Google is the market leader in the online search and search-based advertising markets, where it competes largely against two companies: Yahoo! (which also competes in the same industries), and Microsoft (competes in multiple industries). While Google has benefited from a rapidly growing industry (particularly in the search-based advertising space), it has in particular taken a large share of this market, especially when compared to its main rivals; in addition, its lead has only increased over time.
We used two metrics to show that Google has been outstandingly successful in both of these markets: stock price performance over time versus its rivals; and its current market share versus those same rivals. First, we compared Google’s stock price performance to that of Yahoo! and Microsoft over the past few years, as a percentage of each company’s stock price on 9/1/2004 (the first day of the first full month of Google as a public company). As you can see in figure 1 in the appendix, Google’s stock price has grown 4x since that date, while Microsoft has less than doubled, and Yahoo! has declined in value.
We also looked at Google’s market share in the online search and search-based advertising market, where we found that Google is by far the market leader in both. In online search, one recent estimate puts Google at a 69% market share in online search, with Yahoo! a distant second at 17%, which is remarkable considering Yahoo! was the market leader in search when Google was founded in 1998. In the search-based advertising, another source puts Google at a 70% market share. As you can see in figure 2 in the appendix, Google’s share in this industry has grown over time as well.
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