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A printer's error cost Google US$22 billion

Charles Arthur (via SMH) | Oct. 19, 2012
Google's $22bn results blunder

Another concern for Google will be the upwards creep in the money that it pays to external websites to direct traffic to its search engines. That has risen as a proportion of advertising revenue from a low of 23.7 per cent a year ago to 26 per cent - back towards the 30 per cent figure that it saw at the end of 2007. The higher the proportion, the higher the drag on profits on a search engine. Those too may come from Google's mobile business, where it pays money to Apple for some positions on the iPhone, and to some mobile carriers.

Charlie Kindel, a former Microsoft engineer who worked on its Windows Phone development, commented on Twitter that Google might have to start focusing on ways to make its free Android mobile operating system pay. He said: "Mark my words: a few more quarters like this, Amazon doing well with Kindle, and Google's approach to Android will quickly change." Amazon uses its own version of Android, stripped so that Google gets no ad revenue, in its Kindle Fire tablet.

But Clark Fredricksen, vice-president of eMarketer, which tracks the online advertising business, said that despite the setback he feels that Google is in a strong position because of its underlying strength. Google remains dominant in search, with a 74.5 per cent share of the US search ad market, according to eMarketer. In Europe, its market share is more than 95 per cent – and the overall digital advertising market in the US grew by 17.7 per cent in the third quarter of 2012.

Fredricksen added: "The company now holds the largest more revenue than any other company in the US search, display and mobile advertising markets, respectively – and the company's market share in each category is expected to grow in the coming years.

"Particularly in the mobile arena, Google holds a commanding lead over all other players, taking home more than half of all US mobile ad revenues. The nearest competitor, Pandora, takes home less than 10 per cent of the market."

Meanwhile, a sheepish printer said it was "fully engaged in an investigation to determine how this event took place and are pursuing our first obligation – which is to serve our valued customer". Its shares fell too in the wake of the Google leak – but only by 2 per cent.

The Guardian


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