Google, Web 2.0 and the Long Tail Effect

The Long tail effect is a phenomenon that is attained when a company sells a small number of popular items in large quantities and a large number of a few unpopular items in small quantities (Anderson, 2004). The internet (search) makes this possible by providing a platform through which a company such as Google can make related goods, albeit unpopular, available by providing ads based on users’ purchases or search history. Google is indeed, renowned to have embraced the core competencies of Web 2. 0 (O’ Reilly, 2005).

One of the most significant is how it has leveraged the long tail by using context-sensitive ads on its search pages. Through the use of Google Adsense, Google offers advertising services to companies which allow them to reach a large proportion of internet users across the globe as opposed to only a small group of larger companies and high net-worth individuals. Also, through Google’s pagerank algorithms, it can determine which websites are relevant on the web based on the number of inlinks and outlinks present in the webpages.

Through its blogging service – www. blogger. com, Google has become the prime owner of one of the largest blogging sites and this allows the company to harness collective intelligence from large masses of people across the world. Google also provides services which allow it to control its data sources, for example, it provides access to a large pool of data that gets better as more people use it – Google maps. Controlling an expansive data source which is difficult to recreate is one of the core competencies of Web 2. 0 companies (O’ Reilly, 2005).

Google also has applications which generate rich user experiences, for example, it provides a platform for accessing services online such as YouTube, Google News, Google Documents, Google Scholar, Google Reader, Google Mail and so on. Another main example of how Google demonstrates the core competencies of Web 2. 0 is its release of applications which are in perpetual beta (O’ Reilly, 2005). Google’s applications are constantly being modified and updated to deliver new features which can be used on multiple devices including smart phones and other mobile devices to keep users constantly stimulated.

The Long Tail Effect on Companies Two other well-known companies that have take advantage of the long tail effect are Amazon and Netflix (Anderson, 2004). The long tail effect results in the increased sales of items which are not popular. Netflix and Amazon, through the use of web 2. 0 ideas have been able to leverage this by using search history information, filters and recommendations from other users in the community to drive the demand for a product (Anderson, 2004). Netflix applies this to its sale of DVDs while Amazon applies it to different products ranging from electronics to books.

The long tail effects experienced by these two companies imply that they can sell more of old classics than new products which are yet to be recommended by other people or haven’t yet passed the test of time. On the long term, the long tail effect leads to increased sales and a widespread exposure of customers to previously unnoticed products. Business Model Analysis According to (Osterwalder & Peigner, 2010), a business model determines how an organization is able to create, deliver and continually extend the value provided to customers.

The aforementioned companies have been able to incorporate these nine pillars of any successful business model into their operations. The pillars are explained as follows: Customer Segments: These companies through the use on the internet and the long tail can reach customers from different segments of the web. They can attract a diverse category of people from individuals to large companies. Value Propositions: Through the internet, they strive to understand customers’ needs and problems and ensure that their offerings satisfy customers’ needs

Channels: These propositions are delivered to customers through the use of communication, fulfilment and sales channels which are flexible, accessible and affordable Customer Relationships: Customer relationships are at the heart of any successful business and are constantly managed to ensure that customers are satisfied which in turn enforces loyalty Revenue Streams: This is the profit engine of the business and can only be realised if the value propositions are fulfilled and possibly, exceeded. Key Resources: A company can only operate optimally through the use of its resources.

Resources are key inputs to business process activities and are necessary for ensuring that companies can deliver value to customers. Key Activities: These are the activities that are central to an organizations’ core competencies. Through these activities, the value proposition is sprung into action for the customers’ benefits. Key Partnerships: Partnership contributes to a flexible business model that ensures that operations which can be performed cheaper and better by external companies are outsourced so that client companies can focus on their core competences.

Partnerships can on the long run, improve the reach of most companies to a global scale Cost Structure: the business model elements and the cost structure are strongly linked. Amazon, Netflix and Google have revolutionalised the use of the internet in creating value and altering traditional business models through the use of technology and continuous innovation in a bid to stay ahead of competition and enter untapped markets. Open Innovation Open innovation can be applied by harnessing collective intelligence through the creation of an online platform where users can collaborate, share recommendations and ideas with the host company.

In a situation where a company such as Amazon opens its doors to the public in order to receive comments and reviews from the public, such a company has the opportunity to create a sense of community and “stickiness” amongst its community members. This increases the level of accountability, transparency and familiarity associated with such companies. Netflix also encourages user reviews and recommendations from users of its website. Openness is always good for companies because it provides a way for them to receive ideas from the public, reflecting the Delphi Effect.

Companies such as LEGO, Peugeot, IBM, Threadless have also taken the lead in illustrating the many benefits that can be derived from open innovation. It can lead to an increase in the level of participatory and viral marketing stemming from the use of blogs, tagging, user reviews and discussion forums. If companies can alter their business models to incorporate these tools, then the potentials of open innovation may be fully realized. Disruptive innovation

Disruptive innovation, can be described as a process in which a product/ service starts off simply and then opens up the market in a way that displaces or unsettles traditional competitors. It allows an entirely new population of customers to develop. Through this, customers can have access to a set of products that were originally only accessible to people with a lot of money or skills. It can be described as an innovation that improves a product or service in surprising ways that people could not have anticipated (Christensen et al, 2008).

Companies achieve this either by lowering prices or reaching out to different sets of customers across all locations. They achieve disruptive innovation by doing things cheaper, reaching a new set of customers by offering products which are simpler, more affordable, and more accessible. For example, what Google has done in the advertising world. Google makes advertising simple, affordable and different. Google has changed the name of the game by transforming existing markets and playing the game in a very different way from traditional means.

The business model itself is at the heart of the disruption (Christensen et al, 2008). Amazon’s business model also has elements of disruptive innovation due to the long tail effect made possible by its extensive use of its website to aggregate customers’ purchase history and provide recommendations which are highly personalized. Such a business model has posed a serious competitive threat to traditional bookstores such as Barnes & Noble. The same situation exists between Netflix and traditional DVD rental shops which either do not have an online presence or a strong community reinforced through the use of reviews.

Google in addition, is also giving large advertising houses such as Radio stations, television stations, newspapers and magazines a run for their money. In order for these companies to maintain their position in the market, they must continue to create simple, affordable and effective services to their customers by remaining responsive to their needs and market demands. Social Media Communities Amazon has a wide community of users who provide reviews on the products they have bought. Netflix also has a wide community of users who provide reviews on the DVDs they have watched.

The higher the review a product has from previous customers, the more inclined a prospective buyer would be to go down the same route. Social media is one of the most cost effective means of achieving viral marketing. Through Social networking sites, blogs and discussion forums, companies can leverage the access to large masses of people who may help to market products sometimes, unintentionally. This is one of the positive network externalities that can be gained from the use of social media communities. For example, Google through its Adsense program, pays commission to website owners who place adverts on their webpages.

This program reinforces Google’s’ advertising capabilities and ensures that it sustains a widespread reach across the web. Companies can continually use social media to improve their business by gathering information on consumers’ preferences, implementing ideas from community members, and using the online platform as a way of providing top notch customer service while at the same time instilling a sense of loyalty in consumers. References Anderson, C. (2004). The Long Tail. Retrieved May 27, 2010, from WIRED: http://www. wired. com/wired/archive/12.

10/tail. html Christensen, C. M. , Horn, M. B. , & Johnson, C. W. (2008). Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns (1 ed. ). New York: McGraw-Hill. O’Reilly, T. (2005). “What Is Web 2. 0: Design Patterns and Business Models for the Next Generation of Software. ” Retrieved 26 May, 2010, from http://oreilly. com/web2/archive/what-is-web-20. html. Osterwalder, A. , ; Peigner, I. (2010). Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. New York, NY: Wiley.

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Google, Facebook Move to Restrict Ads on Fake News Sites

Alphabet Inc.’s Google and Facebook Inc. on Monday announced measures aimed at halting the spread of “fake news” on the internet by targeting how some purveyors of phony content make money: advertising.

Google said it is working on a policy change to prevent websites that misrepresent content from using its AdSense advertising network, while Facebook updated its advertising policies to spell out that its ban on deceptive and misleading content applies to fake news.

The shifts comes as Google, Facebook and Twitter Inc. face a backlash over the role they played in the U.S. presidential election by allowing the spread of false and often malicious information that might have swayed voters toward Republican candidate Donald Trump.

The issue has provoked a fierce debate within Facebook especially, with Chief Executive Mark Zuckerberg insisting twice in recent days that the site had no role in influencing the election.

Facebook’s steps are limited to its ad policies, and do not target fake news sites shared by users on their news feeds.

“We do not integrate or display ads in apps or sites containing content that is illegal, misleading or deceptive, which includes fake news,” Facebook said in a statement, adding that it will continue to vet publishers to ensure compliance.

Google’s move similarly does not address the issue of fake news or hoaxes appearing in Google search results. That happened in the last few days, when a search for ‘final election count’ for a time took users to a fake news story saying Trump won the popular vote. Votes are still being counted, with Democratic candidate Hillary Clinton showing a slight lead.

Nor does Google suggest that the company has moved to a mechanism for rating the accuracy of particular articles.

Rather, the change is aimed at assuring that publishers on the network are legitimate and eliminating financial incentives that appear to have driven the production of much fake news.

“Moving forward, we will restrict ad serving on pages that misrepresent, misstate or conceal information about the publisher, the publisher’s content, or the primary purpose of the web property,” Google said in a statement.

The company did not detail how it would implement or enforce the new policy.

Macedonia news

AdSense, which allows advertisers to place text ads on the millions of websites that are part of Google’s network, is a major source of money for many publishers.

A report in BuzzFeed News last month showed how tiny publishers in Macedonia were creating websites with fake news — much of it denigrating Clinton — which were widely shared on Facebook.

That sharing in turn led people to click on links which brought them to the Macedonian websites, which could then make money on the traffic via Google’s AdSense.

Facebook has been widely blamed for allowing the spread of online misinformation, most of it pro-Trump, but Zuckerberg has rejected the notion that Facebook influenced the outcome of the election or that fake news is a major problem on the service.

“Of all the content on Facebook, more than 99 percent of what people see is authentic,” he wrote in a blog post on Saturday. “Only a very small amount is fake news and hoaxes.”

Google has long had rules for its AdSense program, barring ads from appearing next to pornography or violent content. Work on the policy update announced on Monday began before the election, a Google spokeswoman said.

The company uses a combination of humans and artificial intelligence to review sites that apply to be a part of AdSense, and sites continue to be monitored after they are accepted, a former Google employee who worked on ad systems said. Google’s artificial intelligence systems learn from sites that have been removed from the program, speeding the removal of similar sites.

The issue of fake news is critical for Google from a business standpoint, as many advertisers do not want their brands to be touted alongside dubious content. Google must constantly hone its systems to try to stay one step ahead of unscrupulous publishers, the former employee said.

Google has not said whether it believes its search algorithms, or its separate system for ranking results in the Google News service, also need to be modified to cope with the fake news issue.

Fil Menczer, a professor of informatics and computing at Indiana University who has studied the spread of misinformation on social media, said Google’s move with AdSense was a positive step.

“One of the incentives for a good portion of fake news is money,” he said. “This could cut the income that creates the incentive to create the fake news sites.”

However, he cautioned that detecting fake news sites was not easy. “What if it is a site with some real information and some fake news? It requires specialized knowledge and having humans (do it) doesn’t scale,” he said.

(Reporting by Julia Love and Kristina Cooke; Editing by Jonathan Weber, Bill Rigby and Edwina Gibbs)

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Google May Launch Dedicated Search Results For Mobile

Google is reportedly on the verge of releasing dedicated search results for mobile.

 
 
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 suggest that Google disclosed these plans in a keynote speech by Gary Illyes, a webmaster and trends analyst at Google. Currently, Google searches featuring the same criteria reveal identical results on both mobile and PC platform- something that is set to be changed. Though the outcome of this change hasn’t yet been defined, it should lead to more relevant results for when searching on a mobile operating system.

As of now, searches made from mobile platforms like Android and iOS have overtaken those of desktop and laptop, but the results have stayed the same no matter what the platform. It’s said that the desktop index would remain in place, but it would not be as up to date as the mobile one, though to what extent, is still unclear.

This is something has been planning for a while, as Google’s Illyes tweeted about it over a year ago.

This article was originally published on  and has been reposted on Entrepreneur Middle East based on a mutual agreement between the websites.

Related: 

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Google, Facebook and Other Tech Titans Form ‘Partnership on AI’

Five of the biggest tech companies have launched a collaboration to help the public understand the benefits of artificial intelligence. The New York Times  in early September that Google, Facebook, Microsoft, IBM and Amazon had been  to discuss an AI-related project. Now, the cat’s finally out of the bag.

Their  is officially called “Partnership on Artificial Intelligence to Benefit People and Society,” and it has a few goals other than to make sure people know that AI research  creating killer robots. Partnership on AI will support related research and recommend best practices in ethics, transparency and privacy when it comes to artificial intelligence studies. The project also aims to create an open platform where researchers and major players in the industry can communicate.

The initiative’s website explains its tenet as follows:

“We believe that artificial intelligence technologies hold great promise for raising the quality of people’s lives and can be leveraged to help humanity address important global challenges such as climate change, food, inequality, health and education.”

All five founding companies have huge AI projects. IBM, as you know, has , while Google has DeepMind, which you probably recognize as the the team behind . Amazon has Alexa, the voice assistance that’s loaded onto its Echo speakers, while Microsoft has Cortana and a whole bunch of . Finally,  depends on artificial intelligence for many of its features, including face recognition and its News Feed.

Despite the initiative’s solid lineup, people couldn’t help but wonder why it’s missing one key player: Apple. Microsoft’s Eric Horvitz, who serves as one of the project’s interim co-chairs, told  that they’ve been in discussions with Cupertino.

“I know they’re enthusiastic about this effort,” he said, “and I’d personally hope to see them join.”

Another missing name is Elon Musk’s , a non-profit AI research project that promises to make its results available to all. That might eventually change, though, since the team plans to invite more companies and non-profits from around the world to be part of the effort.

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Google Cloud Unit Close to Winning PayPal Business

Alphabet Inc.’s Google is close to winning PayPal Holdings Inc. as a client for its cloud business, potentially beating out Amazon.com Inc. and Microsoft Corp., CNBC reported on Tuesday.

While Google is the front-runner, the online payments processor is evaluating the other providers and hasn’t made any decision yet, CNBC reported, citing people familiar with the matter. 

However, PayPal may not move its technology infrastructure in the fourth quarter, the peak period for online commerce, CNBC said.

PayPal has some existing business with Amazon Web Services, according to the CNBC report.

Google has been trying to beef up its presence in cloud computing, a market dominated by Amazon and Microsoft.

Google landed Home Depot Inc. as a client in March, highlighting the momentum its cloud business has gained under the leadership of Diane Greene, a co-founder of VMWare Inc. Greene joined Google late last year.

Google also counts popular messaging app Snapchat and the world’s biggest paid music streaming service, Spotify, as clients.

Overall, Google was the No. 4 player in cloud infrastructure services last year with a 4 percent market share, according to Synergy Research.

Amazon’s AWS cornered 31 percent of the market, while Microsoft’s Azure had 9 percent and IBM 7 percent.

Google, PayPal, Amazon did not respond immediately to a request for comment. Microsoft declined to comment on the report.

(Reporting by Rishika Sadam in Bengaluru; Editing by Saumyadeb Chakrabarty)

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Google Case Analysis

Google is simply one of the most successful companies in terms of profits, technological innovation, and cultural impact that the world has ever seen. Google’s success, challenges, and future are all subjects worthy of thick books. Here, we’ll briefly discuss a few questions. We first look at the online search industry through the lens of Porter’s five forces model, and see a few reasons why Google has been successful. Second, we recommend Google continue expanding in ways that support its core philosophy of providing information. Third, we predict continued success for Google’s Android operating system.

Fourth, we discuss why Google’s culture and governance structure have been beneficial. Fifth, we look at Google’s struggles in China and Korea and make a few suggestions. Finally, we examine Google’s future with regulatory agencies and make recommendations to deal with regulation. Evaluate the sponsored search engine industry based on Porter’s five forces model. An analysis of Porter’s five forces reveals how Google became the most used search engine today. The first force to be analyzed is the threat of new entrants to the market. Currently, the threat of new entrants is low.

The technology and marketing needed to enter the market are prohibitive for most firms. What’s more, people are comfortable with the search engine choices presently available and, while switching costs are low, Google itself has demonstrated that it has a strong foothold on the search engine market. In November 2009, Google “enjoyed a 65. 6% share of all U. S. searches and outside the United States Google’s lead was even larger, exceeding a 90% share of search queries in numerous countries. ” The second force that needs to be analyzed is the threat of substitutes.

Industry substitutes would be other ways to collect information and/or browse the web. For the vast majority of cases, search engines and Google in particular have been shown to be a faster and better way to collect information (compared to say a library or research firm). We might consider social sites like Facebook or Reddit to be threats. Rather than pure searches, people get information based on recommendations of peers. In Google’s case, it has incorporated social into its own algorithms in response to this threat.

For most searches, though, people go to a search engine like Google rather than waiting for a friend or a Facebook algorithm to suggest it. The threat is low-to-medium. The third force, the bargaining power of suppliers, is also low. The suppliers are just those who put information on the web. Those suppliers can’t switch to another web without Google or other search engines and won’t stop creating content even if one search engine disappeared. The threat is not just low, it doesn’t exist. The fourth and fifth forces are the bargaining power of buyers and the competition. For both the industry and Google in particular, both are low. Learn when the government uses censorship, it puts a limit on what?

Buyers are those who purchase ads. And Google’s ads easily reach more people and cost less than any competitor. (Though those are also relatively cheap). Google AdSense give buyers the best tools to track and improve their advertising. Excepting some huge companies, such as Yahoo, no one has enough heft to negotiate with Google to any degree. They must simply except the price. Google knows they outshine the competition. In addition to enhancing its core search businesses, should Google also branch out into new arenas? Which of the following would you recommend:

  1. building a full-fledged portal like Yahoo!
  2. targeting Microsoft’s desktop software hegemony;
  3. becoming an e- commerce intermediary like eBay?

Why? Reflecting upon Google’s recent strategies since Larry Page’s return as CEO, it is quite interesting to note that Google has shifted its stance becoming more consolidated and more focused in strengthening its business model; and less adventurous in seeking opportunities. Under Page’s leadership, Google aims for depth and specialization and has hence abandoned many of its projects and fine-tuned its focus to seven major business areas: search, advertising, social networking, Android, Chrome, YouTube and local mobile commerce. Read also G oogle’s business model relies on which of the following to generate revenue

How Google will develop under Page from now on will be a very interesting issue to follow. However, for the various reasons stated hereon, it is important for Google to expand. Despite the benefits associated with specialization and fortifying brand image, it is nevertheless important to continue experimenting with new businesses and spur innovation since this is what defines Google as people know it. Going forward, Google should tackle all three branches for expansion.

In pursuing these opportunities, Google should stay focused on its mission as opposed to merely attacking the incumbent leaders. Whilst the development of new features and offerings may inevitably eat away competitors’ market shares, the guiding mission is to provide greater convenience for users in accessing and making use of information, whether that may be via search or share, voice or text. The purpose is to create an all-in-one platform that facilitates such activities. Google should expand for both offensive and defensive reasons.

With its current reputation and diverse portfolio of tools and services, it is in Google’s best interests to expand into new areas–both to broaden its revenue base and fulfill its mission of “reorganizing the world’s information and making them accessible and useful”. Numerous opportunities can still be reaped via further development of current products, such as Chrome OS and Google Apps, and expansions into complementary businesses will be able to leverage their current knowledge base to create both economies of scale and scope. In turn, expansion is necessary as a defensive strategy.

As the technology market matures, product offerings including the search engine will converge and standardize, resulting in tougher competition. Facebook is already emerging as a potential threat where, via introducing a myriad of applications and market places to its social network platform, it has been able to replicate many of Google’s offerings in a simpler form over one enclosed environment. In order to fend off such threats, it is imperative that Google expand into new areas both to diversify risks and concurrently brand itself as the more ttractive provider.

As such, Google should build a portal–which it already has with the current array of applications and tools–but not in the tabloid and link structure as Yahoo! The main feature that distinguishes Google from Yahoo! is the user interaction that takes place via the applications, and as such Google should maintain the portal as an all-in-one platform analogous to the Windows environment encompassing its application programs. Similar arguments must also be made regarding desktop software and e-commerce expansions.

They also both already exist in a form and they will all serve as ancillaries operating under the Google site in support of its broader mission of facilitating information access. The main point is that Google should stay focused. It is neither an online software company nor an e-commerce intermediary. Google is an information company, and it is important that its expansions operate under the concept of facilitating information organization and access. Who will eventually dominate the mobile operating system platform? Google (Android), Samsung, or Apple? Why?

Provide your justifications for your answer. Google, in the form of Android, already dominates and we expect this trend to continue. The market research firm Nielsen released the U. S. market share rate by smartphone operating system and manufacturer patrons. A full 51. 8% of smartphones use Android and Apple’s iOS ranked second with 34. 3%. By manufacturer, Apple is still keeping the first rank using iOS and Samsung, using Android, ranked second with 17%. It also indicates that Apple has gone far ahead of the competitors in regards to the iPhone’s indelible mark on technology, culture and business.

However, while the release of Apple iPhone 5 is attracting people’s attention, Google announced on September 11, 2012 that the opening number of New Android handsets hit 500 million. They are expecting that the cumulative shipments of Android handsets (Android Activations) will exceed 1 billion by 2013. In contrast, it is predicted that Apple iPhone’s aggregate shipments will reach 527 million by the end of next year and 1 billion by 2015. The product management director of Google Android, Hugo Barra commented on his Google Plus, “Today is an important day. 00 million handsets have been opened worldwide and every day more than 1. 3 million has been increasing. ”

Likewise, despite the fact that Apple has been sensational in the mobile market and has hit the operating system market with iOS providing many different kinds of materials, which are fresh enough to attract the users, we cannot deny that the future trend of the operating system market has been moving towards Android. Our team believes that Android will continue to dominate for several reasons. First, there are many staunch allied forces such as Samsung, HTC, Motorola, Sony Ericsson, and LG.

These smartphone manufacturers make Android smartphones, Because Apple does not let other manufacturers use iOS, they cannot help but have a difficulty on the numerical inferiority front. iOS will not be able to overcome such a large amount of competition. Second, while Apple makes one iPhone a year, hundreds of Android phones are released every year. This is why Android can upgrade quickly and generate the models users want. Each of the many Android manufacturers has released more than ten products. These phones vary in specifications, design, price, keyboard, and specialized functions.

This is a strong point of Android because users’ tastes vary. The iPhone, however great, is only one per year, so people have no choice and many will be unsatisfied. The last point that we need to emphasize is the growth of the Android market. The number of the Apps in the Android market is over 500,000 with a dramatically increasing rate. According to the domestic contents industry, the Android Market has fewer limitations in terms of operating and managing for app creators compared to the Apple App Store.

Unlike Android, for the Apple App Store, development companies must go through thorough pre-approval procedures according in order to register their apps. This implies that it has a structure to exclude the contents that are against Apple’s profit model. This will hinder Apple’s iOS further adoption by users. In contrast, the Android Market is relatively easier to register except in the case of harmful contents such as gambling or pornography. With all of this in mind, our team concludes that that Android will dominate the mobile operating systems market.

Do you view Google’s distinctive governance structure, corporate culture, and organizational processes as strengths or potential limitations? Justify your answers. We view them as strengths. The corporate structure of Google, which is common for media companies, such as newspapers, was created to provide the top management autonomy and independence. Google emphasized stability in the long term and thus during the IPO the dual-class equity decision strengthened the company’s strategic resolution.

Public technology companies face great pressure from the shareholders, which could lead to unethical and short-sighted decision making. The fact is that Google as a company is now so powerful it can ignore many shareholder complaints. The cultural values imposed by Google also greatly align with the strategy. Google’s statement of philosophy “Don’t be evil” is a prime example of the culture within the organization. This philosophy is widely used in every-day work to aid in ethical decision making.

The other company philosophy also differs from the traditional listed company as Google does not disclose information usually available from listed companies and also does not wish to “manipulate” the earnings to improve the stock price.Google’s company culture has become a world famous example. Employees are encouraged to spend up to 20% of their time pursuing their own projects and initiatives. While most of these resources will not create any value for the organization, it will maintain the innovative culture.

Concerns that due to these initiatives, the organization might be diversifying too much and spending too much resources on non core-business. (As mentioned above, Larry Page as CEO is addressing this concern. ) However, the increased autonomy, teamwork and cross-unit communication all not only foster innovation but also help create future leaders within the organization. In addition to the organizational behavioral benefits this system provides, Google employees have also created successful products and services, such as Google News and Gmail.

The organizational culture of Google is described to be very positive, productivity oriented and the structure also increases the speed of execution, reduces the need of middle management and thus decreases costs. The company is also highly competitive, which can cause increased stress levels, but at a large innovation driven organization such as Google, this type of continuous improvement and internal competition is one of the key forces driving Google. Despite the recent growth in the market share, Google is still not a dominant player in Korean as well as Chinese markets?

Why? What should Google do to penetrate these markets? With “Google” being synonymous with online search in the U. S. , the average American may find it surprising to learn that Google does not in fact dominate all markets and is in fact losing to homegrown competitors in countries such as China and South Korea. Google’s growth since 1999 is staggering. As of 2009, Google accounted for an incredible 65% of searches in the United States and holds 70% or more of the search engine market in 34 other countries.

Google has had no trouble establishing itself as the dominant player most of the time, however it was this philosophy that got the company into trouble in the worlds most important market: China. ? Google brought its business to Mainland China in 2005 by establishing a subsidiary in Beijing. By 2006, the company released its search offering www. google. cn. While being the first foreign search engine to enter the Chinese market was a positive. Google found itself facing stiff competition from China’s most popular homegrown search engine, Baidu.

Baidu’s purpose was to develop a search engine that would match the needs of Chinese citizens. Founded in 2000, the site quickly became a search powerhouse, was listed on the Nasdaq in 2005, and held over 70% of search market share by 2010. Google found itself in a tricky position from the moment it entered China. But while it was prepared for the Chinese government to censor a certain percentage of its search results, it did not expect the government to hack into its servers to retrieve private information about Chinese dissidents.

In 2010, Google announced that it would move its Chinese servers to Hong Kong in an attempt to circumvent the Mainland’s control over censorship and hacking attempts. Since that time, the relationship Google has held with China has been tumultuous. The government attacks Google in the media, and despite a superior searching performance, Chinese people think of it as the “clueless foreigner. ” Another important reason that led to Baidu’s imminent popularity is the fact that it lets users download illegal mp3’s, a practice, that, if shut down, should significantly affect its usage rates.

As of 2012, the latest market share numbers show Google’s hold on the Chinese market declining month by month to 16. 8% while Baidu hovers around 78%. In South Korea, the story is quite different. Google entered the Korean market in 2001 only to find it up against a search competitor that many have argued is not only superior to Google, but also more innovative. Naver was launched in 1999 by a group of ex-Samsung employees.

The purpose of the engine was to provide a niquely Korean experience, and the difference in the two sites reflects that almost immediately. Naver was built with the Korean user in mind, and therefore created a knowledge database allowing users to post information that could be searched by other users. Due to the lack of Korea-specific content on Google, many Koreans find it difficult to find the results they want when they search Google in Korean. ? If Google wants to penetrate these markets it needs to create search engines that keep the needs of the users in mind.

For instance, in Korea, people prefer Naver because of the plethora of user created content that is searchable in Korean. It will be very difficult for Google to replicate this strategy, however the company could start by incentivizing the most prolific content creators on Naver to start using related Google databases to post the same content, driving users to become more familiar with Google. In China, the challenge is enormous, especially given that the Chinese government lost face when Google decided to pull out of the mainland.

One area that Google has a clear competitive advantage is its integrity compared with Baidu. Baidu will accept money and place prominent links to guide users to websites with questionable products such as knockoff pharmacy product sites and, in the past, sites selling melamine-tainted products. If Google can leverage its integrity and create an engine which provides Chinese users with a more Chinese experience, such as placing links to youku as opposed to youtube, they may be able to slowly leach some of Baidu’s market share back into their corner.

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Google And China

In January, 2010, Google took a strong moral stand, declaring that it was no longer willing to censor its search results and might pull out of China if it came to that. Google has millions of users in China and if the company were to discontinue its China operations, it could lose a vast chunk of its Chinese customer base and huge sums of revenue along with it. Yet Google has been adamant not to give in to the unreasonable and unethical demands of the Chinese government, and was preparing itself to do whatever it deemed was the right thing to do, no matter what the consequences may be (Butterfiled, 2010).

Before Google started its Chinese services in 2005, Google. com was accessible in China but in a limited way. The government used to restrict the search results heavily. Baidu. com was the more popular search engine in China. Even when Google. cn came, Baidu remained no. 1, but Google’s use has been growing. Google then expressed its willingness to voluntarily comply with the government’s Internet censorship laws, thereby making the censorship of its search results self-imposed. This Google did thinking that it could better serve the cause of freedom of information by working along with the government rather than against the government.

By voluntarily submitting itself to the “Golden Shield Project,” Google thought that it would have more bargaining power with the government in allowing relatively better access to the search results. Flouting the government’s censorship policies, on the other hand, could result in serious disruption of Google services or severe degradation of the quality of Google’s search results. Therefore though it was morally abhorrent to the Google’s management to lamely give in to Chinese government’s paranoid censorship policies, they had to do it for practical reasons.

Still, Google was censured by the critics for doing so. And then in January of 2010, Gmail accounts of a couple of Chinese human rights activists were hacked, as it was found out, by attacks originating from mainland China. Only the Chinese government had the motive to do so. In the wake of increasingly objectionable and dangerous activities of the Chinese government, Google had to reconsider its decision to cooperate with it. That Google itself became a victim of a cyber attack by the Chinese government changed the way Google looked at the situation.

At that time Google had an ulterior plan which was not revealed. The company only stated that it would overcome the problem of censorship without going outside the legal framework. Now, in China it was not possible lawfully to do away with censorship. What Google said made sense only after it made the move. From March 22, 2010, Google began rerouting all the traffic coming to Google. cn site to Google. com. hk, i. e. , Google Hong Kong. Hong Kong is part of China and yet it operates within a separate judicial framework. Its judicial power is not subject to most of Chinese laws (Helft, Barboza, 2010).

This was the irony of the situation: Google was contemplating to pull down Google. cn for ethical reasons, namely, depriving people of right information or abetting in the spread of disinformation by censoring the Internet is ethically unacceptable; but if it proceeded with its proposal it would be instrumental in bringing about more darkness into the already bleak Internet scene of China. Google’s move away from China could in fact have many more repercussions too. It could, for example, send a signal to other foreign Internet companies wanting to come to China that this country is an inhospitable place to work from.

In all, the position of an average Chinese Internet user who seeks to browse Internet for learning and knowledge would be severely disadvantaged. Internet in China could end up becoming “Chinternet,” markedly different from the global Internet (Chao, Worthen, 2010). The regular prominent global Internet sites and services such as Amazon and MSN Messenger are being less and less used in China, and are giving way to indigenous substitutes. Yahoo and Ebay have already exited the scene. Facebook is blocked in China.

On the one hand, it is a matter of principle for Google not let its search results be heavily censored, a principle which it could put aside for sometime but not for long. On the other hand, if it left China just like it said it would, some very undesirable consequences could follow which would not be good either for China or for the world. If it had no alternative, Google should have compromised on its principle and continued its China operations bearing the burden of censorship. But fortunately, Google had an easy option out, which was to move its base to Hong Kong.

References

  1. Butterfiled, L. (2010). No more Google in China. ICT Blog. Retrieved May 31, 2010 http://weblog. savetibet. org/2010/03/26/no-more-google-in-china/
  2. Chao, L. Worthen, B. (2010). Google. cn search engine close to being shut down in China. The Wall Street Journal. March 31, 2010. Retrieved May 31, 2010 from http://www. theaustralian. com. au/business/news/googlecn-search-engine-close-to-being-shut-down-in-china/story-e6frg90x-1225840856086
  3. Helft, M. , Barboza, D. (2010). Google shuts China site in dispute over censorship. March 22, 2010. Retrieved May 31, 2010 http://www. nytimes. com/2010/03/23/technology/23google. html

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