Role of Browsers in Surfing the Internet - Essay Example

? THE COMPETITIVE ENVIRONMENT (Google's Monopoly) by: ID Number S-C-P Model Presented of the University School Location Estimated Word Count: 1,681 Due on: May 07, 2012 Introduction The Internet is truly a transformational technology that affects everyone on the planet today. People now do things differently, from shopping to banking to dating to socializing and it has also changed how businesses are being run and managed. The Internet came out of the World Wide Web but this term is rarely used nowadays and it has almost become arcane to younger generations of Internet users. Going back further in time, it was a United States government-funded research project some sixty years ago called the ARPANET that eventually gave rise to the present Internet. It was originally a defense-related project of the Advanced Research Project Agency of the U.S. military to develop a wide-area network of communications that is redundant and designed to withstand a nuclear attack during the Cold War period. It was developed at great cost but the American government saw it fit to give it away for free for civilian uses, similar to the so-called Star Wars Project or the Strategic Defense Initiative which is the precursor to the global positioning system (GPS) used widely in most consumer electronic devices such as mobile phones. The main brains behind the ARPANET was a guy named Vannevar Bush who foresaw an information overload that many people experience. It was first brought up in an article he wrote in which he argued for some form of oversight or a content curator who will see to it that information published on the Web is credible, reliable, and trustworthy; anybody can publish anything without proper verification, and Web content is crucial when people go on-line to look for some information they need. This paper is a discussion of the role that search engines or browsers play when people search or look for information on the Web. Search engines perform a crucial function in this regard as it determines what the search results will be. Although there were many search engines that preceded today's giant Google, the way the search process was performed was very different back then but Google managed to alter everything through its highly-secret algorithm. An end result of this new way of conducting the search is that Google wholly dominates the market. Discussion Google has closely guarded its secret algorithm that produces search engine results, which it rightfully considers as proprietary in nature. As more and more people get connected on-line, digital presence is essential for business firms to survive. Google has dominated this market in just ten-years' time because it altered the way how browsers crawl the vast Internet for the information typed in by people on their search box. Previously, search engines looked for the titles of articles only or the Web addresses of Internet sites but Google's process does it much differently, by looking at the actual content of Web pages posted on the Internet. This had big or profound effects, one of which was lower the price of a unique domain name considerably. The new search process led to search engine optimization techniques that try to influence the search results being produced but Google changes its algorithm to obviate this technique. It is important to do this occasionally to have unbiased results based on page rankings. Landing on top of page rankings has considerable business consequence because people tend to look only at the first few top results and ignore other lower-ranked results. This also has a considerable effect on the profits of Google which relies on on-line advertising revenues to a big extent and indirectly, on the businesses that advertise on-line as more people shift to their purchases through on-line transactions because of improvements in Internet security such as the use of the secure-socket layer (SSL) that encrypts crucial personal information. Google came to dominate the search engine market because of its superior technology, which its former chief executive officer (CEO) Eric Schmidt described as “more measurable, more targetable, and the foremost innovator in this space” which on-line advertisers find to be a bit more accurate also (Helft, 2008:1), as these advertisers want the best bang for their ad bucks. It is not surprising Google controls 65% of the U.S. market for on-line ads and searches while it has a higher market share in Europe at 80% that naturally attracts its competitors' envy. Structure of the Search Engine Market – the way Google altered Web searches are conducted has a big effect on the market, resulting in its complete dominance today. Although there are a number of search engines available like Microsoft's Internet Explorer (IE), Apple's Safari, Opera (from Norway) and Mozilla's Firefox, the people tend to select Google as their default browser; it also tends to attract most advertisers to Google because that is where most on-line people go to. A few major players indicate this should be an industry with high concentration (oligopoly), but the sheer dominance of Google makes it a virtual monopoly which brought in complaints from its competitors, accusing it of some unfair trade practices. The main allegation is that Google engages in monopolistic practices by downgrading search results in Web sites produced by its algorithm to the lower page rankings. The complaints are lodged by Foundem (a British price-comparison site), eJustice (a French legal search engine) and Ciao (a shopping site owned by chief competitor of Google which is Microsoft) and other sites lumped into a trade group that is also funded and sponsored by Microsoft. Conduct of Google – accusations against Google has very important implications in terms of advertising revenues, because Google may have intentionally (or maybe not) altered its very algorithm to favour its own on-line advertisers to be shown prominently on its page rankings. Web site owners would prefer to advertise on Google if they are shown on top of rankings to the detriment of its competitor search engines, because people are often too lazy to search on their own further down to the next pages of search results. Selling on-line requires Web sites to attract visitors to the site and one good way to do this is to land on top of Web searches. Its effect is to have more on-line revenues, as these site visits often translate to actual purchases. The probe against Google is still in its preliminary stages but the European Commission has taken the charges very seriously, because if proven true, it flies against net neutrality principle which states the Internet should be free and open (with no censors, restrictions, biases, etc.). Google maintains its own blog site that announces its adherence to this holy Internet principle (Whitt, 2010:1) but it had been caught doing something else that is opposite of what it says regarding Internet traffic. Net neutrality is a contentious issue but another more divisive issue cropped up when Google admitted its Street View Project collected unauthorized data from a lot of open Wi-fi networks (known as data harvesting), as contained in the final report of 17-month investigation by the Federal Communications Commission (Streitfeld, 2012:1). Giants like Google cannot simply be expected to give up its market dominance so easily which it had acquired over the years through research and innovation in a highly-competitive environment. Performance – the superior performance of Google from its market dominance is shown by its immense profits derived from the on-line advertising, which amounted to $10.65 billion in gross revenues (24% growth) and unaudited net profits of $3.4 billion for the first quarter for the year 2012 (earnings per share or EPS of $10.08 or higher than analysts consensus forecast of $9.54 EPS) based on its financial statements (Google.com, 2012:1) but it is overshadowed by Apple, Inc. as a technology giant in terms of sheer profits ($13.1 billion in 4th Qtr 2011). Conclusion However, compared to its peers within the same industry of search engines, Google is doing just fine and is still the undisputed leader in Web searches but it is constantly under threat by the giant upstart of Facebook when it comes to attracting on-line advertisers (Gustin, 2012:1). Nature of Behaviour – its dominance may not last for long if it takes its eyes on the ball, and it happened when it initially ignored the social networking phenomenon. Its behaviour can be understood as a leader that is extremely paranoid to guard its market share and dominance, as what Andy Grove of Intel characterised as inflection points or changes in its industry patterns (Grove, 1996:105). Google wants to be at the forefront of the next Internet wave, as it sees its role as a vanguard of the next social revolution, as what Ogburn said about new technologies (Ogburn, 1922:77), similar to a plough in agriculture or Industrial Revolution's steam engine. Reasoning - behind the probe by the European Commission is to strictly enforce neutrality of the Internet and Google's market dominance makes it a very complicated issue because it has consequences for the number of digital visitors to its site while allegedly excluding other sites through the vagaries of its algorithm although Google denies it is doing it deliberately or it is practising discrimination with regards to search results. The same situation of dominance is now developing in the mobile devices market, where Google attained 50% share in just three short years since the introduction of its Android operating system. Economist Joe S. Bain was correct in pointing the correlation between profits and performance in industry concentrations (Bergh & Camesasca, 2001:26) but Google seems to defy market expectations because it also is very good in the market efficiency structure hypothesis because of its superior product. The European Commission has to balance competing issues with regards to market dominance, its net neutrality position and the interests of consumers who may be deprived of choices if one player is allowed to dominate an industry although Internet users can switch browsers easily. Mr. Vannevar Bush foresaw the need for a curator (Bush, 1945:1) and Google claims it is just doing exactly that job as gatekeeper of relevant content produced through its search engine. Reference List Bergh, R. & Camesasca, P. D. (2001) European Competition Law and Economics: A Comparative Perspective. Cambridge, UK: Intersentia Publishing. Bush, V. (1945) “As we may think.” Atlantic Monthly, July. Available at [accessed 07 May 2012]. Google.com (2012) “Investor Relations: 2012 Financial Tables.” [on-line]. Google, 12 April. Available at [accessed 06 May 2012]. Grove, A. (1996) Only the Paranoid Survive: How to Exploit the Crisis Points that Challenge every Company and Career. New York, NY, USA: Currency/Doubleday. Gustin, S. (2012) “Grading Google's CEO Larry Page: A First Year Report Card.” [on-line]. Time Magazine, 09 April. Available at [accessed 07 May 2012]. Helft, M. (2008) “Google at 10: Searching its Own Soul.” [on-line]. The New York Times, 07 November. Available at [accessed 06 May 2012]. Ogburn, W. F. (1922) Social Change with Respect to Culture and Original Nature. New York, NY, USA: B. W. Huebsch. (a re-print). Streitfeld, D. (2012) “Data Harvesting at Google not a Rogue Act, Report Finds.” [on-line]. The New York Times, 28 April. Available at Whitt, R. (2010) “Facts about our Network Neutrality Policy Proposal.” [on-line]. Google Public Policy Blogspot, 12 August. Available at [accessed 07 May 2012]. Read More