Google Play, Google's false move?

Speaking as an ebook dealer, which I am (and proud of it!), I couldn’t be happier. After Amazon and Apple, even Google is finally getting in the game. Following many bewildering announcements, Google has at last come up with a clear and coherent design for entering the market of digital content, including ebooks: it’s called Google Play (it’s not yet accessible in Italy, so I’ve provided a proxy link to give you an idea of the bookstore). Now the battlefield has been defined: the 3 big players (Google, Amazon, Apple) and other (small and large) local operators which, especially in editorial content (where language itself is the content), will definitely have excellent cards to play. [And no, I really don’t think Kobo succeeds in its attempt to become a worldwide player; I think it’s in for a serious beating.] [Nor do I believe that Barnes & Noble, with its Nook, will truly venture outside the US borders, where it’s doing quite well, to risk competing with them globally offshore.] Google Play is based on the same model as Amazon and Apple: we sell music, films, applications, books… in other words, digital content, and let’s see who wins.
Even in the specific case of ebooks there’s nothing new: the formats handled are PDF and ePub, ebooks are read through the browser or by downloading the ebook onto a tablet or conventional ebook reader, the DRM used are those (detestable) ones of Adobe even for Google (who probably could have done better).
Result: the market – which up until a few days ago I expected, at least for 2012, to quadruple with respect to 2011 – may accelerate even further. A classic new market in the literal sense of the term, a market which didn’t even exist before and is bound to grow exponentially at least for the next decade. Those who already work in this sector couldn’t help but be happy.
That being said, today I’d like to put myself in the shoes of Google’s CEO, and I say: Google made a huge mistake! Let me explain.
Google, as everyone knows, makes most of its proceeds (at least 90%, it seems) from online advertising, of which it’s a worldwide quasi-monopolist. How did it achieve this position? It’s simple: Google is the most prominent search engine because it’s the most widely used, and it’s the most widely used because it’s perceived as being the most authoritative. As such, if you want to advertise in order to sell your product online, Google is the venue which you simply can’t overlook. It’s no secret that Google, through its so-called natural positioning as well as paid advertisements, is one of the most important sources – if not the most important, as in the case of Ultima Books where it accounts for 45% of our hits – of visitor traffic and thus customers.
Consolidated in this position, however, Google has for some time been struggling with the question of how to create an alternative revenue flow, which could further accelerate its growth and could also act as a backup plan in the event advertising flows should for some reason slow down or even decline. Note that this possibility certainly wouldn’t be surprising, given that even though online advertising is still growing, this growth is actually due to a transfer effect from offline advertising, which sooner or later will slow down since the total advertising sector (online + offline) is contracting. Thus Google has every reason to be concerned.
Considering all the things it knows how to do, and actually does rather well, Google has (had) various options available. I don’t even want to bring up its attempt to compete with Facebook using Google+, so I’ll (mercifully) skip it altogether. But if the chosen option is, as it appears, Google Play, Google would risk not only failing to compete with Amazon and Apple which are already consolidated in that particular market, but even jeopardizing its current business, its advertising sales, the success of which is based solely and entirely on the credibility of its search engine.
Let me explain with an example: up until now, if I want to sell digital content (regardless of whether it’s a book, music album, application, etc.) I would certainly invest in Google, maybe even just to improve the organic positioning of my site or I could dedicate a true advertising budget to Google. But what happens if Google decides, with Google Play, to become my competitor by being a merchant just like me? Can it maintain its perceived credibility and trustworthiness? And even if it didn’t do so, wouldn’t it cross people’s minds that when searching for a certain book Google could favor a link that takes customers to its own store instead of mine? Isn’t this precisely the perfect way to undermine and jeopardize its primary asset?
This is why I myself, as Google’s CEO, would stop Google Play right now in its tracks. But not to just sit there and do nothing: instead I would accelerate, and I mean really accelerate, on Google Apps, i.e., the paid business and enterprise services for professionals and companies. Anyone who uses Google Apps knows full well just how powerful their tools are already, and how much more powerful they become with integration of each of the parts, and the value this could bring to company management. If only Google would adjust its prices and entry thresholds, and accelerate as much as possible, it could truly aim to oust Microsoft from its last stronghold, the offices, aiming to replace both the operating system (which becomes irrelevant) and the Office suite with Google Apps.