I found this excellent post describing Google’s current position, its potential, that adds to my previous post, How Does Google Make Money?
Google has won both the online search and advertising markets. They hold a considerable technological lead, both with algorithms as well as their astonishing web-scale computing platform. Beyond this, however, network effects around their industry position and brand will prevent any competitor from capturing market share from them — even if it were possible to match their technology platform.
To paraphrase an old comment about IBM, made during its 30 year dominance of the enterprise mainframe market, Google is not your competition, Google is the environment.
The net isn’t a directed graph. It’s not a tree. It’s a single point labeled G connected to 10 billion destination pages.
If the Internet were a monolithic product, say the work of some alternate-future AT&T that hadn’t been broken up, then you’d turn it on and it would have a start page. From there you’d be able to reach all of the destination services, however many there were.
Well, that’s how the net has organized itself after all.
From this position, Google derives immense and amazing power.
And they make money, but not only for themselves. Google makes advertisers money. Google makes publishers money. Google drives multi-billion dollar industries profiting from Google.
Major companies will succeed by working within the framework of Google’s industry dominance, and smaller players will operate in niches or in service to the giant.