Why Google And Amazon Won’t Be Wishing Each Other A Happy New Year


The bitter rivalry between Amazon and Google is set to become even more intense over the next 12 months, with both companies likely to raise the stakes on multiple frontlines, including vital markets such as e-commerce, cloud computing, consumer hardware and advertising.

Reuters provides a timely and in-depth analysis of the current state of affairs between two internet giants, and finds that there will be little love lost between the two increasingly bitter rivals as they continue to encroach on each other’s spheres of influence. One particular area of contention will be advertising, traditionally the lifeblood of Google, and a source of revenue that Amazon seems to be increasingly thirsty for.

Google might consider itself to be the king of advertising on the web given all the consumer search data it holds, but Amazon has an ace up its sleeve in the form of its consumer purchase data, something that the former possesses very little of. According to Reuters, a growing number of advertisers are taking to Amazon’s advertising solution, as it provides them with much higher margins by allowing them to target specific audiences that are known to be receptive to the products they have on offer.

“From a client’s perspective, the data that Amazon owns is actually better than what Google has,” explained Mark Grether, CEO of Xaxis, an audience buying company that works with major advertisers.

“They know what you just bought, and they also know what you are right now trying to buy.”

Amazon isn’t the only protagonist in this fight though, as Google is increasingly looking to counter-attack on its rival’s main spheres of influence –cloud computing and e-commerce. While Amazon’s six-year old EC2 platform is by and large the number one cloud solution for businesses today, Google still believes that this market is there for the taking, and will likely once again bombard businesses and web users with ads promoting the virtues of its own Compute Engine. In addition, Google will also try to make inroads on Amazon’s hugely successful e-commerce business with its own Google Shopping service, launched earlier this year.

Finally, the two companies are set to clash over the Android platform. Amazon has already made a major play in this arena with the launch of its own version of Android for its Kindle Tablets, replacing some of the few money spinners on Google’s OS with its own services, like the Amazon store and its digital music service. With Google seemingly at a loss over how to generate cash from mobile advertising, losing out here would be a serious blow. So far, the battle here has been restricted to tablets only, but with rumors of a Kindle smartphone growing stronger by the day, an escalation in this arena seems all but inevitable.

How all this will play out is anyone’s guess, but given the massive resources available to both companies, it’s safe to assume that it won’t be pretty.