The reason the world came to know Google, which has since transformed into Alphabet (GOOG, GOOGL), is slowly fading away. Since desktop search has been declining, it’s not surprising to learn that use of the platform that introduced Google to the world — the “classic Google Search site” — is also dying.
This platform was what the entire essence upon which Google stock was built. It created the biggest advertising business known in history. But, according to data from Comscore, desktop search has been on a steady decline since it peaked in 2013.
The implication of this is that searches are moving to mobile, with statistics suggesting that more than half of all search queries are now being conducted on mobile devices.
This has launched the Internet ad business into a new era.
Decline of Google Search Spurs Competition
The thing is, the death of desktop search opens up the playing field in the ads business. Google stock has hitherto monopolized Internet search. However, in this new era, Google stock doesn’t automatically have to be the one-stop-shop location for all of our Internet needs.
Any company that can build a platform that keeps people around can have a share of the new ad business.
Facebook (FB) has been fervently struggling to make its Facebook app that one-stop destination for all of your Internet needs. Apple (AAPL) has also been taking similar steps with its iOS platform.
But, Google isn’t going anywhere — it’s more valuable now than ever before.
Still, efforts by Facebook and Apple look good from afar, but Google stock is still a step ahead. GOOGL management probably saw all of this coming when it introduced its Android OS. And unlike Apple, it made the revolutionary mobile source code available to all.
Android Keeps GOOGL on Top of Mobile Search
Owning the Android OS has given Google stock an edge over just about every other competitor. Make no mistake, though, the Android platform isn’t what generates the most revenue for GOOGL in the mobile space — it’s the reality that GOOGL can do whatever it likes with Android, that’s the real gold.
Android was essentially just bait to bring everybody on board. It’s a fact that Android is the clear leader in the mobile market, which means that Google stock has significant money-making potential thanks to the sheer number of consumers using the Android OS.
Again, the Facebook initiative looks smart, but GOOGL is smarter, and here’s why: Before Facebook can grab the attention of Internet users, the FB app must first be launched.
That process can be quite lengthy, especially considering the fact that most Android smartphones are heavily inundated with all things GOOGL to begin with. Before Internet users even get to Facebook, Google has put its brand in front of them. So, FB is losing here because of the limitation of its platform.
For instance, the Google app that comes preinstalled on most Android-powered mobile devices offers useful information that many users don’t even know exists. For example, somehow (perhaps through analysis of my personal search habits) the Google app frequently shows me updates about my favorite soccer team and similar details related to my frequent searches. It tells me when an event (which it assumes I’ll care about) is taking place. And in most cases, I’ve found this feature handy and desirable.
By doing things this way, Android users quickly get used to accessing GOOGL for most of their Internet needs on mobile. Down the chain is a thirsty ad business, waiting to feed off the attentions that Google stock has tactically won.
Currently, the only real competitor to Google stock is Microsoft (MSFT), with its Windows Phones. MSFT also has a respectable ad business as well. The only question is if Microsoft could ever woo enough consumers away from GOOGL and entice them to adopt its products en mass. If MSFT optimized its platform, there might be a chance, albeit a slim one.
However, Google stock has built a wide moat in this space, and it would take massive work for MFST to catch up. Also, I don’t even consider Apple a competitor in the mobile ad business, as its historical preference for serving the affluent has made it lost on volume relative to Google’s Android.
Bottom line
GOOGL needn’t worry about competitors in the ad business unless one is able to build another platform that’s as comprehensive — and popular — as Android.
Therefore, for investors looking to tap into the growth of mobile, I don’t think any stock presents better potential than Google stock.
As of this writing, Craig Adeyanju did not hold a position in any of the aforementioned securities.
