RRW pens 11 trends that could disrupt Google (GOOG).  I thought “can we please move on… there will never be another Google” and the search game is over, unless you count mobile search, of course.  But then seeing #11:

11. It’s the Adwords, stupid! All the search wizardry don’t matter a hoot if the monetization is not done right. There is plenty of motivation out there. Sellers want cheaper search words to buy. Publishers want a bigger piece of the cake. Buyers/searchers may even want cash back (we will see if Microsoft’s (MSFT) crude tactic, lambasted in the Blogosphere, makes it in the real world).

I thought: there are two sets of companies getting tired of the Google express:

• media companies tired of seeing Google index and YouTube host their content at their expense;
• MSFT, basically… since Yahoo (YHOO) just capitulated in search and Ask.com and AOL use Google.

So here’s my thinking:

1. If all of the media companies got together and created a free contextual ad network and allowed marketers to promote themselves for free… would that not disrupt Google’s business considerably?  Sure they would be foregoing revenue in the short time, but the point of this would be to undercut Google enough to reduce its grip of ad dollars, reducing its leverage online.
   Google really ate up the search market through AdSense and AdWords: the billboards that popped up all over the Web.   Publishers initially embraced Google due to the ad share, but let’s face it, Google makes money off that, not the underlying partners.
2. If MSFT were to give away advertising for free on MSN properties and then guarantee higher revenues to publishers and portals… then Google would lose out.  Of course, Google’s better monetization engine means that it can outbid YHOO (historically, again, they are a mere footnote in search now) and MSFT for business… but if MSFT were to take even half of that $45B it was going to flush into YHOO and gave it to third party sites over time… many would get rid of Google and embrace MSFT.

#1 won’t happen… #2 could… either way, if any of this happens and Google’s revenues tumble, then its stock would nosedive, too… without Google’s high flying stock, it would have to deplete its cash reserves for acquisitions and before they know it, MSFT has disrupted Google considerably.

I think had MSFT bought YHOO it would have first sought to fight Google in a noble fashion.  Had that not worked and Google walked towards a monopoly position regardless, then I suspect MSFT would have done this: underwrite a loss leader in search advertising using Windows and Office’s cash cow to hurt Google… which, by the way, is exactly what Google is seeking to do with Google Docs using AdSense’s cash cow.

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Ashkan Karbasfrooshan

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