Goodness gracious, Google sure is going through an awful lot of grumbling these days. From internal unrest to external detest, the start of 2020 is anything but calm for the company behind our favorite mobile operating system.
But hefty as those most frequently highlighted hurdles may be, there’s another looming threat that’s even grander for Google to get over — one that represents a serious challenge to its core business and the primary principles that allow it to thrive.
I won’t draw it out any longer: The threat is Amazon. While other companies have traditionally been painted as being Google’s primary competition — Microsoft on the productivity front, Apple or maybe even Samsung on the mobile end, and Facebook or any number of messaging apps from a social, news, and general time-spent-online perspective — Amazon, above any other entity, has the power and reach to drive a spear straight into the center of Google’s heart. And as 2020 gets going, that possibility seems more pressing than ever.
Sound like an overly dramatic proclamation? Maybe. But when you really start to think through some of the areas where Amazon’s shadow is showing up on Google’s horizon, it’s hard to deny there’s something to it — something that’s bound to become even more significant as the months move on.
Think through this with me, and you’ll see what I mean.
Smart assistants, fight!
First: We’ve talked endlessly about how we’ve entered a post-OS era, where what operating system you’re using is less consequential to a company than what digital assistant you rely on. And it’s no wonder: Once you’re tapped into a particular assistant ecosystem — Google’s Assistant, Amazon’s Alexa, or whatever the case may be — you tend to rely on that service for an ever-increasing amount of information seeking.
For Amazon, that means you’re always one step away from ordering stuff — that company’s ultimate currency. For Google, it’s more about data and keeping you closely connected to Google services — because the more Google knows about you, the more effective ads it can serve you both within those services and around the web.
And boy, is the battle between those two approaches booming. Amazon is frantically working to get Alexa in every part of your life, with what appears to be a spaghetti-against-the-wall strategy of throwing everything imaginable out there — speakers, clocks, headphones, eyeglasses, rings, even microwaves — to see what sticks.
On the smart speaker front, specifically, the company’s philosophy (and perhaps also its advantage in beating Google to the market by a meaningful margin of time) appears to be paying off: In the third quarter of last year, Amazon shipped almost three times as many voice-activated speakers as Google — 10.4 million compared to Google’s 3.5 million — according to market analysis firm Canalys.
The disparity on the smart screen side of the picture is even more dramatic: According once more to Canalys, Google sold 700,000 Assistant-enabled displays during that same period while Amazon moved 2.2 million units. Ouch.
And it isn’t just speakers and displays we’re talking about, either: With Nest and the now-Amazon-owned Ring and Google Wi-Fi and the now-Amazon-owned Eero, the companies seem to be locked in step with practically every assistant-related area they’re after. Heck, even with phones, Amazon may have flopped fantastically with its attempt to create its own independent ecosystem in 2014, but it’s quietly racking up Alexa customers via its Prime Exclusive Phones program — which sells phones by the likes of Sony, LG, and Motorola at substantial discounts for members of its $119-a-year Prime initiative.
The catch? The phones come with boatloads of Amazon apps preinstalled, including — yup — Alexa. And while some of the apps can be removed, Alexa typically cannot. In fact, lots of the phones in the Prime Exclusive lineup even ship with Alexa set up to handle hands-free commands right out of the box.
Amazon has effectively come up with a way to position its virtual assistant as a primary part of the Android phone-using experience, in other words, even without having its own self-made device in the picture. That’s quite a feat to pull off and goes a long way in emphasizing Alexa as the interface you turn to for finding whatever you need.
And all of that is still just leading up to the two underlying areas where all of this makes the most immediate and alarming difference.
Entering the advertising arena
All right — here’s where things really start to get serious. At the end of the day, regardless of all the talk about hardware and assistants and everything else in between, Google is an advertising company. That’s where the lion’s share of the company’s cash is generated, and it’s consequently the heartbeat that keeps the Google machine running.
For a long time, with all due respect to the Jeeves and other assorted yahoos of the world, Google’s position as the gatekeeper to the world’s information has seemed untouchable. But guess what? Amazon is little by little breaking through that barrier and — on some level, at least — threatening to make Google far less relevant than it is today.
Consider: A forecast assembled by eMarketer suggests that Amazon will be the sole company to increase its revenue related to U.S. search advertising over the coming two years. Amazon, the organization believes, will jump up to represent nearly 16% of money earned from search-related advertising in America — up from about 13% in 2019 — while Google will fall from 73% in 2019 to 70.5% in 2021.
Already, Amazon’s ad business is believed to have grown by somewhere in the ballpark of 50% from the end of 2018 to the end of 2019, according to AdWeek, and prices for advertising on Amazon have reportedly gone up by 200% over the past couple years — all while prices for advertising on Google have remained relatively constant.
And if numbers aren’t enough, a report in The New York Times last year truly emphasizes just how serious Amazon’s advertising ambitions are getting. The company, the Times explained, has a treasure trove of data about what products we all buy — and that’s just the start:
In addition to knowing what people buy, Amazon also knows where people live, because they provide delivery addresses, and which credit cards they use. It knows how old their children are from their baby registries, and who has a cold, right now, from cough syrup ordered for two-hour delivery. And the company has been expanding a self-service option for ad agencies and brands to take advantage of its data on shoppers.
All of that means Amazon can show ads to incredibly specific subsets of people — categories that include, according to the Times, people who have bought acne treatments in the past month, people who live in households with children ages four to six, and people who have recently streamed fitness and exercise videos on Amazon. And when you consider that Amazon’s ads appear in an environment where those same people are actively seeking to make purchases, well, you can see why this might be worrisome to a company like Google (and might also be why Google has been trying for ages to grow its own Amazon alternative — an effort that’s apparently easier said than done).
And then there’s the biggest, most existential threat of all.
Google it — or Alexa it?
For years, Google has basically been synonymous with search. (Seriously. Go Bing it.) But with all of Amazon’s aforementioned intrusions, there’s a very real risk now that Alexa, not Google, could become the de facto search system of the future.
It seems pretty apparent that Amazon’s aim is to make that happen — to get you in the habit of thinking about Alexa anytime you have a question or command, no matter where you are or what you’re doing. That’d serve Amazon’s interests in all the areas we just finished discussing, and it’d also render Google irrelevant in the fields most important to its ongoing success.
I mean, think about it: If Alexa is available wherever you go and you learn to rely on it for answers to everything, what role does Google serve? Sure, you might still use apps like Gmail and Google Docs, but those sorts of services don’t help Google understand who you are and what your interests are — the type of understanding that enables effective advertising. Look at your own Google advertising profile. If you click through the qualities Google knows about you (or thinks it knows about you, anyway), you’ll likely see that the vast majority of the info is derived from some form of search.
Amazon may not have built its own traditional search engine, but it’s effectively found a way to get around the very need for that by focusing on the non-traditional search of the future — voice interaction — and training countless people to turn to it before Google. And at the end of the day, if you don’t search through Google in some manner or another, you don’t exist to Google in any measurable way.
Now, all things in perspective: Google’s nowhere near becoming a cooked goose. By most counts, the company is thriving — or at least doing reasonably well.
But we all know that trends matter — and if I were Google, good golly, this is one trend I’d be watching and working to correct as if my life depended on it.
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