Google chairman Eric Schmidt suggested today that Google’s dominance — in both search and mobile device operating systems — is under threat from a new set of players intent on reordering the tech business.
He was speaking at the World Economic Forum in Davos, Switzerland, on a panel with Vodafone CEO Vittorio Colao, Facebook COO Sheryl Sandberg, and Microsoft CEO Satya Nadella.
Schmidt was asked about the “dominance” of certain major companies, such as Facebook, Google and Apple who between them control the vast majority of the web and mobile internet. The context is that Google is under investigation by the EU into whether its search engine counts as a “monopoly.” Some regulators have suggested breaking up the company. Google has a roughly 90% share of the search market in Europe and its Android product has an up to an 80% share of the mobile device operating system market for phones, worldwide.
And while Schmidt’s answer wasn’t exactly an admission that Google is going to crumble anytime soon, it did echo the thinking of some in the tech business who have noticed that smaller, specialist companies have begun slicing off niche chunks of Google’s core business, or developing new search areas that Google has no access to. Both Facebook and Apple have search products for instance. (Facebook has its own internal search algorithm and Apple’s App Store has a search function that powers its multi-billion app discovery process.)
“On the question of dominance, you now see so many strong tech platforms coming through and you’re seeing a reordering, and a future reordering, of the leaders because of the rise of the app on the smartphone. … all bets are off. We have a whole new set of players,” he said.
The major question for the future, he said, was, “What are the apps that people are going to use? … I view that as a completely open market at this point.”
His point is that new players can come from nowhere and create seemingly massive businesses from nothing in a matter of months. Two recent examples are the workplace chat product Slack — recently valued at $US1 billion after only being in existence for 8 months — and Snapchat, which in just a couple of years has come to dominate certain types of messaging, particularly among young people.
Whether any such app might seriously damage Google is being openly discussed by investors. A recent analysts’ note from Baird Equity Research suggested Google was losing some of its “mojo” to competitors. It said:
The biggest pushback we hear from investors is that Google’s core search advertising business will not translate (monetise) as well to an increasingly mobile-centric, application-based world, particularly compared to mobile-first peers like Facebook. We do not discount Facebook’s progress in mobile (mobile was 63% of total ad revenue through 3Q14 vs. ~12% of revenues in 2012), and with the continued rollout of a third-party ad network (with Atlas ) in 2015, Facebook will more directly compete with Google’s AdSense as it ventures into monetisation opportunities outside of the Facebook platform.
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