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The Concept of Digital Economy of Google Company

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The Concept of Digital Economy of Google Company

Introduction

A case study of google company will be used in this study to illustrate the concept of

digital economy. Google company operates on a digital economy platform to conduct its daily

business operations. Moreover, it has adopted a digital transformation to realize profits and

reduce losses. Therefore, it is appropriate to argue that factors such as the concept of the digital

economy, the network effects of the digital economy, business models, growing network effects,

launching and growing business platform, business ecosystem, and the effects of pricing in the

digital economy will illustrate more on google company.

The Concept of Digital Economy

Modern information networks, such as those used in the digital economy, are a vital

source of economic activity. It is a key factor in Google's productivity development and

economic structural optimization, which involves a wide range of economic activities. In order to

collect, store, analyze, and exchange data digitally, Google has embraced new digital

technologies such as cloud computing and big data as well as the internet of things, fintech, and

other important elements. The firm has incorporated ICTs that are digital, networked, and

intelligent to enable modern economic activities to be more flexible, agile, and smart. There are

three industrial production models in this company; production, which shows the means of

production and the goods or services to be produced, a distribution which shows the distribution

channels and the exchange mechanism is, the market, and last but not least the, consumption

which shows the target group or the consumers of the goods or services being offered.
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The Network Effects of Google Company

Network effects, the mechanism behind the business platform, is another important

element in understanding the concept of the digital economy of google company. There must be

a platform that enables the organization to conduct its activities in a digital economy. Nonlinear

utility and value of the company can be generated by digital platforms built on and supported by

various digital technologies, bringing together individuals and organizations in previously

impossible ways (Cusumano, Gawer, & Yoffie, 2019). Delivering products or services via digital

platforms has connected google customers to communicate with each other in the digital

platform (Cusumano et al., 2019). The firm’s platforms come in a variety of flavours, from the

transaction platform that acts as a middleman to facilitate the exchange of information to the

innovation platform that provides a technological foundation for other businesses to build on, to

the hybrid platform that serves as both a middleman and a technological foundation for new

product development.

Some network effects might affect the organization’s performance due to the effects of

digital economy. Additional users or participants can impact the value of other users or

participants place on products or services, and the term "network effect" is used to describe this.

According to Parker et al. (2016), value is determined by the number of people who use or

benefit from a product or service. There are positive and negative network effects of this case in

the company. First, the positive effect, which is the value of the network, and the well-being of

its current users will grow with each new user's participation. The negative effect is that instead

of enhancing the well-being of the current members of the network, each new member has the

opposite effect. Network effects of the same side will lead to an attraction loop which means

group members of the company are more likely to use an active platform to raise their activity
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levels, increasing the group's overall activity. It also leads to spillover, which means those who

have not yet embraced the platform.

Business Models of Google Firm

A business model entails value creation, delivery, and capture of all aspects that should

be discussed in a business model. To adapt to the ever-changing business environment, the

google company's business model must be dynamic and adaptive. In a business model, it defines

who the firm’s customers are, the value of the goods or services, and why are they being offered

to the customers; it is also supposed to show how the goods or services will be delivered to the

consumers and how much does the product or service need to be implemented.

Customers play a vital role in the business model of google company. A business model

can have multiple customer groups. The firm’s business model must decide which market

segments it wants to target and which it wants to leave out entirely. A business platform can be

used by one or more people simultaneously. Multiple-sided platforms allow groups of users to

benefit from each other's resources. A platform company can target two types of segments: those

that are served first and those that are served later. Unexpectedly, a new user group can emerge

from practice.

Growing Network Effects of Google

There are different types of sources of networks in the google company. These sources

include internal and external sources. Similarly, the sources of weakening network effects are

part of the digital economy that should be understood in great detail. Generating internal network

sources of the firm include developing trust, retaining users, and encouraging interaction,

exchange, and transactions. Additionally, creating demands and delivering services are critical
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factors of external sources of network effects. A network rating and review system is essential to

developing a robust network effect (Parker, Van Alstyne, & Jiang, 2016). It reduces information

asymmetry and increase participants' trust in producers or products to encourage exchange and

participation. Additionally, the use of a product review system in google can positively affect

buyers' social networks. On the other hand, a rating system has been designed to alleviate the

trust-related issues that arise from information problems.

Launching and Grow Business Platform in Google Company

Launching and growing a business platform in google has contributed highly to the

digital economy. Stummer, Kundisch, and Decker (2018) highlights that a company needs a

strong base business platform for it to perform successfully. As part of creating and launching a

successful business platform, the following factors must be considered in the firm: first, allowing

independent supplies of services on the firm has the ability to directly sell the firm’s products

and services to consumers on the platform. Professionals in the company are driven to improve

customer satisfaction for a second reason: they are in charge of the actual transaction. To round

things out, professionals can tailor their services based on the information they have access to.

Last but not least, there is coordination: managing the possibility of spillovers in the firm, such

as the goods or services provided being substitutes or complements to one another. Other

companies such as Accorhotels.com has been transformed into a distribution platform for

independent hotels and online travel intermediaries from an established hotel chain to an open

platform for independent hotels and online hotels. As a merchant-based business, google

company generates revenue by selling its services to its customers.

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Business Ecosystems

In a business ecosystem, the google company works to create and distribute value to a

common customer base. According to Øverby and Audestad (2021), there are participants in

every business ecosystem, and at least one member acts as an orchestrator in the company. The

authors assert that when placed in a socio-economic framework, the digital economy ecosystem

describes the relationships and dependencies between digital services, information and

communications technology infrastructures, digital marketplaces, and authorities. The digital age

ecosystem's economy is a good analogy for the google company in expressing their

interconnectedness of the digital economy. Stakeholder identification and categorization is the

essential benefit of ecosystem analysis in the company. It is possible that some of them are

partners, while others are rivals, and yet others may impose restrictions on how the business can

operate. In addition, stakeholders with an indirect impact on market performance, such as

authorities and user groups, must be identified. In the company. Other important players in

google firm are the network providers and providers of basic services, computer and storage

infrastructure suppliers, content and application providers, customers and consumer

organizations. The ecosystem analysis becomes a strategic and tactical tool for google company

when used.

The Effects of Pricing on Google

Peitz and Waldfogel (2012) demonstrate the consequences of price discrimination based

on more detailed customer knowledge in both monopolistic and competitive marketplaces. The

authors conducted business operations that included gathering information on consumers'

purchasing decisions; businesses increase the likelihood that consumers will understand how the

decisions they make now will affect their future opportunities. Following a recent study, it is
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feasible that competing companies such as google may learn about the value of their customers,

resulting in a higher degree of competition for consumers. In addition, consumer characteristics

that directly impact the cost of providing services can be learned by corporations depending on

the market. For example, following the acquisition of purchase history information by a firm,

competitors may increase their level of competitiveness after learning about the acquisition from

other company.

Conclusion

This study has highlighted the google company’s digital economy concepts, the network

effects of the company, and business models in the firm. Similarly, growing network effects,

business platforms, business ecosystems, and pricing effects have also been explained in a deep

context, and more information has been provided on how these key elements affects the google

operations.
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References

Cusumano, M. A., Gawer, A., & Yoffie, D. B. (2019). The business of platforms: Strategy in the

age of digital competition, innovation, and power (pp. 1-309). New York: Harper

Business.

Øverby, H., & Audestad, J. A. (2021). Digital Economy Ecosystem. An Introduction to Digital

Economics (pp. 45-59). Springer, Cham.

Parker, G., Van Alstyne, M. W., & Jiang, X. (2016). Platform ecosystems: How developers

invert the firm. Boston University Questrom School of Business Research Paper,

(2861574).

Parker, G., Van Alstyne, M. W., & Jiang, X. (2016). Platform ecosystems: How developers

invert the firm. Boston University Questrom School of Business Research Paper,

(2861574).

Peitz, M., & Waldfogel, J. (Eds.). (2012). The Oxford handbook of the digital economy. Oxford

University Press.

Stummer, C., Kundisch, D., & Decker, R. (2018). Platform launch strategies. Business &

Information Systems Engineering, 60(2), 167-173.