Facebook IPO, the largest in the IT industry, has drawn harsh criticism after Twitter decided to censor some tweets and the bad results of Google in Q4, worse than anyone would have expected. This might lead to the biggest event of our time: the end of the old Internet. Crazy, chaotic and idealistic days of the Internet that we knew have come to an end, writes Time.
Prairies were once open to all. Then came the farmers who fenced them. Same thing happens with the Internet: Apple, Amazon and Facebook put up “cyber-fences”, and Google is left out. The old Internet where Google has thrived is still there, of course, but endangered. Often these days, many have opted for Facebook or the private version of Amazon on the net. Sometimes, users use a smartphone and download an application, instead of using Google.
Investors have already started to bet on possible winners of the new Internet: Amazon shares were up 11% this year, Apple is up by the same percent, and Google’s is 13% lower than at the beginning of January. We are still in the early days of this long term trend, but the feeling is that the performance gap will expand this year and of the slow and long decline of Google has already begun, writes the Time.
What makes these predictions closer to the truth is that Google has little to do with technology, instead is everything about business models. You can buy or copy technology but a business model change is the hardest thing for any company. Google’s business model and almost all business revenues and profits depend on the Internet remaining open. When we look for something on Google, the company earns billions in advertising. If the Internet is changing, the old, original way of doing business of Google will lose value.
When Google reported its results two weeks ago, headlines have focused on increasing revenues by 25% last quarter compared to last year. But investors focused on lower cost per click and the fact that the giant search engine will not be able to convince the advertisers. The main reason for the decline of this extremely important matrix is increasing competition from Facebook, Amazon and Apple.
Let’s start with Facebook, which raised a “cyber-fence” around the over 800 million users and thus refuse to share any important information with Google. This means that the famous Google searches are not as valuable to advertisers as they used to be and especially since Facebook has grown up.
Amazon is preparing the same kind of “food” as Zuckerberg, but with more appetite. Amazon has taken the free Android operating system and adapted it for the Fire tablet. It reached the shelves with Google software, while the search giant receives nothing in return.
The threat to Google, in other words, is that social networks, smartphones and tablets come to dominate the Internet, and the chance that Google will continue to get the search advertising revenue shrinks, along with the company’s influence. Yes, Google has Android and Google +, but these weapons may not be enough to fight the move to the new Internet. Google + is far on the scale from Facebook users and there is little reason for investors to believe that it will catch Zuckerberg’s network. Android, also an attempt from Google to build its own Internet eco-system is a success more visible. Most commentators focus on the rapid growth of Android, and the fact that it has a larger market share than the iPhone.
But do not lose sight of one important detail: Android has market share, but more than half of mobile searches are coming from iPhone users. Google developed Android, but unlike Jobs’ iPhone, it doesn’t control the market. Licensees like Samsung and HTC are able to adapt Android software for their devices. And smart companies, like Amazon, take a free walk in exchange for small Google treats. Yes, Google is still a force. Even its disappointing earnings were huge. But the gains power will reach its climax with the closing of old borders, thinks Internet journalist Keith Woolcock from Time.
