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Google Inc (GOOG): Does It Need to Change Its Business Plan?

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At its very core, Google Inc (NASDAQ:GOOG) is a search company. It has built several auxiliary businesses that are focused on augmenting the company’s position in search, but all roads lead back to the search engine that has changed the way we communicate: To answer any question, “just Google it.” Android may command a nearly 70% global smartphone market share, but the premise of Android is to drive Google’s search business. The same can be said for Google Inc (NASDAQ:GOOG)’s tablets, its cloud-based software applications, and every other pond in which the company plays.

Google IncThe problem — if you want to call it a problem yet — is that the company is under attack from so many different angles that it may need to stop giving away so much good stuff in an effort to drive search. Android is the easiest place to see this phenomenon, as the company is seeing pressure from multiple directions pop up. The release of Facebook Inc (NASDAQ:FB) Home has the potential to change the user experience of smartphones in general, but also to guide business from Google Inc (NASDAQ:GOOG) to Facebook. In addition, a new operating system originating in a collaboration among Samsung, Intel Corporation (NASDAQ:INTC), and others will hit Android from another angle.

The Facebook Home problem
When Facebook Home was announced, CEO Mark Zuckerberg extolled the benefits of Android, explaining that without the totally open nature of the OS, Facebook would never have been able to release the new meta app. FB Home resides in the space between the OS and other apps, taking over, among other things, the home screen and lock screen. The user experience is completely transformed into a Facebook-driven one, but this has serious ramifications for Google.

Source: Facebook.

While Facebook Home doesn’t currently include ads, with the real estate on the lock screen and home screen under the company’s control, it is easy to see where they could be added. This has the potential to undermine Google’s efforts in mobile advertising, but the issue runs deeper. As Facebook begins to dabble with its own search capabilities, by residing above the Android OS, it may have the power to disrupt users from turning to Google for their search needs. That is a problem.

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