In the recent years, the environment has been a concern of many, including technology companies. The continuing concern for global warming has drawn the attention of many towards finding new way of conducting environmentally friendly business and protection of the environment. For technology companies, particularly data intensive businesses, energy is one of the biggest concerns and cost, given that it takes a lot of energy to run their ultra-modern data centers in different continents (Buraniukn.p.). The high energy/electricity consumption emanates from the fact that apart from running constantly, the hardware in the data centers requires cooling; both the operations are energy intensive and require high and constant energy sources, besides being costly to the companies. Further, production of electricity, especially from coal, petroleum and nuclear reactor have a high carbon footprint putting such companies on top of the list of those contributing to global warming. With a concern for their carbon footprint, some of these technology companies, Google in particular, have taken steps to reduce their carbon footprint through investment in renewable energy—solar and wind energy to be specific. Google’s investment in renewable energy has placed it among the companies striving towards using clean energy. A show of the company’s commitment to the use of clean energy is its goal to have all its operations run on clean energy, particularly solar and wind by 2025 (Huddleston n.p.). In looking at Google’s commitment to using solar energy, this paper will explore Google’s background; international environment forces; provide an explanation for choosing Google; project Google’s growth; in addition to exploring some of the challenges Google will face over the next five years.
Google is the biggest search engine in the world, performing more than 100 billion searches in a month trading as both GOOG and GOOGL at the Nasdaq stock market. Google’s performance in search pales it rival, Microsoft’s Bing, which performs only a third of the total Google’s searches. Operating in a market that is relatively new, Google started in 1998, established by Sergey Brin and Larry Page, who were then computer science students at Stanford University. The two had initially presented the idea of search and got no interest from investors. This led to the invention of Google, and their presentation of the search properties of the search engine at the World Wide Web conference in 1998 drew more than $30 million in funding by 1999 (Manjoon.p.). The company became public in 2004, raising $1.4 billion in its initial public offer. Over the years, the company has grown so big that the term Google is synonymous to searching information on the web, with the assistance of the search engine.
In its establishment and even in the current operations, Google sees the internet as a mean of sharing information and data, making this data/information readily available to all the users around the world. Moreover, the company has made searching for information within a computer, in a website, within an intranet and on the internet easier and available to everyone.
Google has moved from being a search engine to a company providing a plethora of other services, many of which a free. Google’s acquisition of YouTube in 2006 enlarged the number of services the company offers to its users. Thus, Google Maps, Google News, and Google Scholar are just a few of the company’s services. Additionally, the company develops and released to OEMs (Original equipment manufacturers) its Android operating system, which it launched in 2007 (Manjoon.p.). Currently, Google’s Android operating system (running on smartphones, tablets and other devices) is the most dominant operating system on smartphone as well as the bestselling on tablets ahead of its rivals Apple and Microsoft.
In 2016, Google rebranded to Alphabet. Alphabet has since become the parent holding company for Google’s other subsidiaries, even as Google the search engine company remains as the most important and dominant of Alphabet’s businesses. Google search remains with the company’s core business of search, advertising, maps, YouTube and Android; on the other hand, under Alphabet are the company’s less known ventures including Google Capital, Google Ventures, X lab, fiber internet services, Nest thermostat and Calico, a biotech research project (Zenger n.p.). Google’s major source of income is advertising from the searches it offers to its users. However, most of the projects under Alphabet are also income generating ventures, which include sale of insurance and providing financial services. Restructuring to Alphabet will definitely have an impact in the running of the company, in addition to vulnerabilities to the forces in economic, socio-cultural, political, legal, labor, competitive, investment and financial environments under which the company operates internationally.
Google remains criticized over its vastness and therefore hogging the search market. Many consider it a monopoly given that it is through it that the bulk of searches are performed. The criticisms have led to antitrust actions launched against the Google especially in Europe. The European Union in 2015 accused the company of abusing its dominant power in web search, ideally violating antitrust laws (Helftn.p.). The potential of such accusations is especially catastrophic for Google since it could not only lead to payment in billions of dollars in fines but also lead to a change in the presentation of search results for the company (Helftn.p.). The European Commission had taken issue with the company’s promotion of its comparison-shopping search function, which had the potential of diverting traffic from other companies’ services.
China remains one of the countries with a huge potential for growth for the Google. Its 1 billion population presents a ready market for Google’s advertising as well as other products. Nonetheless, Google has not been able to penetrate this market due to political reasons. This stifles Google’s potential for growth in such a lucrative market.
Apart from criticism over its vastness and antitrust law violations, Google is among the American companies that has hoarded money in foreign banks as a means of avoiding high corporate income taxes. The US government is piling pressure on Google among other companies to transfer the money back to the US. Yielding to such pressure will mean that the company will have problems with its cash flow. Moreover, such pressure also has the potential of driving Google into making costly foreign acquisitions in avoidance of the high taxes.
Google’s high accumulation of money overseas makes it vulnerable to inflation. With an interconnected international economy, any drop in the value of the currency the company has horded its money has the potential of reducing the company’s value. Any economic turmoil in the foreign nation means that Google’s investment also faces the same turmoil in value.
The fact that the company has its money in foreign countries exposes it to volatile changes in the exchange rate and currency markets. Thus, Google remains vulnerable in the event that the dollar is stronger and the company is forced to bring its money back home. Similarly, the weakness of the dollar could also expose the country to monetary loses as it will be forced to exchange the weak dollar for a stronger currency.
There is a visible shift in the use of gadgets across the bulk of the population. Increasingly, many people are accessing the internet from mobile devices such as smartphones and tablets, place that Google does not have such a strong presence. The company largely dominates the desktop market share; however, it has to compete with Apple Facebook for mobile web browsing (Zakrzewski, n.p.). With a decline in use of laptop and desktop computers, which have traditionally been the points for accessing Google, the company is facing a decline in its main source of income.
There is additionally a changing trend in performing functions. While activities such as search, video streaming, shopping and money transfer were traditionally performed on the desktop, these functions are increasingly moving to mobile devices and social media solutions such as Facebook and WhatsApp. Sad is that Google has found it difficult to translate the success of desktop search into other increasingly online activities such as shopping search. In this end, Amazon is making inroads in to a market that was traditionally Google’s. Currently, about 30 percent of online shoppers go to Amazon for their searches (Davis n.p.). This denies Google important revenue streams from such transactions.
The political criticism of Google as too powerful is also felt in the social realm. Many people have started viewing Google as too powerful. These feelings of distrust have made some people such alternative search engines as a measure against having contact with Google. Even more is that with a decline of the traditional media such a television, many content providers are developing content and delivering them only in direct competition with Google’s YouTube. Some of the content provided by these content providers are especially not accessible via YouTube.
The growth of the use of mobile devices presents stiff competition for Google. While the bulk of the mobile devices run Google’s Android operating system, others do not. Apple and Microsoft both have mobile devices in the market, all of which have proprietary search engines and web browsers. Apple products are especially popular and offer formidable competition to Google’s products. Additionally, other companies have been busy at work developing apps for mobile devices, which can easily bypass Google’s search engines. Mobile apps exclusively for shopping, purchasing and other financial services successfully bypass Google’s search engine.
Google’s superior search algorithms have what have made the company’s search engine the most popular and widely used. Competitors, on the other hand, have developed algorithms similarly effective and popular as Google’s search engines. For instance, Amazon has been able to take over the shopping search (Davis n.p.).
Competitors are further increasing the sophistication of their products and at the same time providing alternative solutions to Google’s products. Facebook’s Messenger and instant messaging app WhatsApp can both be used in sending news, audio messages, as well as streaming videos. These take up functions traditionally offered by Google products such as Google News aggregator and YouTube. Further, Venmo and WeChat allow users to make financial transactions providing alternatives to non-computer based Google products.
Regulations in some fields can be a bane for Google and its parent company Alphabet’s operations. With its entry into fields such as finance, automobile, insurance and telecommunication, Google faces many regulatory restrictions that could eventually limit its expansion and operations. Moreover, there are traditional players in these fields, who can also launch litigations against the company for infringement of policies among other legal peculiarities that could limit Google’s operations in these fields it intends to expand.
The antitrust litigation leveled against Google in Europe could also open the floodgates of litigation in other places. Currently, Google is facing an antitrust investigation by the European Union, with concerns that Google may have caused market access hindrance to its rivals through pushing OEMs to preinstall its bundle of apps/mobile services with its operating system (Davis n.p.). Therefore, by making it a prerequisite for the OEMs to preinstall its services include Maps, search, Google Drive and Play Store, Google essentially locks out competitors and does not allow users the choice for such services. A successful prosecution and fine for such antitrust infringement could possibly expose the company to other similar litigations.
There have been calls for technology companies such as Google to be on the forefront of clean energy use given their high use of energy and therefore their high carbon footprint. Running on clean energy is inherently expensive for the companies, even with government incentives towards the use of clean energy. A switch to clean energy is likely to increase the running cost for the company.
Google, however, has heavily invested in renewable energy across its global operations. One of the largest investments in clean energy is its 842 megawatts investment in Sweden and Chile for a wind farm and a solar plant respectively (Huddleston n.p.). The investment worth $300 million adds to make Google’s investment in renewable energy at $1.8 billion across three continents.
Google is one of the largest technology companies in the world. It has a wide penetration for it is used virtally everyday by users all over the world. Choosing it for analysis therefore came from interest of discovering how the largest search engine in the world operates, the company’s history, its contribution, and investment in renewable energy. Through internet search on solar energy and investment by companies, I came across an article that stated that Google had made the largest investment ever by a non-utility company towards renewable energy. This piqued my interest to learn about the company’s operations and its investment in renewable energy, particularly solar energy. Moreover, the company has been known for its futuristic research projects including the driverless car. I therefore gathered that it would be interesting to find out if it was working on anything towards environmental sustainability.
The Future of Google
It its previous structure, it was especially difficult for analysts to determine Google’s revenues and project its growth. With the current structure, nonetheless, it is easier to project the company’s growth and future projections. Already with its restructuring, the company’s stock price jumped 6 percent, with analysts indicating that its restructuring will have a long-term effect on the company’s performance (Zenger n.p.). As Google and Alphabet venture into ambitious projects and businesses with potential for increasing revenue streams, the company is poised for future growth. Moreover, the Android operating system continues in its dominance providing the company with an opportunity to improve its execution of mobile advertising that is exponentially growing and has potential for increasing the company’s revenues. Further, apart from saving the company operation costs, its investment in renewable energy mean that its can have additional revenue streams (for growth) through the sale of the energy.
For challenges that the company will face in the next five years, advertising and diminishing revenue streams from desktop advertising is a challenge. Thus, although the company it at the center of the mobile revolution through its Android operating system, it has failed to monetize this might into revenue. This is especially costly for the company as desktop advertising slows and mobile advertising picks up.
The company will continue to face antitrust criticisms given its vastness. The European Commission’s investigation is only one of the antitrust cases the company has. Many have criticized the company for giving preferential treatment to business on its own listing and services.
Competition from social networking sites are especially a challenge for Google while is still huge on the desktop, Facebook beats it on the mobile platform with its social networking tools and its advertising presence in mobile. Moreover, Google does not have a formidable challenge as a social networking app on the mobile platform against Facebook.
There is slowing growth in desktop advertising as most advertising goes mobile. Google therefore faces a challenge in this respect. While it may want to grow, it also faces antitrust challenges, which may not allow it to make any more acquisitions without raising concerns.
Buraniuk, Chris. “Why Apple and Google are moving into solar energy.” BBC, 2016.Web. 26 November 2016
Davis, Andrew. “Amazon passes Google as top destination for shopping research.” Search Engine Watch, 2016. Web. 26 November 2016
Huddleston, Tom. “Google’s Latest Renewable Energy Investment is Its Biggest Ever.” Fortune, 2015.Web. 26 November 2016
Manjoo, Farhad. “A Murky Road Ahead for Android, Despite Market Dominance.”The New York Times, 2015.Web. 26 November 2016
Zakrzewski, Cat. “Mobile search surpass desktop searches at Google for the first time.” Tech Crunch, 2015.Web. 26 November 2016
Zenger, Todd. “Why Google Became Alphabet.” Harvard Business Review, 2015. Web. 26 November 2016