The beginning of the end? Google in danger of being shut out of rapidly changing Internet

“The upcoming IPO of Facebook, the flak surrounding Twitter’s decision to censor some tweets, and Google’s weaker-than-expected 4th-quarter earnings all point to one of the big events of our times: The crazy, chaotic, idealistic days of the Internet are ending,” Keith Woolcock reports for TIME Magazine. “Once, the Prairies were open and shared by everyone. Then the farmers arrived and fenced them in. The same is happening to the Internet: Apple, Amazon and Facebook are putting up fences — and Google is increasingly being left outside.”
“When Google reported its results two weeks ago, the first headlines focused on the 25% increase in fourth quarter revenues compared to last year. Investors, however, focused on the drop in the cost per click that Google is able to charge advertisers,” Woolcock reports. “The main reasons for the decline in this all-important metric is increased competition from Facebook, Amazon, and Apple.”

“Start with Facebook, which has erected a cyber fence around its 800 million-plus users and refuses to share some important data with Google. This means that Google’s searches are not quite as valuable to advertisers as they used to be when the Internet was open and when Facebook was much smaller than it is today,” Woolcock reports. “Apple’s land grab, meanwhile, may be the most definitive. The Apple universe is like a cable TV network that owns content or aggregates it. It’s phones, computers and tablets are like the set-top boxes your cable company gives you. The content you consume might be a film that you download, a song, a book, an application or something you buy on line, like a pair of shoes. And none of the data Apple’s customers generate is available to Google… Android may have market share, but more than half of mobile searches come from iPhone users. Google may have developed Android but, unlike Apple’s iPhone, it does not really control it… And smart companies like Amazon are getting a free ride on Android while sharing little of the spoils with Google.”

Woolcock writes, “The danger to Google, in other words, is that as social networking, smartphones and tablets increasingly come to dominate the Internet, Google’s chance to earn advertising revenues from searching will shrink along with its influence.”

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