You'll Never Guess Who Google Considers Its Biggest Competitor

Before you go, we thought you'd like these...
Before you go close icon

When it comes to searching for something on the Internet, most people head over to Google . A growing portion of Internet users (19.2% of U.S. searches) use Microsoft's Bing,but very few consider a big competitor in search. But Eric Schmidt, speaking in Berlin earlier this week, said the giant e-tailer is its biggest competition.

Google is facing antitrust regulations from the European Commission. While Schmidt's wasn't directly addressing regulators, his speech was clearly aimed at swaying their opinion. To that end, Schmidt says Google has a lot of competition on the Internet, but why does he think Amazon is its biggest competitor?

Source: Amazon

The best searches go to Amazon
Search advertising's highest priced ads are for search terms that have intent to buy. (Something like "raincoat.") But Schmidt cited research by Forrester that found almost one-third of people looking to buy something started their research on Amazon. That's more than twice the number that went to Google.

The data clearly backs up Schmidt's claim. Only 12.4% of Amazon's traffic comes from search, and a large portion of that is from people typing "amazon" into their search bar or Google. That's well below average. In 2011, Google said the average website gets 28% of its traffic from search. A 2006 study from Forrester found that 93% of web traffic originates from search engines. My best guess is somewhere in between.

But people go to Amazon first because its product is simply better than Google's for shopping specific searches. Google doesn't consider Bing or any other search engine its biggest competitor because it knows it can do what they do better than them. Amazon has the advantage of reviews, related product suggestions, and a very good price benchmark. Even if people aren't intending to buy something on Amazon, they can find lots of information about a potential purchase through the website.

This summer, Google added star ratings to its product listing ads. These ads, which appear in search results above organic results and in Google's "Shopping" product, have been a thorn in the side of Amazon. Google started rolling them in in 2012 and has steadily improved the product since. All the while, has refused to buy the ads, and its subsidiaries (, have scaled back ad purchases recently.

Source: Google Commerce blog

As Google improves its shopping products, it hopes to attract a large portion of the majority of Internet users that don't use Google or Amazon as their primary shopping research destination.

Not just a search competitor
Amazon and Google go head to head in a lot of categories besides search. Here's a list of just a few areas where the two compete.

  • Cloud computing. Amazon offers Amazon Web Services, which encompasses a wide range of cloud computing services, and Google offers similar services running on its own servers. The two are constantly undercutting each other's pricing, and rolling out new services to attract businesses. Amazon is a clear leader in cloud computing, but the competition is fierce.

  • Advertising. This summer, Amazon entered the world of advertising for third-party sites. Amazon is using its users purchase and browsing history to target advertisements and direct traffic all over the web. This new product competes directly with Google's ad network, which uses cookies and other data Google collects to target advertisements. Amazon's targeting data is arguably better, but likely has a lot of gaps where Google is superior.

  • Consumer electronics. Both companies offer low-price tablets, and Amazon recently followed Google into smartphones with the Fire. Amazon forked Google's Android OS to create its own mobile operating system, which cut Google out of a lot of revenue from app purchases on Kindle Fire devices.

  • Digital media. Amazon operates the second largest digital music store and its the largest ebook seller. It also sells digital videos, and streams music and videos through Amazon Prime. Google has its Play store, and it operates the largest music and short-form video streaming service in YouTube.

  • Rapid delivery. Amazon offers its Prime membership for $99 a year, which includes two-day shipping on most items sold on its online marketplace. Google is working with retailers to offer same-day shipping from local stores through a service it call Google Express.

More opportunity than threat
For Google, Amazon's share of the product search market is more of an opportunity than a threat. The bigger opportunity, though, is the share of the market that doesn't go to either Amazon or Google. Amazon has a lot of dedicated shoppers -- especially its estimated 50 million Prime subscribers. Those people aren't going to suddenly switch to Google.

Amazon's threat to Google is minimal, and Google's threat to Amazon is only slightly larger. The two are competing for the rest of the market.

$19 trillion industry could destroy the Internet
One bleeding-edge technology is about to put the World-Wide-Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism... The Economist is calling it "transformative"... But you'll probably just call it "how I made my millions." Don't be too late to the party— click here for 1 stock to own when the web goes dark.

The article You'll Never Guess Who Google Considers Its Biggest Competitor originally appeared on

Adam Levy owns shares of The Motley Fool recommends, Google (A shares), and Google (C shares). The Motley Fool owns shares of, Google (A shares), Google (C shares), and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading