google-competitors

Google Competitors In A Nutshell

While Google (now Alphabet) has been born as a search engine, it is now a diversified company, even though its core business remains search, as most of its revenues still come from Google, the search engine, and YouTube, the “video engine.” However, as a tech giant, which business is primarily based on advertising, the company does compete with Facebook, Twitter, Microsoft (with Bing), and Amazon (with e-commerce search and its advertising machine).

Origin story

When Page and Brin managed to create a search engine that was 10x better than competing engines, it made clear that search was all but a solved issue. At the end of the 1990s, Page came out with its algorithm, PageRank, which managed to rank the entire web-based on relevance and authoritativeness of the web pages it indexed.

It took off right away! It was at that point that many of Google’s competitors understood that search was just at the embryonic stage. It was by then that Google had already taken over the search market, yet revenue was still far away.

the-future-of-google

Bach in the days, Brin and Page didn’t hide their resentment toward the advertising business model, which was the prevalent model for search. Indeed, in the paper “The Anatomy of a Large-Scale Hypertextual Web Search Engine” where Page and Brin presented their first prototype of Google.

With full text and hyperlink database of at least 24 million pages, in a paragraph dedicated to advertising, they explained: “We expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers.

The main issue they had toward advertising was the fact that it was biased, and it caused a lot of spam in search results. Indeed, when they met Bill Gross, founder of GoTo, which would later become Overture, the encounter might not have been among the most cordial. That’s because Bill Gross had figured the advertising market had massive potential, as he introduced an auction-based system for bidding businesses based on performance and clicks. 

However, this was still back when Page and Brin were two academics completing their Ph.D. at Stanford University. The transition to becoming businessmen would take soon to arrive. Indeed, as venture money was soon to be over a plan B was needed. 

In addition, as Google managed to rank advertising based on relevance (for instance, by ranking higher those ads that got more clicks) advertising became a possible option. As Larry Page pointed out in the first Google letter to shareholders:

Advertising is our principal source of revenue, and the ads we provide are relevant and useful rather than intrusive and annoying.

Advertising

google-advertising-business
Google generated over $116 billion from advertising revenues in 2018, which represented 85% of its total revenues. Of those revenues over 70% came from traffic via Google main properties (Google search engine, YouTube, Gmail, and others). Google’s main properties are monetized primary via a cost-per-click mechanism. Network members sites are primarily monetized on a cost-per-impression basis. Google also spent over $26 billion in 2018 to sustain its traffic on both its properties and as a revenue-share mechanism with its network members (AdSense and AdMob).

As large and multi-dimensional as the company may be, Google is fundamentally an advertising business. The vast majority of income is earned through generating, capturing, and channeling leads who have intent to make a purchase.

Some argue this makes Facebook the main competitor of Google because users are spending more time on social media and less time using search engines. With Facebook offering an ad platform of comparable reach and functionality, advertisers will be forced to follow the money and migrate away from search engines.

how-does-google-make-money
Google has a diversified business model, primarily making money via its advertising networks that, in 2019, generated over 83% of its revenues, which also comprise YouTube Ads. Other revenue streams include Google Cloud, Hardware, Google Playstore, and YouTube Premium content. In 2019 Google made over $161 billion in total revenues.
facebook-business-model
Facebook is an attention-based business model. As such, its algorithms condense the attention of over 2.4 billion users as of June 2019. Facebook advertising revenues accounted for $31.9 billion or 98.66% of its total revenues. Facebook Inc. has a product portfolio made of Instagram, Messenger, WhatsApp, and Oculus.

Search

As already noted, Google’s supremacy in search is unlikely to be challenged in the medium to long term. In fact, the company controls over 92% of the search market since introducing Google Search in 1997.

Competitors in the North American market such as Yahoo and Bing are thus hardly worth mentioning. But in the Chinese market, Baidu enjoys similar dominance because Google is banned from operating there.

A potential emerging competitor to Google search is Amazon. Though not a search engine in the traditional sense, many consumers now bypass Google and search for products on the Amazon website directly.

Entertainment

Google’s acquisition of YouTube in 2006 is a classic example of the company using its power to establish a presence in an industry.

how-does-youtube-make-money
YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, and it generated more than $15B in revenues in 2019. YouTube also makes money with its paid memberships and premium content.

Here, the competition is much more intense. Video platforms such as Snapchat, TikTok, Instagram, and Facebook all compete for video viewers.

youtube-competitors
YouTube is the most popular online video platform, a hybrid between a video search engine and a social media platform with a continuous feed prompted by social interactions and engagement. In fact, the platform is so popular that YouTube.com is the second most visited website on the internet. After being acquired by Google in 2006 for $1.65 billion, the platform now boasts over 2 billion registered users. Collectively, these users upload 500 hours of video every minute. The platform competes with other video engines like Vimeo, Dailymotion, and social platforms like IGTV, TikTok, and Twitch.

Google also faces strong competition for viewers from streaming services offered by Disney, Netflix, Amazon, and Hulu. The company does not operate its own streaming platform, instead offering the somewhat underdeveloped video aggregation service Google TV.

However, it should be noted that Google TV serves ads to consumers based on their viewing history. The presence of this feature could be construed as an attempt to compensate for the revenue lost to social media platforms mentioned earlier.

Technology

In cloud computing, Google’s main competitors are Microsoft and Amazon who both have greater market share in the industry. 

Google must also compete with smaller but no less significant companies in technology and database services, semiconductor manufacturing, consumer electronics, and customer relationship management (CRM). These include IBM, SAP, Cisco, Oracle, Samsung, and Salesforce.

Google’s Pixel smartphone is also up against similar offerings from Sony, Apple, Samsung, LG, Oppo, and lesser-known Chinese brands Huawei and Xiaomi.

Key takeaways:

  • Google has total dominance in organic and paid search, controlling over 92% of the market. But in markets without first-mover advantage, it faces stiff competition.
  • As fundamentally an advertising business, Facebook is perhaps the biggest competitor of Google with Amazon a close second. Users are spending more time on social media and eCommerce sites to search for what they need. As a result, advertisers and advertising revenue must follow the crowd.
  • Google is a significant player in cloud services, but it sits behind Microsoft and Amazon in terms of market share. It also faces established competition in technology and database services, consumer electronics, and CRM.

Read Also: Google History, Google SWOT, Google Organizational Structure, How Does YouTube Make Money, How To Use Google Sheets.

Read next:

Main Free Guides:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"