The New York Times Digital Domain column wonders about "The Human Touch That May Loosen Google's Grip" in Sunday's edition. Given that nearly all of Google Inc.'s (NASDAQ: GOOG) revenue comes from ads that appear on its search results pages and partner sites, it's an issue that Google shareholders may need to worry about. After discussing the severe smackdown that Google has laid on the likes of Microsoft Corp. (NASDAQ: MSFT) and Yahoo! Inc. (NASDAQ: YHOO) in terms of search revenue, author Randall Stross sums up what may be the best bear case on Google:
"The fumbling of Google's largest challengers, however, has not dampened the enthusiasm of entrepreneurs and venture capitalists for entering the search game. The combination of low start-up costs and potentially huge profit makes it seem a reasonable bet.
Developing a search algorithm can be accomplished by very small teams. It was a team of two -- Larry Page and Sergey Brin, the founders of Google -- who developed a new and improved search algorithm. They beat out Alta Vista, whose search engine was developed by seven people at the Digital Equipment Corporation."
While much has been made of Google's acquisitions, corporate culture, and innovation, let's face if folks: Google is a search engine and the rise of a new, better, algorithm designed by two other college kids could spell the demise of Google.
Every Google shareholder should read Stross's column. With the large amount of venture capital funding available, there's an awful lot of would-be Larry Pages and Sergey Brins out there looking for a piece of Google's staggering 29% net profit margins.