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Google Inc 2014

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77 views19 pages

Google Inc 2014

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Archit Pateria
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Google Inc.

in 2014
CASE PRESENTATION
GROUP - 01
Aashi Kant MBA1908
Aditya Shekhar MBA19086
Alok Tripathi MBA19087
Aman Tirkey MBA19088
Ankit Naik MBA19089
Ankita Tirkey MBA19090
Anupam Chourasiya MBA19091
Apurv Karwa MBA19093
Archit Pateria MBA19094
Google Inc.

● American tech company based in California


● Considered as big four tech companies alongside Apple, Amazon and Facebook
● Founded in 1999 it specialises in internet related services - online ads, search engine
● Gross revenue was $59.8b and operating income was $15.4b in 2013
● 67.6% shares of searches in United States in 2014 and 90% outside United States
● Completed its IPO in 2004 at $85 per share and share price exceeded $570 in 2014
● Products: Gmail, Google Maps, Google Books, Google Docs, Google Finance
● Acquisitions - Android OS (2005), YouTube (2006), DoubleClick (2007)
● Alphabet became the parent company of Google in 2015
History
● June, 1999- Got their First round funding for their Startup
● Year 2000- Became Yahoo search engine
● Feb, 2002- Moved to cost per click model, Charged a fix fee when user
clicks on Ad
● Mar, 2003- Expanded beyond search advertising, introducing product
named Adsense
● Feb, 2005- Launched google maps, without ads
● June, 2005- Buying a 5% stake in AOL
Improving Search & Advertising

● CUSTOMIZED RESULTS: User’s prior searches, prior clicks, geographic location, Google’s other
services (Finance, Maps, Youtube).
● Efforts to attract more advertisers, specially Local advertisers.
○ Offered free software to optimize paid- listing campaigns. Eg. Google Analytics

Improved on Overture’s policy Attracted two to three times


of ranking paid listings solely as many advertisers as
according to bids. Overture’s.

● Advertisers believed Google’s Advertising was effective.


Google’s Organization
Eric Schmidt - CEO in 2001.
Brin - President of Technology
Page - President of Products

GOVERNANCE CORPORATE VALUES MANAGING INNOVATION

Used Dual-class equity to give Don’t be evil. Encouraged engineers to spend


10 votes per share to holders of Technology matters. 20% of their time working on
Class B stock v/s one vote per We make our own rules projects of their own choice.
Class A share.
Pressure on the core business

Charges and
Advertisers ad appearances,
Trademark issues

Access search Content


histories, user permissibility
privacy issues issues
New businesses by Google
Hosting Platform:
•Started with the acquisition of YouTube and it placed Google in the role of Content
Host where they stored content on their own servers.
•Successful litigation allowed Google to show ads which placed them at supreme
position helping YouTube earn a revenue of $5 billions.
•By 2010, has more than 1 million books which could be read online or downloaded.
Some books came through authorized authors who wanted more visibility for their
books.
•They obtained other books through their Library project, which they argued was not
Copyright infringement as they made the book easier to find and just showed brief
about in-copyright books.
Communication Applications:
•Came up with Gmail which had 200 times more storage than Yahoo or
Hotmail and even provided advanced user interface using AJAX.
•Enabled real-time communication through Gchat and enabled voice
communication by adding features such as voicemails and facilitating
conference calls. Faced criticism over the issue of ads based on the words of
the mails.
Productivity Applications:
•Google’s server supported ‘Cloud’ which provided features such as easy upgrade,
supported many device and were usable from most of the places. At the same time,
it faced problems such as need for constant internet, lack of privacy as the data was
not safe.
•Competed directly with Microsoft as it provided features similar to those offered by
Microsoft.
•Google docs was a major disruptor as it challenged Microsoft’s dominance and
provided satisfactory services to its users. Microsoft launched online version of its
Office 2011 but google had already made significant gain in the area.
Mobile Devices:
•Google had acquired a small firm known as Android inc. back in 2005; Using this firm, Google
launched the Open Handset Alliance to compete with Apple iPhone.
•The core operating system was Open Source and Google also offered a comprehensive suite of
software such as Google Maps, YouTube, Gmail etc.
•To compete, it lowered prices and targeted people who found iPhones unreasonably
expensive.
•Moving on from just making software, Google launched Nexus one in 2010 built by HTC to
Google’s specifications and marketed by Google. Later on, In 2011 acquired Motorola to stay in
competition in the smartphone market.
•Strategic focus on cloud based services
Other New Products
•Launched Chrome beta in 2008 which by 2014 had grown to
represent 17% of market share.
•Google checkout, launched in 2006, to allow users to pay
participating merchants which allowed users to pay without
sharing their credit card details thus preventing future
unauthorized charges.
PUBLIC POLICY AND COMPETITION

● Endorses network neutrality rules to prevent ISPs from levying surcharges


● Consumers to be permitted to use available wireless spectrum
● After Microsoft's unsuccessful bid, Google advertised with Yahoo’s search results
● Google's monopoly in internet online advertising and its gathering market power
● Competition case ended up, after giving online advertisers more flexibility to manage campaigns
Question 1: Will Search Business Become More Concentrated

● Google is the unquestionable leader with 70% market share of US searches and 90+%
in many other countries
● Yahoo and Microsoft MSN have 20% market share and others are fighting for survival
● There is a chance bigger firms will merge and acquire smaller companies, resulting in a
more concentrated search business
● Winner-take-all business?
○ Most users reach a website via an internet web search
○ Any website that isn’t oriented in the leading search engine won’t get any traffic
○ These factors imply a winner take all business
Question 2 : In renewing its deal with AOL, COULD Google afford to pay AOL more than
100% of the revenue generated from AOL searches? How did Microsoft maximum
affordable bid for AOLs search traffic compare to Google’s?

● Yes, Google had the monetary conditions necessary.


● Google aimed to strengthen the JV with AOL

2005 - Google said it had agreed to buy 5 percent of AOL for


$1 billion to provide advertising credits for AOL to promote
its Web sites on Google's search service. Those advertising credits
total $300 million over the five-year term of the deal, according
to an executive involved in the negotiations.
2010 - Google said it had agreed to buy 5 percent of AOL for $1 billion and to provide
advertising credits for AOL to promote its Web sites on Google's search service. Those
advertising credits total $300 million over the five-year term of the deal, according to an
executive involved in the negotiations.

2015 - As per the terms of a deal announced today between AOL and Microsoft, Google will
be replaced by Bing as the default search engine for AOL’s sites over the next 10 years.

In addition, the partnership will see AOL handling the direct sales of Microsoft’s display
advertising business, which includes mobile and video.
Question 3: Alternative Revenue Streams
● The industry that Google operates in, is very volatile. 95%+ of Google’s revenue comes from online
advertising. Without continued success in the online advertising arena, Google could one day cease to
exist.
● Therefore, it is vitally important for Google to continue to diversify not only their projects and services,
but also their revenue streams.
● Possible Alternative Revenue Streams:
○ Google Play Store: Android market share is 80% and with high number of digital sales of apps and
content, play store drove the YoY growth in 2013-14.
○ YouTube Red: Google should focus on making YouTube Red a premium online streaming platform
like Netflix and Amazon Prime.
○ Google Cloud Platform: This industry is dominated by Amazon AWS and Microsoft Azure but with
new innovations like Cloud Debugger, Cloud Trace, and Cloud Save, demand and revenue is
increasing.
○ Google Fiber: Though building out infrastructure might be very costly but with high demand and
margins, Google can generate high revenues from this.
Q4. Do you view Google’s governance structure, corporate culture and
organizational processes as strength or potential limitations?

● Founders - primarily engineers - not the best communicators/diplomats


● Dual-Class Stock
● Culture suited to innovations and technology that Google produces
- encouraging 20% time for self-innovation
● Perfect environment for accessing the brightest minds
● Integrity and focus on technology

Possible Downside :

● Immunization of top leaders against investors -


possible ego issues.

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