Google and eCommerce(?)

Another late night out, so of course, I can't sleep - which means I surf and - at times like these - blog.

Anyhow, I ran across this article in eWeek with the above title. The lead-in was:

"The better question might be, what doesn't Google know about us, according to Gartner analysts."

A couple of things, they highlighted:-

- Google knows a lot of what people do online and their surfing habits as they have access to exabytes of unencrypted data and enough computing power to process them. "Clearly, Google knows the behavior patterns of its users. Do a search and the company will tailor ads based on your searches. Do some more searches, open your Gmail account and you will find about four paid links related to those searches. The company also knows a lot about the computers where its Google Apps are installed."

- BUT there is one major area that they have "scarcely touched" and that is eCommerce transaction - which is HTTPS encrypted.

- They have Google Checkout which handles about 1% of "what is sold on the internet" but they are missing out on the other 99%

- Gartner then puts forth: "think about what e-commerce giant Google might be inclined to target to fill out its information and online ad holes. Will it be Expedia? Amazon? eBay?"

OK so while I agree that this would be a scary premise, I don't necessary think that this will happen. At this point in time, being an eCommerce storefront is not what Google wants to be.

I mean - they are doing fine - actually pretty damn good - at selling advertising. That's USD 12billion per year good. They bought DoubleClick to help get into the brand advertising since they already more or less own search advertising. So strategically, they want to increase their share of the total USD 44 billion (2008) of online advertising spend (this number is according to ZenithOptimedia. )

So from Google's perspective, they are currently only getting a quarter of the pie, and there is much room to grow in the "traditional" online advertising on major ad portals (and minor ones too.) And since this space is still fragmented, Google can dive in with all of their computing power and clever gen-y scientists to optimize the efficiency AND measurability of these ad networks.

And of course, if they tie that into their search marketing platform, Google can then give advertisers an almost full, 360 degree picture of their online advertising campaigns.

Now THAT, my friends, is what you should be wary of.

They may eventually start to want to own eTailers to satisfy the Wall Street shareholders to keep on increasing their revenue (by acquisition), but that is not yet the case (I don't think.). To do so now would invite cries from all segments of the economy - consumers, business, and governments. But never say "Never".