July 6, 2009: Google's D-Day?

Google hit the bad news trifecta today: The federal government has announced that it's investigating Google for possible violations of the Sherman Antitrust Act; Nokia says it has no plans to develop an Android phone; and YouTube is under attack from Disney. Could this be the day people realize that the search giant is not invulnerable?

Chris Thompson details all three problems on The Big Money. The federal investigation into Google has its roots in an issue several years old, when Google announced Google Book Search, which would digitize countless books and allow access to them online, without first negotiating with copyright owners.

Google was sued by The Author's Guild and the Association of American Publishers promptly, and a $45 million deal was reached about copyrights. The feds, though, say Google may violate antitrust laws in the deal and are investigating.

As for Android, it seemed like a freight train that couldn't be stopped, until Nokia said it had no plans to develop an Android-based phone. Lest anyone be confused about what Nokia said, according to Thompson a Nokia spokesperson said that about the rumor, there is "absolutely no truth to this whatsoever."

Finally, Thompson points out that Disney has begun posting movies and TV shows on Hulu, including popular shows like Grey's Anatomy. Google had been negotiating with Disney for a similar deal. They lost.

So why is this D-Day for Google? With its current business model, it can only grow as fast as search does. Google does lots of things, but at its most basic, it's still a search engine, first and foremost.

That means that it can only grow as fast as Internet search grows, and at some point, that will level off. Google needs other very large businesses in order to fuel growth. Video is clearly one, as is Android. As for books, it's an example of a way for Google to spin other businesses out of search.

The problem is not just the problems with these three businesses. It's that if the myth of Google's inevitable success goes away, Google could be in trouble. And today, it's clear that success with everything it does is not inevitable.