Google SWOT Analysis

Abhijeet Pratap
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Google is one of the world’s largest technology companies and the most popular search engine globally. The parent company of Google is Alphabet. As a market leading technology brand, Google is a well known name in every corner of the world. Google also owns YouTube and is a leading rival of Facebook in the social media segment.

The company has enjoyed strong growth over the past several years driven by its strong performance in search advertising and growth of the cloud industry. Google is also a leading cloud player and has experienced significant growth in its revenue from cloud technology. The company generates a substantial part of its revenue from advertising mainly. However, in recent years, its revenue from non advertising sources has also increased.

In this swot analysis, we will analyze the main strengths and weaknesses of Google based on its performance and market position over the past few years.

Strengths:

World’s biggest search engine:

Google owns the world’s most popular search engine. In desktop searches Google had more than 80% market share1 in July 2023. The company owns the largest search engine and also owns the lion’s share in search advertising. Even the leading rivals like Bing have a much smaller market share compared to Google’s. As of July 2023, the share of Bing in desktop searches was only slightly above 9%.

Large product portfolio:

Google has diversified its business by adding several types of products and services in its portfolio. While the company mainly relies on search and YouTube advertising for revenue, it is also generating revenue from cloud and other services. It has also launched its own smartphone and its Chrome browser is the most popular browser. However, there are several more products by Google including its cloud based products and services as well as Gmail and Google drive that are used widely by customers.

Lion’s share in search advertising:

Google is the market leader in search advertising and takes away the lion’ share each year. According to Statista, Google took away more than 60% of the global search advertising revenue in 2022. In fiscal 2022, the total advertising revenue of Google was $224.5 billion. In this way, Google is the dominant player in the search advertising industry and has a strong revenue source which gives it a competitive edge over its rivals.

Android OS:

Google also dominates the mobile OS market. Its Android os is the largest player in the mobile OS market, used by millions of smartphones across the globe. Google’s Android OS and Apple’s iOS are the two top players in the global mobile OS market. However, Android holds the lion’s share at above 69% compared to Apple’s approximately 29%.

A leading player in cloud industry:

Google has quickly emerged to become a leading player in the cloud industry. Its GCP cloud platform has found huge popularity globally among several customer segments including small and large businesses as well as developers. While Google’s revenue from its cloud business may still be much lower compared to that of Microsoft or Amazon, the company has been able to establish itself as a cloud business and is among the top players in the cloud industry. In fiscal 2022, the company generated around $26 billion from cloud based services.

Strong focus on innovation:

Google has maintained a strong focus on innovation to maintain its growth momentum and expand market share. It is among the leading spenders on research and development in the entire industry. Apart from continuously improving its existing portfolio, it also aims to bring new products and services to the market through its research and development efforts.

Google’s research and development spending is even higher than that of Microsoft. In 2022, the company invested $39.5 billion in research and development while Microsoft invested only $24.5 billion in R&D activities.2

Strong focus on HRM:

As a leading tech brand, Google has also maintained a heavy focus on its company culture and human resource management. For any major company, its culture can be an important source of advantage. In the 21st century, the competition among brands related to HR has increased a lot. Every leading company focuses on hiring only the best and retaining the best talent in the industry. Google is a leading name in the field of HR and offers its employees the most competitive salaries and perks. It has established a company culture that fosters creativity and innovation.

Weaknesses:

Dependent mainly on ad revenue:

Google has a very strong position in certain areas and yet the brand mainly generates revenue from search advertising. It is the king in search advertising but that also makes it dependent on search ad revenue. While the revenue of the company from non-advertising sources has increased in recent years, the company will need to further diversify its business to reduce its dependence on ad revenue.

Smaller market share in the cloud industry:

Google has quickly emerged as a notable player in the cloud industry ranking among the top players. However, when compared to the other two leading players in this sector, its total market share is much smaller. As of the fourth quarter of 2022, Amazon Web Services (AWS) held a 32% share in the cloud industry and that of Microsoft was at 23%. However, Google’s total share of the cloud3 industry was only 10%.

Opportunities:

Cloud industry:

The cloud industry is growing at a very fast rate. Worldwide, the use of cloud based resources and digital technology has grown. Businesses worldwide require cloud-based infrastructure to support their digital services. In this way, the cloud industry offers a huge opportunity for Google where it is competing with major players like Amazon and Microsoft. The cloud industry has quickly grown highly competitive and Google will need to invest in innovation in this area to grow faster and snatch market share from the other two leading players.

AI and Machine Learning:

AI, Machine Learning and other emerging technologies offer significant growth opportunities for tech businesses like Google. The rise of Chat GPT is proof that any breakthrough in this area can prove to be another game changer for Google. Investing in building new capabilities in these areas may prove highly profitable for Google.

Mobile advertising:

Another significant area full of opportunities for Google is that of Mobile advertising. The company competes with Facebook and others in the mobile advertising area.

Google already owns Android OS, which is used by a vast number of smartphones across the globe. Currently, Google and Facebook dominate the mobile advertising market. However, Google can further expand its market share since it already dominates the mobile OS market.

Threats:

The technology world is full of both opportunities and threats. Legal and regulatory pressures are particularly troubling the tech industry since businesses have to deal with a vast number of legal issues related to consumer privacy and anti-competitive behavior. Google has already paid hefty fines to the EU and several other agencies for anti competitive behavior related to its search results.

Another major threat before Google is that the laws and regulations differ from market to market and the company has to focus on being compliant in each market to avoid disruption of services and loss of image.

Competitive threats:

Google is the leading player in search advertising and a few other areas. It has also become a leading player in social media with the purchase of YouTube. The company has also established itself as a leading player in the cloud industry. However, its dominance in these markets are challenged by several of the leading players including Facebook, Amazon and Microsoft mainly. Apple is a leading rival of the company in the mobile OS market. Its YouTube competes with Facebook as well as online streaming platforms like Netflix and Disney plus.

Overall, Google is dealing with intense competitive pressure which means higher operating expenses and higher costs of marketing as well as research and development.

Google is a significant player in the internet world. However, that also subjects the company to several unique pressures including consumer privacy related issues, loss of consumer data and other similar pressures.

Identity theft and online financial frauds are some of the leading cybercrimes plaguing the online world. Google is a significant player in the digital industry and has to deal with all these challenges. The company has initiated some campaigns to make the public more aware of cybercrimes and how to protect themselves against these crimes. However, consumer data related issues are still a major challenge before Google.

Conclusion:

The world’s largest search engine needs but little introduction. It is a familiar name in almost any corner of the globe among people of all age groups. Google is the dominant player in search advertising and retains the lion’s share of revenue generated worldwide from digital advertising. The company is in a very strong position and with its position in the cloud industry strengthening continuously, the company is poised for faster growth in the future. However, it will need to further diversify its business model to reduce its reliance on ad revenue mainly.

The company is also dealing with intense competitive pressure. In the cloud industry especially, Google is set against mightiest rivals like Amazon and Microsoft and against Apple in the mobile OS market. However, the company has continued to increase its investment in research and development to beat the competitive pressure and find faster growth. However, legal and political issues will continue to remain a challenging areas for the search engine giant.