At first glance, this sounds crazy — Yahoo doesn’t even have its own search product; it uses Microsoft’s (MSFT) Bing. So why does Yahoo CEO Marissa Mayer think there is even the slightest possibility that this might happen?
One possible answer — and the big, big caveat here is that this is purely speculative — is that Google is not as strong in search as its history suggests.
“Search,” as a business, is becoming a lot more complicated, with a lot more players, and a lot more stuff to be searched. It used to be that the business was simple, in principle: You went to Google’s search box, typed in what you were looking for, and clicked on a link.
But with Facebook (FB), Amazon (AMZN) and Twitter (TWTR) running their own search operations, and vast new forms of media — music and apps, most obviously — being largely impenetrable to regular search, we may be entering an era in which keyword-matching and link-ranking aren’t good enough any more.
In that scenario, Google is the big, bloated incumbent, ripe for disruption by new, leaner, quicker startups who realize that search isn’t about your mom sitting with her laptop typing “new shoes” into a text box. It’s about her daughter, who wants her phone to automatically surface relevant new material even before she asks for it.
In this scenario, Google is actually weak in search.
Sequential growth is getting worse.
Here’s the economic evidence for the early signs of that weakness. Note the green sequential growth line is getting worse, not better.
Again, before we go any further, let’s underline the obvious: Google is now so massive — $15 billion in revenues per quarter — that its sequential growth is declining simply because it is so big. This isn’t a sign of weakness, it is a sign of massiveness.
But … it’s tough to ignore the fact that this is the second Q1 quarter in a row in which growth has been negative. That never used to happen before. (It happened once in Q1 2009, but that was clearly the recession, not Google, thus we shall ignore it.)