Revenue of Google - Term Paper Example

Case Study - REPORT: Case 5 Googles Country Experiences Contents Contents 2 Executive Summary 3 Introduction and case overview 3 Case Analysis 4 Howdoes a search engine work and make money? What is the ex-portability of a search engines technology and business model? 4 Why did many governments appear threatened by Google? How did they counter this threat? Discuss each country separately. 6 Is the threat, from the government-sponsored search engine, real or imagined? What can Google do to secure its dominance in those countries? What can Google learn from those experiences to guide its entry strategy for other countries? 7 Conclusion 8 References 10 Executive Summary Google is a popular search engine created by Larry Page and Sergey Brin in 1998. Google used PageRank technology to search pages of a website. The search engine was such that no hand editing was possible. Google earned huge money from its advertising business using AdWords which they sold to companies for advertising purpose. Google slowly started expanding in other countries like Japan, Germany and France. But the Google faced many copyright problems in these countries. There were fears that US would dominate other counters through its censorship search results according to government regulation. In France they planned to digitised documents and books but the government of France opposed it. Instead they started their own digitization process. They thought that such ranking would reflect European vision of their history and culture. Similarly in Germany they faced copyright issue and in Japan cultural issue. This report takes a look at how Google adjusted itself in each of the countries and gained market share in spite of presence of local search engine. Google is now eyeing China which the fastest growing internet user base to increase its market share. Introduction and case overview Google which is based in US is presently a popular search engine. Revenue of Google has been rising steadily from 2001 to 2008. This shows that Google has been steadily expanding its operations overseas with its international income gaining larger than national income in 2008. But Google had to face many barriers while expanding its search engine namely cultural issues, copyright infringement etc. Google opened its operation in three countries namely German, France and Japan. In each of the country it faced tough competition from national government and local search engine provider. In France Google launched its search engine google.fr. But this action was seen as violation of their culture and the French and German government together started to develop their country specific search engine. Again they faced many legal issues with respect to copyright infringement. Many advertisers sued Google and the decisions went against Google. The same case happened when Google planned to digitise documents and books. They claimed that the criteria of selection of the books will be done on the basis of Anglo-Saxon outlook. Hence the French started its own digital book project. In 2000, Google launched its service in Germany as google.de. But when they started their Gmail service they came under copyright issue and were forced to withdraw their name Gmail. German Government started their search engine named Theseus. Finally in 2002, Google started its services in Japan. The government of Japan also started developing their own search engine to compete with Google. Google next wanted to enter into China which was considered as the next biggest internet consumer country. But presence of local search engine like Baidu makes it difficult to capture large market share. Thus from the above case analysis it can be said that Google faced tough competition from respective international countries because of censored search results, accusation of removing the links to anti-Semitic and pro-Nazi sites along with other controversial sites, copyright infringements etc. Case Analysis How does a search engine work and make money? What is the ex-portability of a search engines technology and business model? Google founded in 1998 by Larry Page and Sergey Brin became the world’ largest search engine with its introduction of a billion-page index. Google used PageRank Technology to make their search process fast, simple and relevant. This technology uses the popularity of a page to display it during any search results. The popularity of a page is decided not only on the basis of a standalone site but the popularity of other sites which have links to the page. All the above search results were determined algorithmically so that no hand-editing of the results are possible. In countries like Germany and France, it censors many results by customising its algorithm. Again on the basis of location of query, Google displays results which will be more meaningful to that particular country instead of another country like America. But the display result of Google varied in different countries. For example in France a search result of Luis Vuitton showed sponsored links to other local luxury stores (Carr, 2008, pp. 89-94). Google makes money through its AdWords where it allowed companies to purchase keywords for advertising purposes. Google split its business between advertising on its website and selling its technology to other sites. For example when a user searches using a keyword, he would get an unsponsored results as well as sponsored results. Through this business model the advertising revenues of Google increased steadily to $ 21.1 billion in 2008. From the above case analysis it can be found that it is important for Google to adapt to its business models so that it can expand internationally. Google needs to be more critical about their keywords which they sell to its advertisers. Again Google faced many problems on culture, intellectual property and information displayed in international countries. Hence it is important that Google stop accepting bids for trademark words in cases where there are strict rule on copyrights and trademarks (Garnefeld, Eggert, Helm and Tax, 2013, pp. 17-21). Why did many governments appear threatened by Google? How did they counter this threat? Discuss each country separately. When Google entered into different nations they all behave in the similar way. They tried to launch their own search engine. For example French government seemed annoyed since Google was threatening their cultural heritage. For example the French Government strongly voiced against it. When Google planned to digitise the books and documents the French government was strongly against it. In 2005, Jacques Chirac, French President announced that they would start their own digital book project. They believed that Europe should not convert its books into digital files since it would be done on the basis of Anglo-Saxon outlook. They thought that it such a step would reflect European vision of culture and history (Firat and Shultz, 1997, pp. 183-190). The main resistant which Google faced was due to presence of natural search engine of Google. Again Google has access to important information’s which are critical to the respective national governments. Again no governments would want do display results during Google searches which are corrosive to their nation. For example Germany would never want that during World War II search the results will show their brutalities like mass destruction of Jewish communities. There are further challenges to building a search engine by governments. The premier challenge is the completion of the project. Like under new government in Germany in 2006, they did not approve the Quaero project and started their own project named Theseus. This was mainly due to personal differences of project managers. But even within a country there are many other universities and companies which resulted in too many opinions. In Japan the government also started to develop its own search engine which will be a Japan centric search engine. The country used its key technological strengths to create the search engine which will display more information important to them (Brin and Page, 1998, pp. 107-115). Is the threat, from the government-sponsored search engine, real or imagined? What can Google do to secure its dominance in those countries? What can Google learn from those experiences to guide its entry strategy for other countries? The above case study indicated so many threats that it seems those threats are imagined. Google is difficult to beat since the amount needed to invest on building a search engine is almost similar to what Google spends on research. The following can be seen from the figure below Figure 1: Googles Financials (in $ million) For example in 20005 Google invested $ 599.5 million and in 2006 it invested $ 1,228.6 million in R&D. But in comparison to it France, Germany and Japan spent $ 294, $ 257 and $ 885 million respectively. The ability to use technology to its advantage makes Google unbeatable. Google has thorough understanding of the international markets and economics and this makes it difficult to beat it. This can be supported by its spending on advertisements. Again Google adjusted accordingly whenever it required doing so. For example in Germany and France it censored its search results after court cases and it even changed the name of gmail.com to google mail in Germany. The huge market share of Google made its huge brand recognition evident (Brophy and Bawden, 2005, pp. 498-506). Figure 2: Search engine Market Share (%) French think that Google is a threat to their culture. But such kind of thinking is wrong as Google already has a treasure trove of information and it simply delivers search results based on the query of the user. So it cannot be a cultural threat to them. But it can inspire other countries in the way American lead technological innovation. Google has large market share in Germany and France and in Japan it stands second. The entire above figure shows that Google has enough popularity in spite of having local players. The only thing Google can do is to perfect its language sensitive search service. Google needs to develop multimedia searches just like Quaero so that it can be help to consumers. Conclusion The above case shows that Google faced many barriers to run its operations smoothly. The case presents three such countries namely Germany, Japan and France. The case study shows that Google needs to factor in issues like cultural differences, copyright infringement etc. to make its product and business model work in those countries. In France Google faced issues like copyright infringement and the government started its Quaero project to counter it. Again digitising the books and documents was seen as a threat as it would reflect European culture in it. Similar case was seen in Germany where they were battered with copyright issue and in Japan they faced strong cultural problem. Google has been able to adjust itself and is eyeing for China which is the fastest growing internet user country in the world. Presence of local search engines has not been able to make them loose ground. Clearly with technological advancement Google can raise above all kind of difficulties. References Brin, S. and Page, L. 1998. “Computer Networks and ISDN Systems”, The anatomy of a large-scale hypertextual Web search engine. Vol. 30(2), pp. 107-115 Brophy, J. and Bawden, D. 2005. "Is Google enough? Comparison of an internet search engine with academic library resources", Aslib Proceedings, Vol. 57(6), pp.498 - 506 Carr, N. 2008. “Is Google Making Us Stupid?” Yearbook of the National Society for the Study of Education. Vol. 107(2), pp. 89-94. Firat, A.F. and Shultz, C.J. 1997. “From segmentation to fragmentation: Markets and marketing strategy in the postmodern era”, European Journal of Marketing. Vol. 31(3), pp. 183-190 Garnefeld, I., Eggert, A., Helm, S.V. and Tax, S.S. 2013. “Growing Existing Customers Revenue Streams Through Customer Referral Programs”, Journal of Marketing. 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