Google Gets Friendly

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Credit Suisse analyst Heath Terry isn't worried about the odd billion spent on new facilities or the free lunches for which the company is famous. His concern is Bill Gates & Co. "Google knows that their biggest threat is now Microsoft," says Terry. Having dragged its feet on search while Google built an empire, Microsoft has been spending heavily on its Web index and recently partnered with Facebook to provide ads for the popular social site. "To believe that Yahoo!, Ask and Microsoft are not going to improve and take share from Google is naive," says Microsoft spokesman Adam Sohn. He likens this period to the DOS era of search, with a major scramble ahead for the next generation of search tools. Google's Mayer agrees that the vanilla results page that Google and others serve today will probably morph into something categorically different, with images, videos and even conversations among Web users replacing static text links.

To repel the Redmond threat--not to mention Yahoo!, yapping at its heels--Google has executed a rash of acquisitions and product launches tied to its powerful website. From spreadsheet software to online word processing and a digital payment service, the company seems to offer new stuff every day. Free, for the most part, the offerings are dumped onto Google's "more" or "labs" page, in seemingly random order. Mayer wants to streamline that process, helping return Google to its roots in simplicity. "Users aren't going to remember our 50-plus products. They'll remember three to five. We need more features and fewer products," she says.

The idea is that Google wants to organize your life, not just your information, says Oren Etzioni, a professor of computer science at the University of Washington who has consulted for the company on tech development. "In starting up services that haven't been at the core of their business, Google is experimenting to see if they can expand your everyday interaction with them," he says.

Part of that effort means bringing Google to businesses that are still offline oriented. Online advertising, though growing fast, represents just 6% of total ad spending. So Google is going retro, ramping up its video-ad program, launching a major radio-ad service and testing ads in print. "We start with the premise that we should partner with everybody," says Tim Armstrong, Google's vice president of ad sales, who helped close the deal with MySpace.

To some, Google's numerous business deals overshadow the additions on its search side and suggest a slide away from consumers as it seeks new areas of growth. "Google has been an inspiring and innovative company, but the recent alliances seem less creative," says Irma Zandl, principal of the Zandl Group, a marketing and trend-forecasting agency in New York City. "They seem to be going in a less consumer-centric direction, focusing instead on monetizing to the max, which may be a good thing from a Wall Street perspective but perhaps not so good from the consumers' standpoint." Will consumers enjoy using Google less with each new partnership?