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DECEMBER 16, 2003
By Alex Salkever Google Here, There, and Everywhere [Page 2 of 2] ONE INTERFACE. What's becoming more and more clear, though, is advertising will be the primary revenue driver of these portals and aggregators. What Yahoo terms "marketing services" (read, advertising) accounts for nearly 75% of its most recent quarter's revenues. Increasingly, advertising is hung around various forms of search. This explains why Microsoft is seeking to build its own Google-killer search engine and why Yahoo is expected to start using its own in-house software for Web searches -- and to dump Google. The devil, as usual, is in the details. Google has decided that its customers should gather information through inputs of text search terms by using more or less the same simple interface to search for news, things to buy, or any other topic. That's a small but important distinction. Google assumes that customers are smart enough to learn to search with words rather than with the graphical and pull-down menus used by most of its competitors. That's an understandable bet. Google has gone from upstart to Internet star with a business plan based on that assumption. Google's gamble also has stark implications for competitors, which have built their businesses on creating revenue sources and additional services around the very same specific vertical categories that Google is now attacking. Take AOL's MovieFone service, which is an incredibly useful Web tool. Type in a Zip code, and it'll tell you all the movies playing at nearby theaters and offer online ticket sales for eligible venues. AOL probably wouldn't make money if it just sold the tickets and collected convenience fees for each sale. The real money for AOL on MovieFone.com is in advertising. Big studios pay big bucks to place ads there. So do airlines and consumer-products companies. LOST ASSET. Google could introduce a service that allows Web surfers to enter a Zip code and "movies" to receive a link to MovieFone.com with a listing of local films. Google wouldn't really need to ask MovieFone's permission because the service is publicly available and easy to program into Google in the same manner as the FedEx service. Yes, such a Google service would probably mean extra traffic for MovieFone.com. And that would be good for MovieFone, right? Perhaps not. The interaction takes from MovieFone at least one prime advertising asset, the usual initial visit to MovieFone's home page, and instead awards that impression to Google. That's because the movie-listing seeker will skip right to the MovieFone hyperlink with their Zip-code-specific information. And as more traffic arrives from Google, that would give it more leverage to ask MovieFone for a referral fee. That's not hard to envision if Google become a public company with a responsibility to, above all, boost profits. At the same time, being included among Google's services could become a key selling point for companies such as FedEx. It's not that much of a hassle to go directly to the DHL Web site to track packages shipped on that FedEx competitor. But when anyone can check package status directly from the Google toolbar, that constitutes a nice little edge for FedEx or UPS. In the brutally competitive package-shipping business, that small advantage can have a big impact. GOOGLING EBAY? With Internet growth slowing in terms of both new users added in the developed world and overall traffic increases, the ownership of advertising landscape and eyeballs rapidly becomes a zero-sum game. Other Google watchers have noted the growing unease that eBay (EBAY ) and Amazon (AMZN ) feel with regard to Google's steady sprawl. Both have a made a business out of being a different kind of information intermediary. Both have thus far succeeded. But both could get ambushed by Google. Imagine a function where you can type in a search term followed by "eBay" and Google provides links to the eBay pages. It would likely be very popular and could siphon eBay traffic to Google, giving the search engine another bit of Web real estate to monetize. Should Google become a key provider of eBay traffic, then it has the ability to ask eBay to pay for those referrals. The distinction between getting info from Google or going to eBay or FedEx for it are somewhat subtle, as is the creeping nature of the Google universe. The search engine's innovations change how people use the Web at the margins, making it easier to weave it into the fabric of their everyday life and more convenient. For companies that rely on the Internet as a key part of their business, Googlization means they have to deal with a new, powerful intermediary seeking to embed itself ever deeper into the habits of Web surfers. Of course, it's possible to overstate the Google effect. Although it handles up to 75% of all search queries on the U.S. Internet, by some estimates, other sites have plenty of users and leverage. Yahoo still gets more total traffic than Google. However, few of those other sites are growing as quickly as Google. And if the FedEx move is any indication, then the guys at Google have only started their attempts to turn their search engine into the all-purpose Web information tool.
 Salkever is Technology editor for BusinessWeek Online. Follow his Nothing But Net column every week on BusinessWeek Online
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