larry p

Google: The search party is over

July 29, 2010: 6:00 AM ET

Yes, the company is still growing at rates that would be the envy of the rest of the Fortune 500. But its core business is slowing, its stock is down, its Android mobile platform generates scant revenue, and competition (hello, Facebook) is fierce. Can Google find its footing in this brave new world?

By Michael V. Copeland with Seth Weintraub

Google founders Larry Page (left) and Sergey Brin invented the algorithm that drives nearly all of Google's revenue.

Stroll across the Googleplex in Mountain View, Calif., and you are confronted by a world that sparkles a bit more than whatever slightly dreary one you just left. Massive stone busts of ocean explorers like Jacques Cousteau fix their gaze on the cobbled paths that flow into the main Google buildings. At sunny tables outside, Google employees -- the coolest, most confident techies you'll meet -- eat their free food and chat animatedly about who-knows-what arcane computer algorithms, or the latest must-do pastime of the young and affluent Silicon Valley set, like kite-boarding or indoor skydiving.

It looks a lot like the midday break at some elite college campus. But almost 12 years after it was launched by precocious Stanford grad students Larry Page and Sergey Brin, Google and its founders are grappling with a very grownup set of problems. Google's core business, online search, is slowing. That is partly due to Google's own success; it's hard to keep posting record growth rates when you dominate a business so thoroughly -- Google sites lead the U.S. market with 64% of all searches conducted. But more crucially, the web has changed significantly since Google became a verb. There is (at long last) fresh competition from Microsoft's Bing, and also a new wave of sites and services that offer alternatives for consumers' time and attention -- and the advertisers that follow them.

More

Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.