How Amazon Competes With Google

While many people might first think of Yahoo (YHOO) or Apple (AAPL) as Google's (GOOG) direct competition, in fact, its most direct competitor across the Internet is Amazon (AMZN), and the competition between these two Internet companies has only become more intense in the past few years. Most people likely think of Google as a search engine first and an email provider and ad seller through its AdWords program second. And most people likely consider Amazon as simply a gigantic online shopping center. But the basic fact is both companies are Internet giants focused on the selling of goods and services, and in the Internet marketplace, the goods and services they are trying to sell increasingly result in head-to-head competition.

The Battle For Online Shoppers

It may be surprising to learn it is Amazon, not Yahoo, that is Google's main search engine competitor.

When people are looking to buy something, they very often hop right over Google search and go straight to Amazon. As of 2015, market research shows that roughly 33% of online shoppers start directly on Amazon, more than twice as many as those who start on Google. Amazon has worked hard to increase this trend by offering, in addition to just buy-and-sell information, product reviews and answers to customer questions, providing more search results similar to what might be found through a Google search.

Every time someone bypasses Google, it loses the opportunity to show the viewer ads, which remains Google's bread and butter business. Google has countered with Google Express, a delivery service designed to at least partially steal away some of Amazon's buying traffic and compete with Amazon's Prime service. Not to be outdone, Amazon is rumored to be experimenting with drones for delivery services.

Part of Amazon Prime has been its music and video service, expanded by the development of the Kindle Fire tablet. Google has Google Play. Google also has the Google Play Store, with its Android operating system apps, but then Amazon has its own app store. In the area of video service, both have developed direct television viewing software, Google's Chromecast and Amazon's Fire TV. These two options have swooped in and taken away significant market share from Apple's Roku television service.

Diving Into Data

Amazon has even made inroads against Google's well-known market analytics program, Google Analytics, with its own service called Amazon Kinesis. The largest market battleground of the future for these massive Internet sector firms may well be the Internet cloud. Another potential surprise to many people may be the fact it is Amazon, through its Amazon Web Services, or AWS, that got into large-scale cloud computing services well ahead of Google and currently maintains a massive lead over both Google and the other dozen or so main competitors in this market. The marketplace in this area is not so much for individual consumers who can already store tons of personal data online for free but for large corporations with amounts of data massive enough to justify paying for storage and data analysis services.

To get an idea of what is at stake for the companies in this marketplace battle, consider that between data storage servers, software and all other Internet technology services combined, the total value of the global marketplace for cloud services, as of 2015, is estimated at over $1.5 trillion.

While Google actually has more data space available on its servers worldwide, Amazon has the most cloud space dedicated to providing cloud IT services. Google has attempted to make inroads by undercutting Amazon on price, but thus far Amazon's lead in developing, refining and streamlining services has enabled it to match every price cut by Google.

The Bottom Line

It is anyone's guess as to who ultimately will win the cloud computing war. Some analysts think Google's financial resources and larger global reach give it an edge, but Amazon's practice from the beginning of collecting the most extensive data on its customer's buying habits and desires has served it well so far in achieving the highest level of targeted marketing.