In a recent lecture Google’s Eric Schmidt argued that Google’s biggest competitor in the field of Search is Amazon. That might look peculiar at first glance, but once you put things in perspective it becomes really obvious why it is the case.
(Too) Many companies in tech are built on the promise (or hope) that if you have a great product people love and want to use, you’ll find some way (as if by magic) to make money out of it. This worked for Google (with AdWords), Instagram (bought by Facebook for $1B), and the creators of games that include farm-building, candy-crushing, Smurf-herding, etc.
The reason why monetization is so elusive, is that in many cases no one really knows what people are ready to pay for. Or who exactly will be ready to pay. For example, users were never prepared to pay for the service offered by WhatsApp (they started switching to Viber and other alternatives as soon as WhatsApp tried charging for its services), but Facebook were gladly ready to throw cash at them for ownership of WhatsApp’s user base.
Once emerging companies set themselves as established big corporations, finding the niche where consumers are coming with the readiness to spend money is a big deal. And in such conditions, it becomes imperative to be on top of the consumer’s mind.
“First to Mind” Converts
Think about it for a second. Who was the 25th President of the USA? What’s the 25th element in the Periodic Table? Who won the World Series in 1925? (My respect if you know the answer to any of these – please tell me how and why you remember it in the comments section below.)
When faced with a question like this, what’s the first thing that comes on your mind. Let’s Google it.
What about when you need to buy a book? Or a toy for your kid? Or just about anything else? Of course, this battlefield is much more fragmented. There’s eBay, Alibaba more recently, Target and Walmart, and many other more focused website of various size (think Zappos, or Etsy), but almost certainly Amazon is going to be somewhere pretty high on your list. Even if it’s only for research.
And Google? Maaaybe not that high. And they certainly want to be on top of your mind for everything.
Is Google Threatened by Amazon?
You might be thinking “OK, but why should Google be caring so much? After all they still have their cash cow – the ads business” In business, much like in war, you fight your fights abroad, so that you don’t have to fight them at home.
With the growing importance of ecommerce, and the expanding track record of Amazon (they used to be a bookselling company, remember, and now they’re into cloud services and entertainment through Amazon Instant Video among other things), it’s very likely to see more and more attention going in their direction. And merchants, together with their ad spend, will soon follow.
So that’s why Eric Schmidt’s words are neither surprising, nor misleading (even though he was certainly trying to lift some of the pressure off Google’s back).
And it’s also why we constantly see (and will continue to witness) companies making forays into enemy territory – Apple going into mobile payments, Amazon in entertainment, etc.