With Zagat purchase, Google faces identity crisis
Google (NASDAQ: GOOG) made an interesting acquisition last week when it purchased Zagat, the restaurant review company, for a reported $125 million. With this move, Google propelled itself from search engine vendor to content producer, and while the purchase might have solved some problems for Google, it might have created others, especially for its lucrative search engine.
Google is a company with a big problem, you see. On one hand, it wants to be the world's search engine and to a large extent that's true already, since it controls vast swaths of search engine market share. But as the world's largest search engine, it's also a huge target, and that means lots of complaints (and even government investigations) about which content gets displayed near the top of the results--not to mention issues around permission to include other companies' content in its results and on other Google services.
For instance, Yelp complained last year when Google started including Yelp reviews in its Google Places service without permission. It's worth noting that Yelp was also complaining when Google threatened to pull all Yelp content from the index because, well, it gets a lot of traffic from Google (well duh!). To complicate matters further, Yelp turned down overtures from Google to buy it in 2009. Google tried every which way to include Yelp in its results (short of paying), only to be pushed aside. Google apparently had enough because it went out and bought its own restaurant review site (so there). Now it has its own competing service, that should resolve the problem, right? Or does it?
In another example, Google couldn't come to terms with Twitter on an agreement that expired in July to display Tweets in its Real Time Search results. As Danny Sullivan reported on Search Engine Land, as the agreement expired, so did Google's Real Time Search feature. But Google did not sit still. Oh no, because it was around this time that Google launched its own social network in Google+, providing a way to access its very own social stream for use in the search results.
Time and again, Google has shown that when it couldn't include other companies' content in its search results, it would find a way to include its own. The problem with this approach though, as Matthew Ingram on GigaOM points out, is that it plays into the hands of critics who say Google is favoring its own content in the results. As Ingram wrote, Google is in a no-win situation. If it favors its own content, then critics will slam it, and when it tries to index aggregated content from other sites, it gets whacked for that too.
I'm not suggesting, by the way, that we feel bad for Google because it's a big company and it can work through this dilemma. It had a cash agreement for a number of years with Twitter, for instance, to get *permission* to include results from the Twitter stream before that agreement expired in July. It might have to forge similar agreements with other large content producers moving forward.
But in the mean time, Google might have to decide if it wants to be a content company or a search engine--and it could find itself increasingly squeezed between these two goals. - Ron