Over the past three days, we published a three-part series on how Google has evolved from a simple search engine to a giant that is leveraging its huge pile of cash reserves to take over the world.
Google’s core business remains to be online properties along with the search engine. Its own properties with high traffic (e.g., Google, YouTube), advertising on other sites, Gmail and productivity suite for corporates and social features with Google+ have all evolved into a well-integrated platform. Coupled with its Android platform on nearly 900 million devices worldwide, they have a huge impact on users and their behaviour. Business operations generate billions of dollars of surplus cash every quarter, adding up to nearly $50 billion currently. But nearly 95% of all revenues are dependent on advertising and this is a huge dependency. So what does a giant with software prowess and financial muscle do to stay relevant for the coming decades?
They look at acquisitions, of course!
In the past 14 years, Google has acquired 143 companies as per publicly available information. In the past two years alone, they have spent nearly $17 billion on acquisitions – more than their top five competitors put together. They have acquired companies that not only augment their core and auxiliary products, but also companies that are completely unrelated with respect to their current business operations. Many of these acquisitions have also become part of Google X, a super-secret facility where technologies with futuristic capabilities are being developed.
Are acquisitions the only approach by Google to stay relevant?
Why not invest?
Google created ‘Google Ventures’ in 2009, with an objective of investing in diverse sectors. The mandate was to function as an independent VC firm with profitability objectives, whether or not the investments align with Google strategically. With $1.2 billion under management, nearly 230 startups and many exits, GV has come a long way.
Google has left no stone unturned in continuing to make their core product great while also having an eye firmly on the future. Not just for futuristic technologies, but also to enter other industries where software, big data and analytics can make a huge impact.
What is their next move?