How Amazon Competes With Google (AMZN, GOOG)

Across the internet, Google (GOOG) and Amazon (AMZN) compete head to head, and the rivalry between these two internet giants has only grown more intense over the past few years. Google is the dominant search engine, a service that is monetized through its Google Ads business (formerly AdWords). Amazon is the dominant e-commerce retailer. However, both internet behemoths focus on selling goods and services, and this puts them squarely at odds.

The Battle For Online Shoppers

When it come to online search, Amazon—and not Yahoo—is Google's main competition. When consumers shop online, they often skip Google and head straight to Amazon. Surveys find that 41%-54% of online shoppers start their product search at Amazon, compared with 28%-46% who start at Google.

Amazon has achieved these figures by improving the relevancy of its search results. It supplements buy-and-sell information with product reviews and answers to customer questions. Every time a shopper bypasses Google, the company loses the chance to display an advertisement, which remains its bread and butter business.

Google has countered with Google Shopping, which allows users to search for products and compare prices among vendors. Retailers must pay to get their wares in front of users. The ads appear on Google Shopping, in search results, on partner websites and within the Google display network, such as YouTube.

Amazon and Google also compete directly when it comes to selling entertainment to consumers. Amazon offers paid and free streaming services for television, movies and music as part of Amazon Prime. Google runs Google Play, a pay-per-download and subscription service. Both compete in the hardware space: Google with Chromecast and Amazon with Fire TV.

Diving Into Data

The largest battleground for these massive internet companies may be in cloud computing. Amazon is well ahead of the pack with Amazon Web Services, or AWS. There is considerable revenue at stake. Companies spent an estimated $266 billion on cloud computing services in 2019, a figure that is forecast to grow at a 14.9% compounded annual growth rate through 2027.

In fact, Google runs a distant third in cloud computing behind Microsoft (MSFT). Amazon led the market by capturing an estimated 31% of cloud spend in the second quarter of 2020. Microsoft grabbed 20% with its Azure service. Google brought up the rear at 6%, just ahead of Alibaba (BABA) with 5%.

The Bottom Line

Amazon's practice of collecting extensive data on customer buying habits has served it well in honing its product search results. While some analysts think Google has the financial resources and global reach to grab a significant share of the cloud computing market, so far it looks as though Amazon and Microsoft have outpaced Google.

Article Sources

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  2. Grand View Research. "Cloud Computing Market Size, Share & Trends Analysis Report By Service (SaaS, PaaS, IaaS), By Workload, By Deployment, By Enterprise Size, By End Use, By Region, And Segment Forecasts, 2020 - 2027." Accessed Dec. 23, 2020.

  3. Canalys. "Global cloud services market Q2 2020." Accessed Dec. 23, 2020.