Google: The Next Generation

Joel Anderson |

Google 2.0, GOOGThe world of internet businesses is set to change dramatically over the next year. With Facebook, the second most visited website in the world, due to finally go public and immediately become one of the largest companies in the world, the landscape of internet companies looks to make a fundamental shift. But how will the most visited website and world's biggest internet company Google (GOOG) respond to this? Beginning in 2012, Google has begun a fundamental shift in its approach to business that is geared towards getting its users to spend more time on the site and draw greater profits from them while they're there.

Google 2.0

Two moves early in 2012 marked the beginning of the shift for Google, though both seemed to fly under the radar while the hype surrounding Facebook's IPO filing grabbed headlines. The first was a shift to begin using private information collected by the sites Google+ social networking site in the results of its search engine. Now, users can expect to find photos and information in the results of their Google searches. This represents a move to put Google+ front and center for Google's users as well as integrating its other services into its wildly popular search engine. The second move is a major retooling of Google's privacy policies, a shift that users of g-mail, Google's e-mail service, should already be aware of. Google has consolidated its privacy policy and made it more permissive, allowing Google to use searches on YouTube and other services to hone the advertising being shown to individual users and their tastes.

The combination of the two shows that Google, already flush with users, is looking to generate more revenue by capitalizing on its existing user base rather than by expanding it, something that appears more than sensible based on Google's current popularity. What's more, it represents a shift towards increasing Google's penetration into the everyday life of its users.

Competition on Multiple Fronts

Google's most recent moves appear to show that Google is better positioning itself for a long-term battle with Facebook. But it's worth noting that Google appears to be a major rival to two of the most visible brands in the world. Google is battling for dominance of the internet with Facebook, but it's also at odds with Apple (AAPL) in the growing market for internet television systems and technology devices.

While Germany twice famously erred by waging a war on two fronts, it's not as certain that Google is making a similar mistake. Android phones don't appear to be passing the iPhone in popularity at any point in the near future, and the odds of Google+ passing Facebook as the social networking site of choice seems equally unlikely. However, by keeping its fingers firmly ensconced in both pies means that Google is not so heavily reliant on either source of revenue. What's more, Google's ability to compete in both spaces is buoyed by its visibility online and through the ad revenues that it generates.

A Changing Landscape

While the rapidly changing business landscape should be in flux for the foreseeable future, Google doesn't appear to be letting itself grow stagnate.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
SATS EchoStar Corporation 52.64 0.64 1.23 96,509
AAPL Apple Inc. 111.03 1.08 0.98 29,999,674
GOOG Alphabet Inc. 771.19 12.08 1.59 1,760,975

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