Do a case study of a platform business. When did the business commence, what are its primary fields of operation, and has it been successful? How does it make money from its activities, and have any concerns been raised about the company?
Introduction
A platform business establishes value by making it possible to conduct exchanges between two or more interdependent groups. These groups are mainly consumers and producers. Platform businesses use the platform model business, where the plan allows its registered members to come up with content consumed by a certain group of users or the general audience. Examples of platform businesses include; Facebook, Google, Airbnb, YouTube, PayPal, Uber, eBay, Amazon, Microsoft, and Alibaba (Beattie, 2020). The paper will focus on Google as the platform business discussing when the company was started and its major field of operation. The report will also discuss if the business has been successful, and how Google makes money from the activities it provides, and if there have been any public concerns brought forward about the organization.
Business Commencement, Field Operation, and its Success
Google, the biggest search engine worldwide, was started by Larry Page and Sergey Brin in 1998, a subsidiary of Alphabet Inc., a holding company. Google deals with over 70% of the world’s online search requests, becoming the number one search engine for internet users (Staff, 2018). The headquarters of Google is in Mountain View, California. The company commenced as an online search organization. Still, it currently provides over 50 internet products and services, from online document creation and e-mailing to software products for (tablet computers and mobile phones). The company purchased Motorola Mobility in 2012, making it possible for Google to sell hardware in the design of mobile phones. Due to its size and wide range of product portfolio, Google is now ranked among the top four most influential firms in the high-technology marketplace. Google is involved in web services, smartphones, and in 2012, the company started working on hardware under ATAP and Google X divisions (Beattie, 2020). Google Glass became the most famous product, a wearable computer that increased information into the users’ periphery, allowing it to record photos and videos. Sergey Brin demonstrated the strength of Project Glass during the 2012 I/O developer conference. Although the device was only available to a small group of individuals, it was criticized as a potential risk to a user’s privacy. Regardless of the different fields of operation, the root of its success remains its search engine.
It is a fact that Google is one of the largest companies in the world. The company defined by a single algorithm has become a multi-billion-dollar business enterprise surpassing its competitors and becoming significantly successful. One of the primary factors that have contributed to the success of Google is its capability to set in motion the product’s beta version or prototype, and it goes on to improve the product with every harping. For instance, after Google created Gmail, it managed to grow it into other significant services like Google Docs, Google Maps, Clout Drive, and Sheets, which have controlled the interest of the internet and the ultimate marketplace by a landslide. This is in comparison to other search engines such as Bing and Yahoo. The ability of Google to identify opportunities in the market and take them has increased the success level of the company. Before its competitors could identify opportunities in the business market, Google made sure to fill every business segment in technology, starting with smartphones, wireless earpieces, notebooks, robots, and software apps that have great prospects. Google made its earliest investments by acquiring YouTube, which is now the second-largest search engine next to Google itself. Google acquired Android in 2006 before it became the operating system used by over 80% of smartphones globally. This alone gives the success story of Google LLC (Staff, 2018).
How Google Makes Money
There are several ways that Google generates its revenue other than selling its stocks, shares, or private investment. Google employs various methods to create and establish partnerships with advertisers and merchants through; Google Ads, Google AdSense, Google Pay, and Google Analytics, among others. The main revenue generator for Google is through advertising services referred to as AdSense and Google Ads. With Ads, advertisers tender ads to Google, and they include an inventory of keywords associated with a business, product, or service. The ad appears on the SERP in the sidebar if a Google user searches the internet using one of the provided keywords. Google gets paid each time a user clicks on the ad and is taken to the advertisement site (Rosenberg, 2020). It is imperative to state that google enjoys high usage from millions of users by leveraging functionality through various services and apps built on the platform.
Fig 1. The figure below shows the significant usage gap between google and other digital platforms in Australia.
Source: (ACCC, A.C. and Consumer Commission, 2019).
AdSense is the same, but instead of showing the ads on the Google SERP, a web admin can decide to incorporate ads on a specific site. The content and site are analyzed using Google spiders. Google then chooses ads carrying phrases crucial to the webmaster’s site. The webmaster has the option of customizing the location and type of ads provided by Google. Each time a user clicks on the advertisement on the website, the site gets part of the ad interests, and the rest goes to Google (MCFarlane, 2021). Similarly, Google Analytics works as a tool used to track website traffic, making them understand who their users are and the activities they perform on their websites.
Google Pay, which was previously known as Google Wallet and Google Checkout, is a service created to enable purchases to to become easier for the retailer and the consumer. On the consumer’s side, the user creates a free Google Pay account, and they are needed to enter their debit or credit card number, which is stored in the Google secure database. Anytime a user goes to a retail store that uses Google Pay, either in a brick-and-mortar store or online, they can use the service, and Google facilitates the deal by using a “virtual account number”- used as an alias by Goggle in place of the user’s real card number. Both the business and consumer are not charged for the transaction. Through advertising alone, Google had revenue of 181.69 billion U.S. dollars in 2020 (Rosenberg, 2020).
Concerns Raised about Google
Over the years, Google has faced numerous concerns from its users and has been fined by courts worldwide. In 2019, a situation by users was raised alleging Google has been secretly tracking the online browsing behaviors of users and has passed this information to advertisers. An investigation conducted by a privacy-focused browser, Brave discovered that Google had hidden internet pages to gather user data creating profiles exposing them to targeted adverts. The evidence was handed over to the Irish data regulator, and Google faces a General Data Protection Regulation (GDPR) fine if the evidence proves that the tech giant broke the data protection laws (Wakefield, 2019). Notably, it can be argued that googles sloppiness in data protection could be a result of minimal competition against the company.
Fig 2. The figure below shows an overlap between competition, consumer protection and data protection and privacy. Ideally, stiff competition causes digital platforms to be more vigilant with regard to consumer and data protection especially where consumers can easily shift to alternative platforms.
Source: (ACCC, A.C. and Consumer Commission, 2019).
Most tech giants face privacy concerns from their users and the government, and Google is no exception. Another tracking concern against Google was raised where the company was accused of tracking private users through Google Analytics, Google Ad Manager, and other website plugins and apps. The privacy lawsuit was put against Google in June 2020 alleging that even after users have turned off data collection in chrome, other Google tools continue to collect their data. This lawsuit demands Google pays a lawsuit fine of $5 billion for violating the federal California privacy and wiretapping laws (Stempel, 2020). The complaint indicated that Google collects and tracks user browsing history and other internet activity regardless of what safeguards consumers do to protect their privacy.
Conclusion
Google has made it easier for its users to access information and access their needs from the comfort of their home, where they can shop online and pay using Google Pay. However, the concerns raised about the company have seen users lose trust in the tech giant. Privacy and safety are some of the most important aspects that users need when using technology. Still, tech giants are using that to their advantage where they track and collect their consumer’s data without their consent. The impressive success that Google has gained through the years can be diminished due to the concerns raised and lawsuits against the organization.
Name: Jiayin Shen
SID: 500041857
Group 10
References
Beattie, A., 2020. The Story Behind Google’s Success. [online] Investopedia. https://www.investopedia.com/articles/personal-finance/042415/story-behind-googles-success.asp
Mcfarlane, G., 2021. How Google (Alphabet) Makes money: advertising generates the most revenue. [online] Investopedia. https://www.investopedia.com/stock-analysis/2012/what-does-google-actually-make-money-from-goog1121.aspx
Rosenberg, E., 2020. How Google Makes Money (GOOG). [online] Investopedia. https://www.investopedia.com/articles/investing/020515/business-google.asp
Staff, V., 2018. Google’s 20th anniversary: how the world’s best search engine ate the world. [online] The Verge. https://www.theverge.com/2018/9/5/17823490/google-20th-birthday-anniversary-history-milestones
Stempel, J., 2020. Google faces a $5 billion lawsuits in the U.S. for tracking ‘private’ internet use. [online] U.S. https://www.reuters.com/article/us-alphabet-google-privacy-lawsuit-idUSKBN23933H
Wakefield, J., 2019. Google’s ‘secret web tracking pages’ explained. [online] BBC News. https://www.bbc.com/news/technology-49593830
ACCC, A.C. and Consumer Commission, 2019. Digital platforms inquiry: Final report. Digital platforms inquiry – final report | ACCC