What Everyone Is Talking About Today

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NEW YORK (AdAge.com) -- We all know what goes up must come down, but it’s likely to be a bit of a shock to those folks toiling away in Google hallways that even when your net income rises 82% ($372 million!) and you turn in $1.29 billion in sales in one quarter, you can still get punished by the Street. But when your self-described motto, "do no evil," gets rewritten by those outside your company as "do only a little bit of evil," you have to expect a reality check is coming your way.
The Google brand name is a powerful one, but it’s been getting a bit of a bashing outside of the U.S.

And so it came. The stock price fell 12% on the release of the search engine giant’s fourth-quarter results, bringing the price down to a mere $381, which is not nearly as nice as the high of $433.

The Google brand name is a powerful one, but it’s been getting a bit of a bashing outside of the U.S. Just yesterday, a group of newspaper, magazine and book publishers in Europe accused Google and other aggregators of online news of unfairly exploiting their content, according to the Financial Times, whose headline was the strongly worded “Search engines accused of ‘theft.’” The FT quotes Gavin O’Reilly, the president of the World Association of Newspapers, which is co-ordinating the campaign with groups including the International Publishers’ Association, the European Federation of Magazine Publishers and Agence France Presse, as saying: “We need search engines, and they do help consumers navigate an increasingly complicated medium, but they’re building [their business] on the back of kleptomania.” The groups said they are considering legal action to enforce their copyrights. And the double o’s of the portal's logo could have been drawn with two black eyes the day news surfaced that it was cooperating with China in censoring citizen-users there.

Google’s killer revenue app, advertising, is also not on as firm a footing as it once was, with some analysts raising concerns. Business Week’s Ben Elgin this morning lays out some of the hurdles Google faces in the upcoming year, including chatter in the market about how much growth remains in keyword prices, which made up about a third of Google’s growth last year. Prices appear to be leveling off, and in some places even falling. And Google’s recent push into video, its way into the expanding broadband video market, has been met with criticism that its positioning to consumers is muddy, given its multipricing platform that allows users to watch free video, rent videos or outright buy them. It’s a tougher sell compared to the crystal-clear positioning and easy use of iTunes -- pay $1.99 per video.

Other roll outs, such as radio advertising through its acquisition of dMarc Broadcasting and plans for classified ad service Google Base, will also take the company beyond its comfort zone. It also upset users and advertisers with its recent deal with AOL, which raised concerns that its new partner would get preferential treatment in Google’s up-till-now entirely democratic search model. The news that it would experiment with rich-media ads, another move beyond the text-only ads that brought it its status as emperor of Web advertising, could also impact how it interacts with its advertisers.

All these prosaic challenges have succeeded in bringing Google’s feet in sudden contact with the all too real terra firma of business reality. It’s a crucial management challenge to steer a company through early exuberance to grown-up business. To which Watercooler says, "Good luck Google guys! We’ll all be watching."

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