Google manages to maintain its revenue growth despite looming competition
Contrary to the popular belief that Google’s (GOOG)(GOOGL) growth has been slowing down, the company has been able to maintain its revenue growth at around 20%. As the chart below shows, Google’s year-over-year revenue growth has been quite consistent. This growth is commendable because Facebook (FB) has stepped up its efforts to take business away from Google in almost every mode of online advertising.
In an earlier series on Facebook titled Why investors punished Facebook’s stock despite strong growth, we discussed how Facebook has been pursuing initiatives to take market share away from Google in search, display, mobile, and video advertising.
Amazon becoming a major threat to Google
Google’s competition isn’t just limited to Facebook. Google has stated publicly that Microsoft (MSFT) Bing and Yahoo (YHOO) aren’t its competition. Instead, Amazon (AMZN) is a competitor. Google has entered into Amazon’s e-commerce business territory by providing faster delivery services through Google Express. Google has also been looking to end Amazon’s supremacy in the cloud service market through its own cloud-based products.
Amazon isn’t keeping quiet. It’s reportedly planning to develop its own software to place ads online, similar to Google’s AdWords program. AdWords is an auction-based advertising program from Google for delivering relevant ads to its own websites and its partners’ websites. Amazon can threaten Google by leveraging its users’ shopping behavior on its site to serve relevant ads through its own advertising program, thereby cutting Google’s ad business.