Google's Very Rough Transition
Google's Very Rough Transition
Dec 17, 2014
Google's stock price hit a 52-week low yesterday.
This is not surprising news.
This has been a year of major change for Google, and it hasn't always been pretty.
CEO Larry Page, frustrated with the pace of innovation at the company, took a big step back from day-to-day operations, turning over control to Sundar Pichai.
Google's core business, search advertising, is looking shakier than it has in years. The problem is the rise of mobile. Search advertising is the best way to make money on the web. But people aren't using the web as much on their mobile phones as they did on their desktops. Last quarter, Google's advertising business grew at its slowest rate in six years.
People are searching for products on Amazon, rather than using Google. The only reason search makes money for Google is that people use it to search for products they would like to buy on the internet, and Google shows ads for those products. Increasingly, however, people are going straight to Amazon to search for products. Desktop search queries on Amazon increased 47% between September 2013 and September 2014, according to ComScore.
The executive in charge of running the moneymaking side of Google, Nikesh Arora, quit for a new job at Softbank. Internally, Arora's departure has been the source of some tension and disappointment. Before he left, Arora was planning to throw a huge conference for Google sales employees in Las Vegas. Now that Arora is gone, the event has been canceled in favor of more regional meetings, and we've heard some Googlers are bummed. These same Googlers are under the impression that the whole company is in the middle of a hiring freeze. After speaking to several more sources, we're pretty sure there is not actually a hiring freeze at Google. But it is interesting that some people inside the company think there is. Clearly, there are pockets of pessimism.
Google is getting knocked around overseas. Google just pulled its engineers out of Russia. It shut down its news aggregator in Spain. The EU wants to break up the company. The situation isn't looking great in Brazil, either.
Facebook has decided to compete with YouTube for video-advertising dollars, and Facebook may win. Facebook is working on bringing YouTube-like video to its News Feed. It's also rolling out video ads. Many in the industry believe that Facebook is in a better position than YouTube to eat into the advertising dollars that are leaving TV. Anmuth writes, "Facebook appears better positioned to capture new dollars coming online given its 21% share of mobile time spent, strong leverage to news feed ads, and nascent opportunities in video and Instagram."
Add it all together, and there are some serious worries about Google in the industry.
Says a former Googler: "I think 2015 is going to be disastrous."
"Mobile has been eating away [at them] for years, but they've been able to pull rabbits out of the hat to increase revenue."
"[That] has to end somewhere."