1. Why could Google die …
maybe not now, but tomorrow
Paris, March 2009

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..…….
March 2009 • Why could Google die ? • 2

3. This presentation is an answer to the comments
related to the previous faberNovel study
In December 2008, faberNovel published a white paper about
Google’s key success factors :
http://www.slideshare.net/misteroo/all-about-google-presentation
Many comments dealt with Google’s weaknesses and the possible
threats to Google’s market dominance. We are now trying to identify
these threats and weaknesses.
The title of the presentation refers to Jeff Jarvis’ book
What would Google do? which will be published in France in June 2009 (faberNovel/Télémaque publishing) ..…….
March 2009 • Why could Google die ? • 3

4. Methodology
• 4 types of threats and weaknesses have been identified:
Legal threat
Internal weakness
Strategic threat
Other threat
• For each threat or weakness, probability, forecast and impact have
been evaluated on scales :
• Probability: evaluation of the possibility that a threat or a weakness could impact Google’s
business
Low Mild High
• Timing: evaluation of the time limit for the threat or a weakness to impact Google’s business
Short Long
term term
• Impact: evaluation of the negative impact on Google’s revenues and profits
Low High
impact impact
..…….
March 2009 • Why could Google die ? • 4

5. 12 main weaknesses or threats
Threats / Weaknesses Probability Timing Impact
Low > High Short > Long Low > High
Antitrust suits against Google
Legal threats
Copyright infringement suits
Inability to hire or retain key people
Internal
Inability to scale operational processes
weaknesses
Top management issues
Acquisition difficulties
Strategic Competition with incumbents
threats Disruptive innovations
Inability to control points of entry
Interruption or failure of Google’s services
Other threats Privacy concerns
Opensource’s ecosystem threats
..…….
March 2009 • Why could Google die ? • 5

6. Antitrust suits against Google Legal threat
Google is increasingly subject to antitrust suits
vs / vs
In 2007, Microsoft called for In November 2008, Google and In February 2009, Sourcetool, a B2B
regulator action to stop Google Yahoo ended their negotiations, search engine, filed an antitrust suit
and DoubleClick merging abandoning attempts to overcome against Google, accusing it of upping
the objections of antitrust regulators its ad rates unfairly
Google might constantly be subject to antitrust claims for (amongst others) :
Excluding companies Over favoring in-house Issuing unclear ad
from Google results services rates
Probability Timing Impact
High Middle term High
..…….
March 2009 • Why could Google die ? • 6

7. Copyright infringement suits Legal threat
Google has been subject to copyright infringement claims
all over the World (Australia, Austria, France, Israel, Italy,…)
vs vs vs
May 2007: Viacom sued Google, May 2008: a group of Belgian October 2008: Google agreed to
accusing YouTube of "massive newspapers filed a lawsuit against pay $125 million to settle two
intentional copyright Google claiming that Google News copyright lawsuits by publishers
infringement" and asking for more made the papers' articles available and authors
than $1 billion in damages for free. They asked Google for €49
million in damages
Since most of Google’s services link or host copyrighted material,
The risk of monetary damages is substantial
Probability Timing Impact
High Short term Moderate
..…….
March 2009 • Why could Google die ? • 7

8. Inability to hire or retain key Internal
people weakness
Google set up processes to attract and motivate employees
Since its performance depends on the talents and efforts of highly skilled individuals
600
Examples : 400
Google stock
200
price [$]
05 06 07 08
Cool work Transferable stock Very selective
environment options program hiring process
In a more mature company, incentives became less efficient:
Google’s work environment is becoming comparable to big corporations
At current stock price, 85% of its employees have underwater stock options
Google’s hiring process is currently viewed as interminable (up to 5 months) and inefficient
Probability Timing Impact
High Middle term Moderate
..…….
March 2009 • Why could Google die ? • 8

9. Inability to scale operational Internal
processes weakness
Operational infrastructure and processes are key to Google
favoring the growth of the company through innovation and quality
Google's 80/20 rule allowed to Organization based on a startup model:
develop many products : • Project teams are small and autonomous
• Peer-reviewing: engineers work is subjected to
the scrutiny of other engineers who are experts in
the same field
Google will face issues adapting its infrastructure to quick growth
Implementation of heavy Inability to maintain a corporate Inability to maintain
processes which could culture that fosters creativity and good quality level for
slow down innovations teamwork Google products
Probability Timing Impact
Mild Short term Low
..…….
March 2009 • Why could Google die ? • 9

10. Internal
Top management issues
weakness
Top management is key to Google’s strategy
Larry Page, President in Eric Schmidt, CEO Sergei Brin, President in
charge of products charge of technology
Moreover, the triumvirate’s stocks account for 67% of the voting power of Google
capital stock
Top management issues could affect Google’s performance
Internal dissensions Loss of key management leaders : Uncertain ability to
between the members of accident / lack of interest for a more transfer or delegate key
the top management mature company etc… responsibilities
Probability Timing Impact
Low
Long term High
..…….
March 2009 • Why could Google die ? • 10

11. Strategic and operational Strategic
difficulties acquiring companies threat
Most of 54 Google’s acquisitions were successful
In the future, Google could face some serious issues acquiring
companies
Strategic issues Operating difficulties Diversion of
• Forecasted revenues may not • Integration of procedures and management time
fully materialize: processes • Rather than focusing on
• Technical integration of the operating business, top
companies: management could focus
• Google could miss investment on acquisition integration
opportunities: challenges
Eg : It took 16 months to
relaunch Jotspot after its
acquisition by Google
Probability Timing Impact
Mild Short term Moderate
..…….
March 2009 • Why could Google die ? • 11

12. Strategic
Competition with incumbents
threat
Until now, Google withstands competition on its core business:
US search market (Hitwise 2009)
Yahoo 18%
Microsoft 5%
Google 72%
Other companies 5%
But this situation might change
Microsoft and Google distributors New entrants on
Yahoo could could break their Google’s markets
Examples
merge partnership
Apple search engine ?
More efficient
AdSense
competitors?
Probability Timing Potential impact
Mild Middle term High
..…….
March 2009 • Why could Google die ? • 12

13. Development of a disruptive Strategic
innovation on Google’s markets threat
Some of the most successful IT companies have been victims of
disruptive innovations:
Historical
leaders
Disruptive Broadband Google’s
innovations access PageRank
Future disruptive innovations could seriously impact
Google’s core business:
Natural language search? Semantic Web? Other innovations?
Probability Timing Impact
Mild Long term High
..…….
March 2009 • Why could Google die ? • 13

14. Strategic
Inability to control points of entry
threat
Google already had some difficulties controlling strategic points
of entry:
Example : Social networks
Google and MySpace $900 Million Except in Brazil and India, Google’s
deal on search and contextual ads social network never managed to
did not reach expected revenues compete with Facebook
Google may have difficulties in controlling future points of entry
Mobile Video games Television set-top Internet of things
consoles boxes
Eg :
Probability Timing Impact
Mild Middle term Moderate
..…….
March 2009 • Why could Google die ? • 14

15. Interruption or failure of Google’s
Other threat
services
Recently, several Google products experimented serious
interruptions or failures:
March 2009: some February 2009–March 2009: March 2009: some users' private
users had difficulties Gmail crashed twice across documents were accidentally
creating events the world shared with other users
These problems may strongly affect Google:
Brand damage Loss of business users
A strong brand is all the more important Users can very easily move to
since barriers to entry are relatively low competitor’s products, and need to fully
in the Internet market trust the service
Probability Timing Impact
High Short term High
..…….
March 2009 • Why could Google die ? • 15

16. Privacy concerns Other threat
Everyday, concerns are expressed
about Google’s practices regarding the use of personal information
A wide amount of information … …could be lost or used for
unintended purposes
Personal information Navigation tracking and logs
Medical Data Location
• Governmental control
Mails &
Searches
• Commercial uses
conversations
• Others. Eg. exploited by
Personal WWW Web
competitors
documents behaviour
As the amount of stored data is strongly increasing, privacy
concerns will increase too, favoring:
Claims Brand damage Loss of users
Probability Timing Impact
High Short term High
..…….
March 2009 • Why could Google die ? • 16

17. Opensource’s ecosystem threats Other threat
Google is outsourcing its R&D to independent communities
Google R&D is still important …but most of it is supported by Opensource actors :
• 2,12 billion $ in 2007 • The Mozilla foundation
• 12 % of Google turnover • Most of Google products integrate
opensource code : from Android to
• vs. Microsoft’s R&D investments : 7,5 billion $ Google Chrome
Google could be forced to internalize these efforts in the future
Dissensions with the community Weaknesses of the community
/ X
• Google’s exploitation of Opensource • Opensource business models may evolve
efforts • The long-term existence of these communities
• Google’s proprietary strategy : keeping is not ensured
most parts of its developments secret
Probability Timing Impact
Mild Middle term Moderate
..…….
March 2009 • Why could Google die ? • 17

18. What do you think?
Of what
Which threat ?
kind?
Probability Forecast
? Impact
Fill this slide and send it to
contact@fabernovel.com to give your opinion! ..…….
March 2009 • Why could Google die ? • 18

19. Download this presentation at :
http://www.fabernovel.com/en/analyze/
news/why-could-google-die
..…….
March 2009 • Why could Google die ? • 19

20. Stéphane Distinguin
Founder and CEO
stephane.distinguin@fabernovel.com
Cyril Vart
VP Strategy & Development
cyril.vart@fabernovel.com
Pierre Fremaux
Project Analyst
pierre.fremaux@fabernovel.com
Matthieu Lecomte
Junior Project Analyst
matthieu.lecomte@fabernovel.com
42, bd de Sébastopol 75003 Paris
Tél. : +33 1 42 72 20 04
Fax. : +33 1 42 72 20 03
www.fabernovel.com ..…….
March 2009 • Why could Google die ? • 20