Multi-tasking Google Revisited

November 21, 2010 § Leave a comment

Google epitomizes the new geekiness: jack of all trades, master of even more. You would expect computer nerds do only well in technology, programming, algorithm, etc…. Not any more. They also do well in fashion. Last week has witnessed Google’s expansion toward an area that is previously deemed out of its reach.

On Wednesday, Google launched Boutique.com, a fashion e-commerce site that allows users to search for products with Google’s power search algorithm. Retailers pays Google by clicks, which direct consumers to their shopping sites. There are already numerous websites specialized in what Wikipedia calls “discovery shopping search”, such as TheFind.com, Like.com and Shopstyle.com, the third being my favorite.

Rumors emerged Friday that Groupon.com, the leading coupon-offering e-commerce site localized to different major markets, is considering selling itself to Google, with the management group leaning toward a sale, according to Bloomberg.

According to Bloomberg, “Schmidt is using takeovers to lessen his company’s reliance on ads placed alongside search results and move into new areas, such as display and mobile marketing messages.” Bloomberg also said Google has accelerated its dealmaking in 2010, spending $1.6 billion on more than 20 companies in the first nine months of the year.

Google has acquired Slide.com, an innovative social technology company in August; ITA, a MIT-scientists-founded travel industry software company in July; Metaweb, a company that maintains open, free database in July; AdMob, a California-based mobile advertising company in May……

It seems a little reckless. However, Google is now focusing on social network and e-commerce, I would say by acquiring many start-ups, it is trying to increase the stake of winning.

For Google, with more than 20 million users and a worth of arguably $3 billion, Groupon, is certainly a great deal for Google.

Groupon will gain more traffic from Google and save a huge amount of advertising expenses (since it is automatically advertised on Google). At a time when the population of online shoppers grow (“E-commerce spending during the holiday season is expected to reach $38.5 billion, up 14.3 percent from 2009, marking the second straight year of double-digit e-commerce growth, according to a new forecast from eMarketer“), Groupon has great potential even without the peddling from Google.

According to Larry Dignan at ZDNet, Google provides a spectrum of services, which makes going elsewhere for information unnecessary. “You find that restaurant on Google, you get a nice map for directions, you get a few reviews and you can hand out a coupon for drinks or some discount. If you want a premium mashup toss in a deal of the day with Google services.”

The sentiment is overall positive. However, there are some dissenting voice. While questioning whether the number-specialized Google are able to do well in other areas, Niall Harbison raised a very important issue — the problem of slow integration, without which the previous discussed benefits won’t exist in the first place. Quoting the example of Dodgeball, a social network software, which was acquired by Google in 2005 and was discontinued in 2009, he said “The key to the ongoing success for Groupon is speed and how quick they can roll the service in to other cities and countries. Competitors are springing up all over the place and Groupon need to keep growing as fast as possible and having the distraction of a complicated deal might not be the best thing in terms of their growth.” However, I would expect Google to learn from past experiences.

He mentioned another problem: margins will get squeezed since the business model is easy to copy, which I think is of lesser concern since once a huge users pool is built, as in the case of Groupon, it is hard for them to shift to other similar sites without any strong incentives. I mean, so far we haven’t seen another social networks stealing market share from Facebook or Twitter after all.

The biggest concern is that as Google transforms into this giant web monster, crowding out businesses offering similar services, it may end up doing a disservice to the economy. But it is something they will never, or probably shouldn’t care about.

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