Move Over, Amazon? Google Aims to Sell e-Books

Google's plan to offer online access to books on a variety of Web-enabled devices could threaten Amazon's Kindle

By Olga Kharif and Douglas MacMillan

Amazon may want to keep an eye over its shoulder—Google is readying a deeper push into e-commerce. In the coming months, Google (GOOG) plans to begin selling online access to electronic versions of books. The titles will be available for viewing on any Web-enabled device, be it a cell phone or a laptop. "By end of this year we hope to give publisher partners an additional way to sell their books," Google said in a statement on June 1.

Details, including revenue-sharing arrangements with publishers, are still being worked out, one major publisher told BusinessWeek.com on condition of anonymity. Google also expects to form partnerships with other online retailers, such as local bookstores, so those sellers could provide instant online access to books.

The plan to sell e-books is the latest indication of Google's attempt to expand beyond online advertising and gain a toehold in e-commerce, where Amazon.com (AMZN), eBay (EBAY), and Wal-mart.com (WMT) hold sway. "Google's core growth rate is slowing, and it's starting to look for the next big growth driver," says Laura Martin, an analyst at Soleil Securities Group. In February, Google's YouTube said it is testing ways to let people sell video through the Google Checkout online payment system. Google is also testing Google Product Search, which lets consumers locate the cheapest products at various online stores. Google also runs Android Market, a store that sells mobile-phone applications.

Combined with other Google e-commerce tools and the company's arrangements to make books available online, the e-books project has the potential to increase competition for Amazon and other online booksellers. Technologies that undergird Checkout, Product Search, and Android Market could serve as the basis of an online Google e-bookstore. "Certainly, they've got all the parts they need in place," says Jeffrey Lindsay, a senior analyst at Sanford C. Bernstein.

Some publishers may welcome an Amazon rival

Selling new books would complement Google's existing plan to take online more than 7 million out-of-print and other books. Some publishers may opt to ally with Google in hopes of bolstering a competitor to Amazon, Marianne Wolk, an analyst at Susquehanna Financial, wrote in a June 1 note. Some publishing houses "fear Amazon will garner the same 70%-plus share of e-books that it has captured in online book sales," Wolk writes.

Amazon says it's not worried about the competition. "We don't focus on other companies; we are focused on offering our customers the best possible reading experience," Amazon spokeswoman Cinthia Portugal said in an e-mail. Sony (SNE) has teamed with Google to make many public domain books available to users of its Reader device. The company says it hasn't entered into an agreement with Google around this latest announcement.

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