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Google’s fragmentation strategy: redefining its competition as second-rate search

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In a recent post about some new Google offerings and the relative mediocrity of these when compared to the best-in-class consumer web products in the market, the reference was mainly to Google’s Music OneBox service. But I also touched on Google’s apparent focus on other second-tier media competitors in its attempt to salvage these in their descent. Despite the sometimes critical nature of my earlier post, I may have stumbled upon an important trend in Google’s strategy, which could pose a serious long term threat to the consumer web’s top tier.

There was an interesting television interview with Google’s CEO Schmidt this past week, in which a particular statement stuck out: “We desperately need newspapers [and other media] to be successful because we need their content.” In the same interview Schmidt describes what he believes to be Google’s strength and core business – not content creation, but content packaging and delivery. His argument being that for such a business to thrive, there must be content out there to package and deliver. The emphasis in this last statement is not on the term content, or even deliver, but rather on package. A platform that generates its revenues as a search vehicle is only truly necessary in a fragmented content environment. In an extreme scenario in which all content is created by one source, there is no longer any need for Google.
Thus, it is in Google’s interest, under its current business model, to encourage market fragmentation or, more appropriately stated, to discourage consolidation. In the same blog post referenced above, I had also alluded to the threat that Google must be feeling from Apple and Facebook. In the context of Google’s battle against consolidation as described herein, Google’s sentiment can be easily understood. However, I did not previously go far enough. It isn’t only Apple and Facebook that Google sees itself competing with, because content is not limited to entertainment or information, but also includes commerce. Add, therefore, another giant to Google’s target list: Amazon.
The clearest illustration of my meaning, and what Google seems to be up to these days, is in this week’s introduction of Google Commerce Search. This is not only a lifeline thrown to the thousands of vendors who are not but who will benefit from the mass exposure that Google can offer, but provides these vendors with an alternative outlet that does not involve Amazon – which also allows small vendors to sell their wares through it, but through an Amazon shopping experience that promotes Amazon’s brand and Amazon’s own consumer offerings.
So just as with music Google seems to be on the side of the “also-rans” in competition against iTunes, with Commerce Search it is on the side of the smaller merchants in competition against the behemoth. And there is still another objective that Google may consciously or unconsciously be undertaking in this process, which in the long term may be as critical (or more) to its competitive success: Through the roll-outs of Music OneBox and Commerce Search, Google is blurring the distinction between it and the e-commerce giants, iTunes and Amazon, and is redefining the latter as merely second-class search engines on Google’s home turf.

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