Just before Google Inc went public 10 years
ago, co-founder Larry Page said he wanted to get the search engine's users
out of Google and to the right place as fast as possible. Today, Mr. Page's
Google often is doing the opposite: Providing as much information as possible
to keep users in Google's virtual universe.
Results highlight how the world's largest search engine is
transforming its core business, and the basic notion of search. Its transition
promises to be a tricky one for its own business and for millions of others
dependent on its search results to survive.
Advertisers will pay more than $50 billion to the search
giant this year for clicks that deliver potential customers to their Web pages.
By offering its own hotel listings, for example, Google may alienate
advertisers such as online-travel agencies that alone pay it billions a year.
The shift has spawned antitrust investigations
world-wide as some online publishers complain Google wields its extensive
influence over what Internet users see to promote its own content and services,
in the process helping some businesses while hurting others.
The changes risk Google's standing as a neutral arbiter of
Internet content and the most widely used search engine. Today, those
attributes have helped make it the third most valuable company in the U.S.
behind Apple Inc. and Exxon Mobil Corp.
If Google is perceived as favoring its own content over
impartial search results, it would risk losing users over time. But if users
find the results more helpful, they'll keep coming to Google, forcing
advertisers to stay there.
So far, the shift hasn't hurt Google's financial results.
Advertising revenue rose 18% in the first six months of this year compared with
a year earlier, and while the stock is up about 4% in the same period, it is up
38% over the past 12 months.
On the smaller screen of a smartphone, users spend more time
in apps and less time browsing the Web that Google has organized and monetized
via search-related advertising.
As smartphones proliferate, clicks on Google ads are rising.
But ad prices are falling, down nearly 20% since the start of 2012 in part
because clicks from a phone aren't as valuable. Buyers searching for products
on a phone complete purchases roughly one-third as often as those on PCs.
Google says that when it promotes its own content, it is
benefiting users. They could switch to Bing or another search engine if they
don't like its results, a spokesman said. Its share of the U.S. search market
has been holding steady at around 67% for the past four years.
As Google seeks to collect and display more information, it
sometimes leans on other Web publishers to share content or lose prominence in its
listings. Last month, Google told retail advertisers they must supply product
reviews from their own sites to Google, or their ads won't include star ratings
that encourage clicks.
Some of these practices have prompted complaints to
antitrust regulators in the U.S. and Europe, which so far have led to few
changes in Google's practices. The U.S. Federal Trade Commission closed an
investigation into Google's search practices in January 2013, saying the
changes it reviewed may have benefited users.
In a proposed settlement with European regulators in
February, Google agreed to dedicate space for competitors atop its search
results. Under pressure from Google rivals, some European commissioners want to
reopen the deal and push for harsher sanctions. So far, Google's moves still
require users to go elsewhere to complete a hotel rental or other transactions.
But some fear that may be changing.
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