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(P.76)
THE INTERNET
GOOGLE'S
GRAND AMBITIONS
Its lips are sealed, but its moves rattle
everyonefromMicrosoft to eBay
I
N YEARS PAST, MICROSOFT CORP.
could freeze competitors and send
investors scurrying just by uttering
the name of a market it fancied. To-
day, Google Inc. is the 800-pound
octopus that is filling potential
rivals with dread and envy.
In typical Google fashion, the company
chose an unusual moment—the sleepy
doldrums of mid-August—to shake up
the tech world with aflurryof announce-
ments. First, Google confirmed that it had
quietly acquired mobile-phone software
startup Android Inc. Then came the sur-
prising news that it would add $4 billion
to its cash war chest with a secondary
stock offering. And then on Aug. 24, the
search giant announced it was getting
into the instant messaging and Internet
telephony businesses. No wonder tech
watchers from Silicon Valley to Bangalore
are all wondering the same thing: What
the heck is Google up to?
No point asking the Mountain View
(Calif.) company. Google, as usual, is
about as talkative as a telephone pole. But
in dissecting the
company's spate of
recent hires, invest-
ments, and acquisi-
tions you can catch
tantalizing glimpses
of where the search
giant could be head-
ed. Talk about ambi-
tion. Google appears
to be contemplating
forays into every-
thing from Wi-Fi In-
ternet access and
mobile devices to
DEEPER POCKETS
Page and Brin plan
on having $4 billion
more to shop with
36 I BusinessWeek I September 5, 2005
operating systems and e-commerce.
Google faces serious challenges of
course, not least because it is playing catch-
up in some of thesefields.But if the com-
pany's outsize ambitions come to fruition,
Google would suddenly be on a collision
course with some pretty heavy hitters. The
company is already challenging Microsoft
and Yahoo! Inc. Now it seems to be get-
ting ready to stomp on the turf of such gi-
ants as eBay, Motorola, Nokia, SBC Com-
munications, and Verizon. And if you're a
tech startup working similar technologies
as the savvy folks in the Googleplex, you
have two basic choices: Plan to be ac-
quired—or get run over. "There is a new
fear and caution about how Google will
use its war chest," says Chris Shipley, pro-
ducer of the DEMO Conference, where
startups strut their stuff. lead of partnering with telecom giants.
If the search behemoth goes ahead Google may be showing its hand in
with its myriad initiatives, it will be this arena with a couple of little-noticed
Google vs. Everyone. Here's a glimpse of business moves. In April, Google teamed
where Google may be headed: up with wireless startup Feeva Inc. to
GOOGLE VS. VERIZON Playing a role in sponsor a Wi-Fi hot zone in San Francis-
how consumers connect to the Net is an co (page 39) in which Google appears as
important step for the start page. Google says this is all part
online giants. It of its mission to make access to informa-
helps deepen the tion more readily available, but it won't
link between Web comment on other Wi-Fi moves. Some
surfers and Internet analysts, though, believe it would make
companies while perfect sense for Google to bankroll Wi-Fi
providing a window access points, not only allowing Google to
for these outfits to get more users but also to target ads bet-
showcase products ter locally—a huge growth area. "Google
and services. Google wants there to be more search moments,"
clearly covets such a says Esme Vos, editor of the MuniWire-
role, but it has less Weblog and a consultant to cities de-
shown no interest in ploying Wi-Fi solutions. "This would
mimicking the ac- make a lot of sense."
cess businesses of Meanwhile, in July, Google invested in
other tech titans- Current Communications Group LLC, a
piling up millions
company that offers broadband access
of subscribers like over power lines. The company has been
America Online or rolling out its service to a few markets in
following Yahoo's the U.S., including Cincinnati. Verizon
 and Android technologies.
GOOGLE VS. MICROSOFT
Google has been poaching tal-
ented engineers with a wealth
of expertise in two Microsoft
strongholds: browsers and
operating systems. One source
familiar with the company
says some of these hires are
working on an Internet oper-
ating system that might run
on top of Linux and could
compete with Microsoft's
Windows franchise. Although
any such offering may be
years out, it seems plausible
based on the talent Google has
lured. In recent years, it has
hired several architects of Mi-
crosoft's .Net strategy—an at-
tempt to expand its operating
system dominance to the In-
ternet. If Google is indeed
contemplating an OS, it would
amount to an attack on the
very foundation of Microsoft.
Google's raid on browser
talent has been just as impor-
tant. In the past year it has
hired several top developers of
the Firefox browser, a well-re-
garded but distant challenger
to Microsoft's Internet Explor-
er. "If I'm Microsoft, I'm
watching these guys co-opt my
desktop," says Michael Gar-
tenberg, an analyst at Jupiter
Research. "I would be concerned about...
the sheer power of their presence."
There is a new fear and caution about how
Google will use its war chest GOOGLE VS. eBAY Google has not
wowed anybody in online commerce so
— Chris Shipley, producer of the DEMO Conference, far. Its shopping search site Froogle has
where tech startups strut their stuff not distinguished itself from the pack,
and it garners only a fraction of the visi-
and SBC take note. These moves show the company is working on a software tors that go to competing services, such as
Google is "really interested in affording platform for mobile phones. In July, the Yahoo! Shopping. But Google concedes
people the greatest possible access and company snatched up the secretive start- that it is working on an online payment
speeds," says Scott H. Kessler, an equity up Android, founded by Andy Rubin. Ru- platform—which could put it in direct
analyst at Standard & Poor's. bin's previous startup was Danger Inc., competition with eBa/s PayPal service.
GOOGLE VS. MOTOROLA Former insid- which developed the popular Hiptop Another possibility: Google could
ers say Larry Page—who, with Sergey communications device. Although little is eventually allow individuals to post items
Brin, founded the company—has rumi- known about Android, one person famil- for sale on Froogle. Google's recent hiring
nated in years past about offering a iar with the company says its engineers at of Louis Monier, former director of eBay's
Google mobile phone, allowing users to one point had been working on an oper- advanced technology research, has only
search the Net easily and get data from ating system for mobile phones. added to such speculation.
the device. Although afiercelycompeti- Google also buttressed its mobile-soft- It's a good bet Google is pondering all
tive space crowded with companies like ware arsenal with its May acquisition of of these possibilities and more. The real
Motorola and Nokia, the barriers to entry Dodgeball. The startup has developed so- question is what projects will get the re-
are getting lower all the time, thanks to a cial-networking software for mobile de- sources inside Google and see the light of
passel of contract manufacturers from vices. A Dodgeball user, for instance, could day. With uncertainty like that, Google
Taiwan and elsewhere eager to make contact a group of friends in a particular will have the rest of the tech world on
phones cheaply for anyone interested in vicinity with a single message on a mobile edge for some time to come. •
breaking into the market. phone. Google declines to comment on -By Ben Elgin in San Mateo, Calif,
At the least, recent acquisitions show how it intends to utilize the Dodgeball withArik Hesseldahl in New York

September 5. 2005 I BusinessWeek I 37