Google – Under the rug

Choice of search engine makes little if any difference.

• Google choose an opportune time to publish what could have been seen as bad news but in reality, I don’t think it will make any meaningful difference.
• Right in the thick of CES (Jan 9^th), Google sneaked out the news that it will be giving European users a choice of search engines when setting up their Android phones in 2020.
• There will be 3 alternative options available on every European splash screen at set up and Duck Duck Go, a privacy-focused search engine will be offered as an option in every country while Bing is only an option in the UK.
• I suspect that this closely reflects Bing’s position which outside of the USA I think is pretty much UK-only.
• Google’s move in this direction is to satisfy the EU’s remedy following the finding that Google had behaved uncompetitively when it comes to search.
• More than 50% of Google’s search revenues (the vast majority of all revenues) now come from search and at a very high level, this could be seen as a significant threat to revenues.
• This is Europe only which accounts for less than 1/3 of total revenues of which half come from iOS.
• This means that the hit could be around 1/12^th if every European user switched off Google search which is an extremely unlikely outcome.
• (1/3^rd of revenues from Europe of which 50% from mobile and of which 50% come from iOS leaving 1/12^th coming from European Android phones in Europe approximately).
• What is more likely is an outcome where almost all users decide to continue using Google search because that is what they know and what they like to use.
• Of all the search engines, Google is by far the best and almost every Android user already knows it.
• Furthermore, I have yet to see any hard evidence that users care about Google or even Facebook using their data as financial performance has remained excellent despite the endless headlines in 2018 and 2019.
• The end result is that this is very unlikely to make any difference to Google’s financial performance and hence should be taken too seriously.
• However, had this emerged during a quiet news cycle, it would have been everywhere, and may have even affected the share price.
• Hence, while it was rather sneaky of Google to edge this one out the door when everyone was looking the other way, I do not think that anything meaningful has changed.
• Hence, the outlook for Google remains the same and is one where the outlook pretty much matches the share price.
• Hence, I remain pretty indifferent to Google shares.