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Google's Case Assignment

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1. Google's early success is attributed to new search engine with innovative search algorithms (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, 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 Google. But it is not only about money, it is about mutual interests and benefits.

4. I would recommend Google developing something new, but not branching out into or emulate what is already established and matured (e.g. full-fledged portal, desktop apps, etc.), but Google shouldn't dilute from its core business, i.e. organizing all the world's information. Its search engine is the main competitive advantage and Google should devote the most of the time to innovate and perfect the search technology to be a step forward away from its competitors.

5. They are not a limitations, but strengths, because they inspire innovative ideas and perfectly suited for such type of company. Providing employees with 20% of working time, gives them an opportunity to develop new ideas. Teamwork also helps brainstorming creative ideas. Everyone is equal and it creates a good corporate culture. Innovative companies shouldn't have hierarchies of management. This working



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