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"Something meaningful shocked the eCommerce ecosystem in January," writes Stifel's Jordan Rohan...

"Something meaningful shocked the eCommerce ecosystem in January," writes Stifel's Jordan Rohan in his contrarian note on Google (GOOG -1.2%). Search engine marketing (SEM) firm IgnitionOne saw a 9% Y/Y drop in ad spend in Jan., followed by subdued growth of 9% in Feb. and 11% in March. Rohan, who also reports hearing Jan. mobile banner ad buying was weak (a negative for MM), does admit other SEMs saw mid-teens growth, but points out Google shares have little margin for error. "Google replaced Apple in tech portfolios as the comfort food trade in mobile..." AMZN +1.5%. EBAY -1.7%.
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  • Jack Staub
    , contributor
    Comments (95) | Send Message
     
    Google's ad revenue has a lot more risk than the market appreciates, particularly as they transition to mobile, and even if the majority of mobile devices run Android.

     

    Android is a Linux based, and so the source code is not owned by Google but is in the public domain. This makes it easy (i.e. technically trivial and perfectly legal) for device manufactures like Samsung and Amazon to modify Android to redirect searches away from Google and sell that search traffic to the highest bidder.

     

    Google owns the Android trademark, but not the source code. Even if they modify it for their own phones, they will need to release that derivative work as it too is public domain.

     

    Ultimately the mobile device manufacture will make the profit on mobile search traffic.
    27 Mar 2013, 01:24 PM Reply Like
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