Amazon, Google Will Deepen Their Rivalry In 2013

Its safe to say Google and Amazon are already rivals on a number of levels, including app stores, books, movies, and more. The seeds of rivalry began over 10 years ago when Amazon CEO Jeff Bezos got wind of Google’s plan to digitize product catalogs and Bezos saw a threat to his online retail giant.

“He realized that scanning catalogs was interesting for Google, but the real win for Google would be to get all the books scanned and digitized” and then sell electronic editions, the former executive said.

Thus, a rivalry between the two companies was born and a new Reuters report anticipates a new escalation between the two giants in 2013. At least for now, there is still some cooperation between the two companies, but Amazon’s use of a stripped down version of Android and not allowing the Play Store will only escalate tensions.

“Amazon wants to be the one place where you buy everything. Google wants to be the one place where you find everything, of which buying things is a subset,” said Chi-Hua Chien, a partner at venture capital firm Kleiner Perkins Caufield & Byers. “So when you marry those facts I think you’re going to see a natural collision.”

One area that Google is likely to defend with all its might is online advertising, better known as the backbone of the Google empire. As Amazon begins pushing its own online ad efforts, the threat to Google’s main income line grows. Amazon’s online ad business only grosses a fraction of what Google brings in, however Amazon is one of a few companies with enough muscle in the marketplace to continue to grow at a fast pace.

“From a client’s perspective, the data that Amazon owns is actually better than what Google has,” said Mark Grether, the chief operating officer of Xaxis, an audience buying company that works with major advertisers. “They know what you just bought, and they also know what you are right now trying to buy.”

Consider that Amazon sells ad space that shows up on the side of product search results, of which there were 6.7 billion ad impressions in the third quarter. Such “early success” for Amazon is a big concern for Google which relies on product searches and the relating ads for revenue. As Amazon seeks to continue growing its control of its Kindle Fire tablet line and replace Google Play with its own App Store, Google’s revenue stream is cut out.

Not unlike Apple, “Amazon wants to control the experience on their devices,” said Oren Etzioni, a University of Washington computer science professor. “That doesn’t make Google happy.”

In the end, both companies are likely to find themselves fighting on the same ground and working to earn the purchase and “click” of the same user. It’s all a recipe for continued collision and we can only hope that any escalation between the two companies will work in the favor of the consumer as both giants move to bring new services to bear.

Reuters

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