x Abu Dhabi, UAEFriday 28 July 2017

Google's fate in a Facebook world

Today's Google is a mature corporate behemoth facing challenges in a range of tech fields as it appears to grasp for a way forward.

The internet search giant Google may be expanding its presence in the Middle East but globally it faces a strong challenge from Facebook over influence and revenue.Randi Sokoloff / The National
The internet search giant Google may be expanding its presence in the Middle East but globally it faces a strong challenge from Facebook over influence and revenue.Randi Sokoloff / The National

Facebook's Mark Zuckerberg may be the latest recipient of Time's "person of the year" accolade, but it was Google that dominated the headlines over the past year.

The search engine was never far from the minds, or more important, the eyes of the online world last year, with a product release or announcement almost every week.

Already in its second decade, Google is the internet's top search engine and leads the web in advertising revenue.

It is also a leading mobile developer and its Android operating system has emerged as a serious contender to topple Apple's iPhone as the world's top smartphone platform.

The year has also seen Google engage in a number of quirky side projects, such as developing driverless cars, investing in wind farms in the US and publishing the Books Ngram viewer, a database of more than 500 billion words culled from digitally storing 4 per cent of all books published since 1500.

Closer to home, Google is making significant headway in establishing a presence in the Middle East.

Last month, the company announced it would invest US$10 million (Dh36.7m) in Jordanian businesses, $2.5m of which would be set aside for technology start-ups.

Google is also expanding its office space at its Dubai headquarters and is in talks with the Government to implement a localised version of its Street View feature for its Google Maps website, company executives say.

But Google faces headwinds over the next year that could see its growth and influence begin to wane.

"As it looks at its future, Google needs to realise it has a user-experience problem and its simplicity - the elegant search box - isn't enough, especially as it starts to compete with rivals whose entire existence revolves around easy consumer experiences," Om Malik, the executive editor of the technology blog GigaOM, wrote last month.

From a commercial standpoint, Google is doing well. In the third quarter of last year, the company reported net profit of $2.17 billion, an increase of 17.9 per cent from the previous quarter.

Revenues are also on a steady incline and have passed the $7bn quarterly mark for the first time.

But its shares traded down 5.3 per cent over the past year. There have been reports of important engineers leaving Google to join Facebook, lured by the potential for vesting stock options at extraordinary levels.

Meanwhile, Facebook and Twitter are seeing more online use. These websites provide a richer, more social fabric to the web that Google has yet to match.

"Google is a one-trick pony, a company that has a primary source of income, which is search-based advertising. It has a lot of money and it has tried dozens of outside activities and failed with nearly all of them," Spencer Reiss, a contributing editor to Wired magazine, told the Globes newspaper.

"Until recently, Google was the place where all the information available on the internet could be found. Then came Facebook and created a black hole that cannot be scanned … Google isn't the same company that we all loved five years ago. Today it's seen more as a giant corporation."

Facebook has even begun to siphon off a significant part of Google's online advertising stream and is said to report $2bn of revenue this year. To add further ignominy, Facebook found itself in the headlines after raising $450m from Goldman Sachs and being valued at $50bn, a level it reached faster than Google.

Google's own attempt at social networking, Google Wave, was eventually scrapped because it confused users who were already unsure at what exactly they were "waving".

"One of the things that we've learned is that Google hasn't gotten social right yet. That said, social is really important; it's something that we're working very hard on. I think that we will get it right," Marissa Mayer, the vice president of consumer products for Google, told Media Beat.

"I think that if you look at some of the main platforms of the web, it's search, video, mobile and social. We've done really well in three out of those four and we're working very hard on the fourth."

While this is not an immediate threat to Google's share of the advertising market, it may tip the playing field in Facebook's favour. Analysts believe Google lacks the "killer app" to match the innovation and attention of Facebook and convince advertisers to stick with the search engine.

Morgan Stanley estimates that $50bn of advertising could be shifted online each year, a valuable opportunity Google cannot afford to miss.

A preview of Google's social networking plans was leaked to technology blogs recently as "Google Me". It includes a tool bar that sits atop a web browser. More details on this service will be revealed in the coming months, Google said.

Mobile technology will play an important role in Google's development over the next year. Smartphones using the Android operating system are being activated at a rate of 300,000 units a day and now command a 26 per cent share of the market since launching two years ago.

Android will certainly factor in the next chapter of Google's existence. Better location-based services will help Android exploit the opportunity presented by more targeted advertising.

Search, Google's core business, is also evolving. Google Instant provides a list of search results before users finish typing their queries, while its much-anticipated "serendipity engine" could offer search results before a query is even made.

"Google is like an old dog trying to learn new tricks. The good news is Google isn't that old, and more important, the company knows it has a problem and is trying to find ways to fix it," Mr Malik wrote.

Legally, Google may face its greatest challenges of all. Antitrust officials are shining a light on what they say is Google's illegal manipulation of data for its own benefit.

Google has adamantly rejected these claims, but in November the EU began investigating the company for allegedly manipulating search results to give an unfair advantage to its own service. A similar investigation is under way in Texas.

The company also faces complaints from privacy groups for its ability to track users' information, as well as posting unsolicited images and downloading passwords with its Street View.

Google also raised the ire of "net neutrality" advocates who warn that its demands for a tiered mobile web does not conform to the original mandate set out in the 1970s by the founders of the internet, including Vint Cerf, a founding father of the internet who now works for Google as its "chief internet evangelist".