Inside Google

Google, under antitrust scrutiny by the U.S. Department of Justice, the Federal Trade Commission and European Union regulatory officials, is being far more specific in describing who it considers to be a competitor than it has been in the past.

I think it’s part of an effort to convince regulators that Google faces stiff competition and to avoid being seen as dominating the Internet.
 
The latest form 10-K filed with the Securities and Exchange Commission covering 2009 lists 10 specific companies the Internet giant views as competitors.  They are Yahoo!, Microsoft’s Bing, WebMd, Kayak, Monster.com, Amazon.com, eBay, Facebook, Yelp and Twitter.

The 10-K filed last year covering 2008 describing competition says, "We consider our primary competitors to be Microsoft Corporation and Yahoo! Inc." No other companies are mentioned by name.

Both documents begin the section on competition with similar language. Last year’s 10-K starts:

"We operate in a market that is characterized by rapid change and converging, as well as new and disruptive technologies, and we face formidable competition in every aspect of our business, particularly from companies that seek to connect people with information on the web and provide them with relevant advertising."

This year’s beginning language is similar:

"Our business is characterized by rapid change and converging, as well as new and disruptive, technologies. We face formidable competition in every aspect of our business, particularly from companies that seek to connect people with information on the web and provide them with relevant advertising."

But then the Internet giant gets very specific in this year’s filing:

 "We face competition from:
 
      " • Traditional search engines, such as Yahoo! Inc. and Microsoft Corporation’s Bing.   
 
     " • Vertical search engines and e-commerce sites, such as WebMD (for health queries), Kayak (travel queries), Monster.com (job queries), and Amazon.com and eBay (commerce). We compete with these sites because they, like us, are trying to attract users to their web sites to search for product or service information, and some users will navigate directly to those sites rather than go through Google.   
 
       "• Social networks, such as Facebook, Yelp, or Twitter. Some users are relying more on social networks for product or service referrals, rather than seeking information through traditional search engines.   
 
      "• Other forms of advertising. We compete against traditional forms of advertising—such as television, radio, newspapers, magazines, billboards, and yellow pages—for ad dollars.   
 
      "• Mobile applications. As the mobile application ecosystem develops further, users are increasingly accessing e-commerce and other sites through those companies’ stand-alone mobile applications, instead of through search engines.
 
       "• Providers of online products and services. We also provide a number of online products and services, including Gmail, YouTube, and Google Docs, that compete directly with new and established companies that offer communication, information, and entertainment services integrated into their products or media properties."   

 
As regulators looked increasingly at Google for possible antitrust problems, the company began a series of meetings last year with opinion leaders where executives stressed that, as they saw it, "competition is one click away."

The same theme is voiced in this year’s 10-K: "For users, other search engines are literally one click away, and there are no costs to switching search engines."

In the section of this year’s report titled "Risks Related to Our Business and Industry," Google claims, "We face intense competition."

Judging from the efforts the company is making to try and demonstrate that view, I think the opposite is actually true.  With around 70 percent of the search market in the United States and higher penetration in other countries, Google is now the Internet’s gatekeeper for most people.  The real risk to Google’s business is not from competition, but that the Justice Department, the FTC or the Europeans will act in the interest of consumers and force the Internet giant to engage in it.