BERKELEY, Calif. (MarketWatch) — Everyone is writing about Google Inc. since the stock dropped after the company’s latest earnings report.

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The fact is that Google GOOG +0.01%  was hoped to be the next Microsoft Corp. MSFT +0.20% , with the shares getting on the doubling treadmill for a decade or so, then going flat. Google skyrocketed to $500 and above rather quickly and has since stalled.

There are a couple of things to note that do not bode well for Google in the long run.

The main issue is that while the company dominates the search market, it is not monopolizing it the way Microsoft ruled the operating-system market and then the productivity-software market. From there, Microsoft was able to make inroads into other profitable niches.

Google is different. It’s not selling a product, as it makes its money from advertising. It’s a media company, plain and simple. (Every time Microsoft ventures into media, it backs off. Even with Bing it seems skittish.)

Which brings us to Yahoo Inc. YHOO -0.06% , one of the first pure online-media companies selling advertisements around various forms of content, from search results and email to user groups.

At some point, inventors decide that the company has nothing special going on and the stock falls to some boring level, and there it stays.

The problem with a media company is the problem magazines have with circulation. At some point, you max out. You’ve permeated the market, saturated the audience. Now all you can do is fill the magazine with ads.

Google knows that it has reached full market penetration. The company could improve page views perhaps by teaching people how to use Google more with advertising, promoting oddball uses. This would mean showing people how easy it is to find a phone number with Google. This sort of thing will move more ad inventory.

But for all practical purposes, Google has grown all it can grow in the search business. It really has nowhere to go but down.

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