How Google Loses (Thinks Out Loud Episode 442)

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Google faces the most serious challenges in its history right now. And any stumble Google suffers also hurts your business. Organic search, paid search, local search, metasearch, product search, and all the rest depend on Google getting lots of traffic. If Google loses, even a little, you stand to lose too.

So how does Google lose? How likely is it to occur? How does that loss affect your business? And what can you do about it to ensure that you win, no matter what happens to Google? That’s what this episode of Thinks Out Loud is all about.

Want to learn more? Here are the show notes for you.

How Google Loses (Thinks Out Loud Episode 442) — Headlines and Show Notes

Show Notes and Links

You might also enjoy this webinar I recently participated in with Miles Partnership that looked at "The Power of Generative AI and ChatGPT: What It Means for Tourism & Hospitality" here:

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Transcript: How Google Loses

Well hello again everyone and welcome back to Thinks Out Loud, your source for all the digital expertise your business needs. My name is Tim Peter. This is episode 442 of the Big Show and I think we’ve got a really cool show for you today.

I’ve been thinking a lot about Google and everything that’s been going on with them with regard to the antitrust trials, with regard to, um, AI, with regard to what’s happening in terms of consumer behavior, and it’s really brought to light for me how Google loses.

Now you’re probably thinking, that’s ridiculous. Google is as big as they can possibly be. There’s no way that Google loses. And you might be right. But I want you to think about this for just a minute. And I want to start by saying, I don’t care what happens to Google. I care what happens to people downstream of Google. Which, I suspect, includes you and your business.

Marketing consultants and professional speakers and thought leaders, in other words, people like me, have pretty much always told marketers that it’s a bad idea to build your brand on rented land. The problem with building your brand on rented land, of course, is that the landlord, the folks who own the land, can change the rules on you, more or less at any time, just whenever they choose to. The benefits that your business receives from that rented land, in terms of reach and traffic and engagement and revenues and profits, could then vanish overnight.

What’s funny is that those of us who told you not to build your brand on rented land, then turned around and talked about the benefits of SEO. Which is like, wait, what? Right?

SEO is rented land too. Let me say that again. SEO is rented land.

So is paid search, pretty much by definition. So, you’ve built your business on SEO, and you’re now getting lots of traffic from search and the like, and the rules of the game are changing. And, don’t get me wrong, there are some things like brand and search that are built more around your brand activity.

But you’re still dependent on the rules laid down by somebody else, somebody like Google. As we’ve seen with the rise of Google features like paid search ads and people also search for and meta search and things along those lines, Google doesn’t automatically have to send people directly to you even when those people ask for you by name.

I still do think that that’s the best way to win at search is to have people search for you by name. You’re also still dependent on Google treating that search as though people are really just asking for you. And some of the evidence is that Google’s not going to do that. Most of the time they will. Google seems to realize that it’s good business for them to give consumers what they ask for. They also know that it’s good business for them to monetize the traffic that they get any way that they can. Letting brands get traffic for free? doesn’t necessarily translate into long term brand value for Google.

I wrote a piece for Biznology way back in 2011 called, "Whose Brand Does Google Want to Build?" And if I can give you a spoiler for an article that is almost 14 years old, the brand they want to build is their brand. That’s whose brand Google wants to build. It was true 14 years ago, it’s true today.

For those who’ve been very successful with SEO, for those who’ve been very successful with search generally, any change to the algorithm or to Google’s business practices can be bad for your business. In fact, that’s what we’re seeing across the board with clients today. Google is changing some of the way that they’re doing things, some of the ways they do things. And the clients, the folks downstream of Google are starting to feel the effects of that.

Now, that’s true in the small, in the immediate term, in the details. Let’s take a step back and look at the bigger picture. There was a piece in The Wall Street Journal last week called “Googling is for Old People. That’s a problem for Google,” written by Christopher Mims. It’s a really good article.

It summarizes quite a few of the things we’ve talked about here over the last year. And it opens with this remarkable lede:

If Google were a ship, it would be the Titanic in the hours before it struck an iceberg. Riding high, supposedly unsinkable, and about to encounter a force of nature that could make its name synonymous with catastrophe.

I mean, damn, that’s, you know, that’s really putting a fine point on it, isn’t it?

I’m not necessarily as bearish on Google as Christopher Mims and The Journal are. I do agree somewhat though. This is something I’ve been talking about for a while. As Mims’ colorful metaphor suggests, no one thought the Titanic could sink when it was pulling out of port. If they did, we wouldn’t still be talking about the doomed ship over 110 years later.

I’m not convinced that Google is doomed, and this is a topic I’ve thought about a lot over the last couple of years. We’ve had at least a dozen episodes in the last 12 months addressing that very topic. I’m more like 50/50 on whether Google loses its seat as king of the digital hill, whether it is in fact a digital Titanic waiting to happen.

Google’s got a number of paths to victory. They’re also facing enormous threats. Now, I promise you, I’m going to bring this back to you and your business before we’re done today. I also want to explain Google’s situation in more detail first, right?

So, let’s start with some numbers. In the last four quarters, Google has made roughly $340 billion in revenue and roughly $94 billion in profit. Roughly 57% of those numbers comes from search advertising. Google That’s about $194 billion in revenue and roughly $54 billion in profit. Now, if we assume that Google has 90% share of the search engine marketplace, then every point of search share that they lose — every time 1% of users get their answers from Amazon or TikTok or ChatGPT or Bing or Perplexity or Claude — that costs Google roughly $2 billion in revenue and about $597 million in profits.

If you’d rather limit those numbers instead to Google’s 50% share, give or take, of paid advertising, it actually is worse for them. Each point of market share is around $3.9 billion in value to them in revenue, and over a billion dollars in profit.

Google can’t afford to lose much search activity without seriously hurting their business, without seriously hurting their top line and their bottom line. In fact, that’s probably the single largest reason I can’t write them off as doomed. They have enormous incentive to prevent that from happening. And that’s not their only benefit. Far from it. In terms of the arguments for Google maintaining its dominance, there’s a bunch.

Start with they own Android, the most used mobile operating system on the planet, and I think the most used operating system in computing history.
They own Chrome, which is the most used browser on the web.
They own YouTube, which is among the most watched video networks in history. It’s bigger than Netflix, it’s bigger than TikTok in terms of watch time and viewers. In the US, only Disney is bigger than YouTube in terms of watch time. And a couple of years ago, research showed that Netflix was a bigger driver of data bandwidth consumed on the internet, but I suspect that’s changed. They’re as big as anybody out there.
Additionally, as I’ve just mentioned, their core search product has dominant market share. And YouTube is right behind it in terms of search query volume. And Google Search is the default search engine in iOS.
Add to that that Google has assembled one of the greatest research and product development teams in history.
And, apart from making absurd amounts of money, they’re sitting on a war chest of around a hundred billion dollars.

Those are all massive advantages that are going to be very hard for anyone to overcome. They’re also not insurmountable, as tough as that is to believe. Just like the Titanic was absolutely sinkable. Just having all those advantages doesn’t guarantee that Google wins.

Let’s look at some of the arguments against them. Let’s talk about how Google loses.

First and foremost, they’re a one product company. Remember, 57% of their revenue and earnings come from search. The vast majority, the overwhelming majority, comes from search.
Ignore Chrome and Android. As big as those may be, they don’t directly contribute to Google’s revenue or earnings. They’re helpful, and I do think people using those do lead people to search on Google more. That’s also not a guarantee. Nobody’s paying money for those in any meaningful sense.
It also doesn’t appear clear that Google’s making all that much money, if any, from Artificial Intelligence at the moment. You could argue they’re making some through Google Cloud and I talked about that on our recap of Big Tech’s earnings a few weeks ago. But AI itself is not generating the kinds of revenue that Search is.
Next, of course, as Christopher Mimms talked about and as I’ve talked about a lot on this show over the last year, The U. S. Department of Justice, a boatload of state’s attorneys generals, and regulators in the EU are suing Google in jurisdictions all over the world and winning those lawsuits. Google has had way more setbacks in court than victories this year. Some of those setbacks are leading the folks prosecuting them to call for Google to divest Chrome, stop paying folks like Apple to be their default search engine, Or, open up their data to competitors. Those are big, big penalties with long term effects to Google’s success in the marketplace.
If that weren’t enough, there’s lots of evidence that younger consumers are conducting some search activity on social channels like TikTok, and especially doing so for things like e commerce purchases. Now, that’s particularly bad for Google because, as you might imagine, e commerce is a significant driver of Google’s advertising revenues. Who else is going to pay for search ads than the people who are actually selling something at the end of that search?
There’s also a lot of evidence, both anecdotal and real world, that search results are getting worse. In part, that’s because spammers are attempting to flood the search engine with crappy AI generated pages. That’s definitely happening, happening, and partly because of Google’s own actions or in particular inactions as the marketplace is changing to that point.
Another big risk is Google doesn’t seem able to move quickly today in the way that they once were.
1. They are very much caught in what’s known as the innovator’s dilemma. You’ve probably heard about this before. But Google’s got this problem that if they make major changes to their search results to better serve the needs of searchers, like incorporating AI answers all over the place, it could hurt their revenues. So they don’t want to do that.
2. But if they don’t make major changes to their search results, it could cause more people to find somewhere else to get their answers, which also hurts their revenues. So they don’t want to do that either.
3. In either case, they’re at risk of losing searchers and the revenues that follow from that. That’s a trap. That is a bad place to be. And it’s the kind of thing that has happened to many dominant firms over the years. It’s what happened to Microsoft in the 90s. None of that is what you call, you know, good.
My last concern for Google, and I think the last big threat to Google, is that they’ve been a talent magnet. And I’m not convinced that they are. That it’s still true that they are today. Ten years ago, if you were a young product manager, or a young developer, or a young AR researcher just starting your career, Google probably represented your dream job. It was at least pretty high on your list of places you really wanted to work. Today, if you’re a young product manager or developer or AI researcher, is Google still the place you think of as being the coolest, most cutting edge opportunity to build something amazing? I don’t know that it is in the way that it was. If I were starting my career today, and I wanted one of those kinds of jobs, I’d probably be looking at a company like OpenAI, or Perplexity, TikTok, NVIDIA, maybe even SpaceX. There just seem to be better, more interesting opportunities out there. And yeah, Google might still be on the list. But it would be much further down that list than it was, you know, even five to ten years ago.

So when you put all those elements together, you talk about the one product problem, you talk about their legal troubles, you talk about younger consumers looking at other search engines, you look at the fact that search results are getting worse, you look at Google’s inability to move quickly, and all of that driving less interest from young talent.

That’s how Google loses, that’s where they could be in deep trouble.

Now, I started by saying, I can’t bet too heavily against them. I’ve already detailed their strengths, and they definitely have ways to win.

Ultimately, Google’s fate will be decided by consumers. If consumers continue to get good answers from Google, they’ll keep searching there. If they don’t, or if they find some place where they can get a better answer, they’re going to go there instead. That’s how Google’s in trouble. That’s where Google will lose.

But if consumers still like the value they’re getting from Google, they’re not going to move that quickly, and not that many of them are going to move.

If you’re like most companies, you’re getting a healthy share of your traffic and revenues from Google. So if people move, that’s not just bad for them, it’s bad for you too. Looping all the way back to how I started this episode, I actually don’t care what happens to Google. I care what happens to you.

If Google stumbles, even if they stumble a little bit, your business could still feel real world consequences. Google could sneeze and you could be the one who catches a cold. Which is why you need to take action today.

Remember that there are always four paths of success for your business:

You can get more customers, you know, reach people you haven’t reached before.
You can get your existing customers to spend more with you every time they buy.
You can get existing customers to buy more often.
And of course, you can do a combination of all three of those. Get more new people who come to you, who spend more money each time they come, and who come to you more often.

But doing these things depends on diversifying your marketing mix. And there are a number of steps you can take there.

First, sourcing great content that your customers regularly look forward to.
Using that content to develop organic and paid social media followings on the channels your customers prefer. That could be TikTok, Pinterest, or Instagram if you’re a B2C company. Or it could be LinkedIn if you’re a B2B company. But the point is you need to be where your customers are.
You need to build partnerships with creators on social and in the real world to gain even more engaging and productive content.
You need to grow your email list and increase your email effectiveness so you can keep in touch with people and bring them back to your site and to your sales channels more often.
You need to focus more on PR activities to keep your brand’s name in front of customers when they’re ready to hear from you.
And you need to leverage video to reach and engage customers on YouTube, TikTok, Instagram, and LinkedIn.

If you check out our past episodes on “The CORE Methodology” and on “Diversifying Your Marketing Mix When There’s Too Much to Do,” which I’ve linked to in the show notes, you can get more detail on how you can do each of these successfully next year.

Regardless, that’s how Google loses. None of this means that Google will lose, but if they do, that’s how it’s going to happen. What’s most important to me, and should be most important to you, is that I’ve also made it clear how you can win. I don’t care whether or not Google loses. I care whether or not you do.

Don’t worry about what happens to Google. Worry about what happens to your business. And even better than worrying, take action today to ensure you get what you want. Then you don’t have to worry about whether Google or anyone else loses. You just have to watch yourself win.

Show Wrap-Up and Credits

Now, looking at the clock on the wall, we are out of time for this week.

And I want to remind you again that you can find the show notes for this episode, as well as an archive of all past episodes, by going to timpeter.com/podcast. Again, that’s timpeter.com/podcast. Just look for episode 441.

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Show Outro

Finally, and I know I say this a lot, I want you to know how thrilled I am that you keep listening to what we do here. It means so much to me. You are the reason we do this show. You’re the reason that Thinks Out Loud happens every single week.

So please, keep your messages coming on LinkedIn. Keep sending me things via email. I love getting a chance to talk with you, to hear what’s going on in your world, and to learn how we can do a better job building on the types of information and insights and content and community that work for you and work for your business.

So with all that said, I hope you have a fantastic rest of your day, I hope you have a wonderful week ahead, and I will look forward to speaking with you here on Thinks Out Loud next time. Until then, please be well, be safe, and as always, take care, everybody.

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