Googles Achilles Heel

Google has an Achilles heel that I have yet to see written about and that's Ad Words.  Ninety five percent of their revenue comes from this service.  All other Google technologies do not need to generate any revenue as long as they potentially can give Google advertising or market knowledge reach. 

The Sherman Antitrust act plays an important roll for large companies.  Not in the way most people think.  When the US government goes after a company for antitrust - because they've gotten too big - many people think the government is over reaching.  I think the government is the canary in the coal mine.  The government is telling a company it's time to divest since the company has gotten too big to be managed effectively.  It's important to note that divestiture does not negatively effect stock holders, employees, or customers.  The only person who looses is the President and CEO of the divesting company since they no longer have as large  an empire to rule over.

Just look at the high tech history of antitrust.

Back in the 1980's IBM won their antitrust suit.  The government wanted to break them into two - a large computer and a small computer company.  To fight possible divestiture IBM licensed an operating system for PC's instead of using one they had already developed - thus creating the Microsoft juggernaut. Instead of of using an internally created processor for PC's they used a third party one - thus creating the Intel juggernaut.  By the 1990's IBM realized that small computers and printers were hobbling them, selling these business units.  For the stake holder a more advantages solution would have been to have their stock split into a small computer company - think Lenovo, Microsoft, and Intel as one company, and what's currently left of IBM - a large computer solutions company.

AT&T fought the US government for years finally succumbing to divestiture in the mid 1980's.   They found that divestiture gave them a much better way to manage their company.  AT&T was way too far flung of an empire.  They continued to divest even after the government no longer required them to. 

In the 1990's Microsoft was in the cross hairs of the US government over the Sherman Antitrust act. Microsoft won.  But look at Microsoft today.  They are struggling, mostly because they have gotten too big to manage.  Individual product groups don't make the best decision for their customers or their product since they are being forced to make the best decision for the company.  If they had broken up back in the 1990's I'm sure each of the new entities would be having a much better time flexibly reacting to the changes in technology.

Now back to Google.  Google's issue is that technologically they are into everything and tend to be a Juggernaut in each of these fields - think search, maps, mobile OS ...  The problem is none of these provide revenue since Advertising is how Google makes money.  All of Google's technologies are just  platform for them to present advertising.  So how do you break that up?