Why Europe is Afraid of Google


Executives from across Europe's technology, media and telecoms sector fear Internet search and advertising giant Google may steal their business, they told a Reuters summit this week.

Several managers cited the Silicon Valley-based company as one of their most feared rivals -- even if they did not know exactly how Google would become their competitor -- and one they should try to partner with if they knew what was good for them.

Google Headquarters

"I am worried about Google, just because I don't know," Eric Simonsen, chief financial officer of telecoms infrastructure provider Nokia Siemens Networks, told the Reuters Technology, Media and Telecoms Summit in Paris.

"Our vision, with the world connected, primarily over the Internet, 5 billion people, and you look at the economic resources that Google has -- if I think they are not going there, that's a pretty stupid assumption on my part," he said.

"I have no idea how, I have no idea when, but I ought to be thinking about those kinds of things." Google has branched out from its core businesses into areas as diverse as cellphone software, submarine communications cables and medical software, raising a wave of anxiety that has spread from the United States and is still rising in Europe.

In the U.S., companies as diverse as retailer Wal-Mart , agricultural commodity supplier Cargill and Wall Street banks have studied how Google could become a major challenger in the long run.

Such seemingly far-fetched concerns have a basis in Google's growing lock on Web search activity -- the starting point for consumers looking for information. Google's market share is more than 70 percent among the major search players in the world.

As a result, Google has come under the glare of competition regulators in Europe and the U.S. in the past year, egged on by Microsoft and major telecommunications carriers.

The "Frenemy"

Many traditional advertising groups, telecoms operators and mapmakers have rushed to strike up partnerships with the fast-growing Internet phenomenon, hoping to be carried along by its success rather than crushed by it.

Martin Sorrell, chief executive of advertising group WPP, has famously called Google a "frenemy," although he spends about $850 million a year on advertising with Google on behalf of his customers -- nearly 4 percent of Google's expected revenue for this year.

He told the Reuters summit: "Google is a phenomenal company, as is Microsoft, as is Yahoo , frankly, and we're increasingly trying to find ways to work with them."

WPP and Yahoo - Google's rival in Internet search, whose search business Microsoft wants to buy - said last week they had struck a partnership that would let WPP buy ads on Yahoo's online ad exchange and help Yahoo extend its customer base.

WPP rival Publicis boasted at the summit that WPP was copying a deal it had previously struck with Google, although Chairman and CEO Maurice Levy was careful not to upset its powerful partner by giving away details too soon.

"Google has a lot of restrictions for any announcement which could be seen as a pre-announcement," Levy said. "I cannot give detailed information on what we're doing but believe we will soon be able to give more details."

Google's almost eightfold rise in market value since its 2004 stock market debut to $173 billion has made it one of the world's most valuable companies and the object of almost universal envy.

"All you have to do is look at Google and you'll see how much the stock markets love growth," T-Mobile CEO Hamid Akhavan told the Reuters summit. "Growth is the sexiest thing on earth. You can produce truckloads of cash but it's not exciting."

NSN's Simonsen, a tough CFO and serial restructurer of companies in distress, gave this advice: "I learned a long time ago that you better respect anybody who thinks they are your competitor, because you never know."