Case Assignment Google

e1. Google’s early success is attributed to new search engine with innovative search algorithm s

(PageRank, Personalized Search), which had an index of one billion pages surpassing all

competitors, and the focus at what the users need. Another technological Google’s breakthrough

is paid listings algorithm and localization, which ensured most relevant ads are on top, making

advertising more effective for both advertisers and Google. Google provided advertisers with

Google Analytics software to help them to optimize paid-listing campaign. Generating more

search traffic and having lower CPC bids, Google attracted more advertisers than its rivals.

2. We already can see increasing concentration in web search industry. There are several big

players (namely Google, Yahoo, Bing, AOL and ask.com), which take almost 100% of market

share worldwide. Being the bi ggest player, Google serves almost the whole market in many

countries. I think this concentration trend will only continue, which could be explained by

several factors. First, search giants have a considerable technological lead in search algorithms,

computer platforms and other additional services among search engine, which have been

developing for many years and very hard for new companies in this industry to catch up. Second,

due to the network effects and brands brand perception of search giants, it is and will be hard for

new players to capture even a small market share from them. Despite having no switching costs,

users will choose that search engine, which is better and provides better search experience.

3. Google was ready for everything, even paying more than 100% revenue and preemptive

buying of AOL’s stake, to get a deal with AOL, because if this deal was lost to Microsoft, it

could be a strategic risk. For Google, it was a crucial and defensive move, which prevented

Microsoft from becoming more influential in search. Microsoft offered 100% of their paid listing

revenue to AOL vs. 80% of...