Google is one giant every technology company should have good terms with. And if you want confirmation, ask investors in Bankrate, a renowned provider of news and information about interest rates and credit cards.
Try not to come in Google’s path
On Thursday, Bankrate shares fell nearly to half to $6.85. According to S&P Global Market Intelligence, the company reported quarterly revenue of $93.4 million, which was short by 30% to what was expected. Also the company posted a quarterly net loss of $13.3 million. Above all, the main concern was that the company even failed to provide an outlook for 2016.
Google is the main problem behind all this, says a report from USA Today by Matt Krantz. Last year, the online advertising giant launched Compare, which is used to compare financial services. This service hit Bankrate directly.
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In the conference call, Bankrate’s CEO Kenneth Esterow admitted this, saying, “Google Compare product test did dampen our overall (credit) cards growth and revenue profitability in the quarter.”
Google, on the other hand, said that it is going to end its Compare service, including Compare Credit Cards, by March 23. For Bankrate, it is good news. But the fact that Google displays “additional paid advertisements,” on the top of many search results puts Bankrate in a difficult spot going forward, Esterow said. The ads could make links to Bankrate’s services, such as credit card comparisons, less prominent and less likely to be clicked on by consumers looking for financial products.
Yahoo still getting trampled by Google
Bankrate is the most recent example of a company that is slowly declining due to Google. Demand Media, a provider of media content, has seen its shares collapse 96% since 2011. Articles written by Demand Media were made hard to find after the search giant made changes to its proprietary search engine. The Internet search engine is seen hurting Yahoo too. Initially, Yahoo users shifted to Google to find websites online, and now they have been changing their email accounts too, says Krantz.
Bankrate’s sorrows highlight the difficulty of building a meaningful business on the Internet, which is being increasingly dominated by titans of technology. Amazon, Alphabet, eBay, Facebook and Liberty Interactive are the five companies that control 70% of the Internet industry’s revenue, says Krantz.
It’s dangerous for companies like Bankrate to compete with the search giant head on, especially as they rely on Google’s search engine to get more customers.