Media Curmudgeon

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January 16, 2006

Google Gets Whacked

Google was whacked recently by two writers--take your pick of writers or reasons for the whacking.

Jon Fine, one of the country's best writers on the media in my view, has an article in the current (January 23) issue of BusinessWeek titled "Putting The Screws To Google: How Old Media could take back its share of search's ad bounty." Fine writes "...picture this: Walt Disney, News Corp., NBC Universal, and The New York Times, in an odd tableau of unity, join together and say: 'We are the founding members of the Content Consortium. Next month we launch our free, searchable Web site, which no outside search engines can access.' (A simple bit of code is all it takes to bar all or some major search engines from accessing a site.) 'From now on we'll make our stuff available and sell ads around it and the searches for it, but only on our terms. Who else wants to join us? Membership's free.'"

Fine asks the right question, "Why have major media companies allowed Google to search their content and make money on it and not share that money with the content creators?" I don't know if major content providers will have the guts to form a consortium, as Fine suggests, but I do believe that plenty of them are upset and will try to find a way to limit Google's access to their content and they will try to monitize their own content.

I think 2006 will be the year that Google's growth will slow down. Perhaps Google has matured past its adolescent stage and reached maturity--still big, to be sure, but little more growth left.

Another writer, the infamous Henry Blodget, former Wall Steet Internet analyst, who now has a blog titled the Internet Outsider on which he posted on January 10, "No one else is writing this piece, so it will have to be me. I should say upfront that I'm not predicting that this will happen (yet), and I'm certainly not making a recommendation. I'm just laying out a scenario that could kneecap Google and take its stock back to, say, $100 a share."

Blodget makes a detailed and credible case that Google's stock is overpriced and shows how it could easily decline to $100 a share from its current stratospheric price of $466 (January 16).

Are these writers' predictions credible or plausible, or is it just another bash-the-big-guy reaction such as what happened when Microsoft became so dominant? I think it's a combination of the two. I believe that Internet-savvy people are beginning to worry about Google dominating the Internet like Microsoft did and are fighting now to cut Google down by encouraging competition, which Yahoo and Microsoft are glad to provide, especially after Google's purchase of five percent of AOL to keep Mcrosoft from getting AOL's search traffic.

I also believe that Google's stock has soared more because of the herd mentality that afflicts Wall Street than because of real value. This mentality creates bubbles and bubbles are bound to burst sooner or later.

Therefore, if I handled my own investments, which I am not dumb enough to do, I would short Google. But I wouldn't bet a great deal of money on shorting Google stock, maybe just one percent of my total investments, and just to do my little part in seeing Google's stock go down, I've put Yahoo search on my toolbar and have been using it. I find I like Yahoo's results better than Google's. Maybe that's another reason to short Google's stock.

Posted by Charles Warner at January 16, 2006 8:34 PM

Comments

Roland at January 21, 2006 11:29 PM writes:

Half Sigma at January 19, 2006 9:38 PM writes:

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