Saturday, February 25, 2006


Google's Payments

It looks like Google is making significant progress to be a central player in the payment part of the transactions that it enables. Official statements from Google (through their blogs) seem to confirm the rumour that has existed for sometime now. As a service platform (search-linked-advertising), it does not make sense for it to not to be a key part of the payment exchanged. Recall eBay's logic in buying paypal: significant information in addition to fees.

This paragraph from the blog is particularly illuminating:

If you take a look at the history of Google's advertising programs and online services, one thing you notice is that online billing and payments have been a core part of our offerings for some time. To run our ad programs, Google receives payments every day from advertisers, and
then pays out a portion of those funds to advertising partners. Over the past
four years, Google has
billed advertisers in 65 countries more than $11.2 billion in 48 currencies, and made payments to advertising partners of more than $3.9 billion. When one of our consumer services requires payment to us, we've also provided users a purchase option.
Google's ability to close the loop between search and actual purchase puts them in a much stronger position to dominate commerce than letting that part of the business be handled by the traditional banking industry. Closing the loop requires powerful technology infrastructure (which Google has) to extract data and information (which they know how to do).

If you have not taken a look at it before, see Google Store. Looks a lot like what Amazon was a few years back. Amazon's success is based on their superior information technology functionality and sophisticated supply chain and fulfillment process. How will Google develop the physical fulfillment?

Network-era competition in dynamic timeframe. Another powerful illustration of blurring boundaries and interlinked competencies in the network era.

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