), the world's most popular Internet search engine, is leaving no
stone unturned to reap maximum benefits from its search engine
business. So long a free product service, product placements and
information displayed by merchants in the company's general search
results will now be chargeable.
So far, retailers have displayed their products for free by
providing Google some related data. The new move, to be known as
Google Shopping, will ask retailers to pay if they want to display
their results, and will list only those merchants who pay for the
service. Placements on Google Shopping will be based on bids that
retailers send via constant feed. The new system will replace
Product Search by fall 2012.
We do not see Google charging a certain amount from retailers
for the placement of their products on Google site as a negative
but it could definitely alienate some retailers that were providing
good data. However, the company must find new ways to expand its
revenue base in order to win in this cut-throat business world.
Retailers will feel the pinch but they will be on their toes to
update product data with accurate pricing and special offers,
keeping customers abreast of the best deals.
Google delivered a stellar first quarter, with gross revenue
touching a record $10.65 billion. Revenues from both Google-owned
and partner sites continued to grow double digits on a
year-over-year basis. But in terms of shopping-related searches,
Google lags online retail giants
In April, U.S. Internet users made about 80 million searches
using Google's shopping-search site, while eBay and Amazon handled
about 900 million and 335 million searches respectively, according
to research firm comScore Inc. These figures in themselves indicate
that though Google is the No. 1 web-search engine, it needs to perk
up shopping related searches. So, any ethical move which could
strengthen its competitive position is welcome.
Following the news, Google shares fell 1.3% on Thursday but its
recent patent win against
) could limit further declines.
However, other legal entanglements related to competitive
matters or patent infringements remain an overhang, keeping the
Zacks Rank on Google shares at #3, which translates into a
short-term Hold recommendation.
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