for their own trademarks' keyword. There are also fears that it will confuse consumers.

 

Right on the back of a 30% increase in profits, this looks pretty hard to justify.

 

A second issue that is likely to infuriate the European Commission in particular is that Google has not made much if any headway concerning its use of cookies on users' computers which track their online activity. Google uses this information to help target advertising.

 

According to the Financial Times, this became a hot issue last April when Google announced that it proposed to by DoubleClick, the biggest online display advertising firm. There were complaints then that the two combined would own an overwhelming amount of data on the world's Internet users.

 

To defuse the situation, Google promised to come up with a less intrusive cookie technology. Last week, Google's CEO Eric Schmidt explained that this work hadn't begun because his company hadn't been allowed to talk to DoubleClick about this issue while the acquisition was under examination by regulators.

 

As Microsoft and European mobile operators can testify, the European Commission is not to be trifled with and is not doubt following progress carefully, having approved the acquisition last month.

 

The third issue is that Google has moved a long, long way from the heady days of being a spectacularly successful start-up into one of the most formidable corporations the world has ever seen, Last year it added some 6,000 to its workforce, which is now 16,805.

 

According to the Financial Times, ex-Google employees talk about "the intellectually stimulating culture, good pay levels and extravagant benefits".

 

Still the days of making a life-changing amount of money by being in on the act early are gone and some of the people who propelled Google to its outrageous success have left. They include Sheryl Sandberg (who went to Facebook recently) and Doug Merrill, CIO, who somewhat surprisingly skipped to record label EMI. Ethan Beard, head of social media and Chris Sacca who was in charge of wireless development have both gone too,

 

Which brings us to the fourth area for concern - mobile. Google has a poor understanding of what works on a mobile device, and the fact it is used as much as it is on mobile is testament to the brand rather than the quality of the product. In the meantime, mobile is one of the few areas the Yahoo has been successful in and offers the best search facility, apart from the iPhone, of course. Google needs to smarten its act up in a big way if it wants online and mobile to be a contiguous experience that it dominates.

 

In the Western world and developing economies (where most people have no access to PCs and fixed broadband), there will be a sharp rise in the amount of Internet activity from handheld devices. For example, at the end of March, the GSM Association (GSMA said there are now more than 32 million Mobile Broadband (HSPA) connections worldwide compared with just over 3 million at the end of the first quarter of 2007. The use of HSPA, WiFi, WiMAX, LTE and other wireless technologies is set to boom over the next three years and Google is in danger of missing out unless its gets some serious talent in to tackle this increasingly important sector - and fast.

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