A recent presentation conducted by Google Australia highlights to investors one direction that the internet giant is planning to take the company in the future. It's a reminder to investors that Google will continue to look for ways to monetise its vast resources and expand its reach into more business lines as it looks to grow its revenues and profits.
The presentation, titled Google Maps for Business, highlighted Google's enterprise business solutions for the transportation industry. In the words of the presenter, Google is looking to "revolutionise" the transport industry.
The Google maps application also has the potential to compete with listed minnow Nearmap (ASX: NEA). Nearmap has been doing a great job of monetising its own intellectual property which has helped its share price race 900% higher in just 12 months. While Nearmap has carved out a seemingly profitable niche and provides capabilities that Google doesn't currently match, it is one example of where Google has the potential to be a threat.
The travel agency sector is another area where Google has the potential to threaten the profitability of other firms via its travel search functions. Wotif.com (ASX: WTF) and Webjet (ASX: WEB) currently command impressive market shares in the competitive online market for travel agents. Google already runs a search booking engine called Google Flights in the USA and there is little stopping it from offering this service to Australian customers as well.
The profitability of Carsales.com (ASX: CRZ) and Seek (ASX: SEK) makes these two firms highly appealing to investors, but high profits also entice competition. The business models of these online classifieds businesses gives them strong defensive characteristics however a firm the size and with the balance sheet backing of Google could well be a threat if it decided to take these businesses on.
Foolish takeaway
The threat of a 'big gorilla' such as Google competing with domestic stocks is always a very real possibility. While it's also not a reason to be immediately concerned, remaining vigilant and aware of competitive threats is an important element of investing in the stock market.
