This week Google announced yet another astonishingly strong quarter of financial results with a profit of $9.4bn for Q1 2018, a figure 44% higher than original forecasts of $6.6bn. Don’t however, expect Google to flaunt this result too loudly. In a month where Facebook, its Silicon Valley neighbour, has come under intense scrutiny from the public, the media and even the US Senate with regards to how they manage user data, Google has somehow slipped under the radar. How is that?
It seems that many people are simply complicit with the notion that in using Google products they receive a free service and in return will have to “pay” by surrendering their data for the purpose of targeted advertising. But while most internet users realise the ads they receive online are often based on their search and web browsing history, few will be aware of the extent to which Google tracks their every online move.
Google now has seven products with more than a billion monthly users and they use this incredible ecosystem of products to capture and connect billions of pieces of information as users jump from its search engine to their maps service to Gmail and YouTube.
Each of the Google platforms that have over 1 billion monthly users.
To scare yourself, read this article by Dylan Curran, who did some incredible work to detail the extent of data that Google store about each of us. Google know your location, your deleted search history, your workout routine, any app you’ve ever launched, who you interact with and what time you go to sleep. We would never share so much information with a bank or insurance company for example, so why are people seemingly happy to share this information with Google, who at the end of the day are just another company with a shareholder’s obligation to generate profits.
The proposed solution to the issue was a set of laws that will come into effect on May 25th this year called General Data Protection Regulation, or GDPR, which aims to prevent websites from capturing and storing user data. Consent in the EU will become something that is opt-in rather than opt-out, as you will have likely noticed by the number of brands emailing you, encouraging you to remain on their subscriber lists.
The change, will be a positive one for us as individuals but ironically it seems that rather than force the tech giants of Facebook and Google to relinquish some of their control and fall into line, GDPR may have the unintended consequence of reinforcing their duopoly.
When the law was passed in the spring 2016, Google and Facebook mobilized hundreds of lawyers, designers and engineers, creating giant interdepartmental teams and setting an industry standard that would be impossible for smaller firms to meet. Which brings us to the paradoxical element, that while GDPR was introduced as an attempt to reign in the two tech giants what it may actually do is consolidate their control on the digital marketing industry. Strong financial performance in the wake of these data breaches would reinforce this point, and the two giants are expected to collect a combined 49% of all digital ad spending world-wide in 2018.
The vast majority of Googles revenue is generated from Google AdWords, it’s search advertising platform. In Q1 their Ad revenue reached $26.6 bn, which accounts for 86% of Googles overall earnings, and most of this ad revenue was derived from AdWords or search marketing as it’s known. Fortunately for them, search marketing will be the digital channel least affected by GDPR. While E-mail and digital display will face challenges as they will require consumers to opt in to marketing pools, search marketing operates by showing relevant ads to users based on their search query. The likely net outcome is that investment in search marketing will continue to grow as will Googles dominance.