Tech

Pinterest's IPO filing shows how powerful Google has become

Key Points
  • Pinterest said the site's traffic was hurt in the first quarter of 2018, when Google removed some keyword landing pages from search results.
  • Similarly, Pinterest claims its user growth was negatively impacted by a change Facebook made to its login authentication system in the second quarter of 2018.
Evan Sharp and Ben Silbermann, co-founders of Pinterest
Source: Pinterest

Pinterest on Friday released its IPO prospectus, and the document shows just how much leverage Facebook and Google hold over internet companies.

Like many websites and apps, Pinterest allows users to sign into its service using their Facebook and Google credentials. The company relies on traffic from Google's search engine and logins from Facebook, which has over 2.3 billion global monthly active users.

Any changes made by those two companies can drastically impact Pinterest's own business.

In the first quarter of 2018, Pinterest saw keyword landing pages get removed from Google search results, according to the financial filing. That action hurt traffic and user growth in the following quarters, Pinterest said.

"Our ability to appeal these actions is limited, and we may not be able to revise our search engine optimization ("SEO") strategies to recover the loss in traffic or user growth resulting from such actions," Pinterest said in the prospectus.

Facebook similarly impacted Pinterest the following quarter when the social network made a change to its login authentication system, "which negatively impacted our user growth and engagement in that period," Pinterest said.

"If Facebook or Google discontinue single sign-on or experience an outage, then we may lose and be unable to recover users previously using this function, and our user growth or engagement could decline," Pinterest said in its filing. "Any of these events could harm our business, revenue and financial results."

The duopoly is reflected in the online advertising market. Google and Facebook account for a combined 59 percent of U.S. digital ad spending, according to eMarketer.

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