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15 Nov 2003
Google’s Business
Andrew Orlowski discusses in the Register the business of Google. He questions whether there is a search engine business at all. He argues that Google is in the advertising business: it buys advertising space with third parties and has some advertising space themselves (mainly Blogger). All this space is then sold to Media agencies. But in the end it is unclear how Google makes money. Telepocalypse agrees with this view that Google has two businesses: a media buying business and a billboard business.
I am a bit confused about the definition of business. Telepocalypse defines two businesses: one from the selling point of view and the other from the buying point of view. And the search engine does not seem to be a business at all. Business seems to equate money. I need some better definitions here.
I think it should start with the service you are offering to your customers. A business is then defined in terms of this service. The number of users can then define the size of the business. Of course it is even better if you can earn money by offering the service.
Thus Google is in the search: it offers users a search service and thus it is in the search business. Unfortunately for Google this is a free service, thus the size of business in terms of money earned is very small. The other businesses are clearer. They sell advertising space on the pages with search results and the sell advertising space on pages they bought from third parties with AdSense. This is the reselling of advertising space. I would not call the buying of advertising space a business though.
But I do agree with Telecopalypse: do not buy the shares as their business model is unclear: but there is a search engine business as there are users.