Google Maps: Friendly Giant?

By: Alper Karakas

Google Maps’ large size seems to be a foe of a fair market, but maybe, it’s not all bad.

With a 70% market share and an unmatched acquisition power, Google Maps certainly has sizable market domination in the web mapping industry. Market domination is bad, right? It excludes competition, limits innovation, and charges higher prices to consumers. However, Google Maps’ impressive size is not necessarily the worst case scenario. Let’s explore why.

The manner in which Google Maps can offer real time traffic, predict arrival times, and optimize routes for many modes of transportation lies in how it receives data. Through every individual using the application or the website, Google Maps constantly and continuously collects data. If you navigate with the application while walking, driving, taking the bus, etc., then Google Maps collects data on when you started your journey, how fast you moved, what time of day it was, and more. Almost every parameter concerning your journey is being taken into account.

Google then uses this data to improve its service. As Google Maps keeps track of how long it takes individuals to complete their journeys, it gives other users more accurate traffic status, estimates for arrival times, optimal routes, and even strong offline functionality. It learns, based on the use of others, for the next user’s benefit.

And speaking of users, Google Maps has a lot of them. Google Maps currently has an approximate 70% share of the web-mapping market after its parent, Google acquired its then biggest threat, Waze, in 2013. Moreover, although Uber and Lyft recently came out with their own GPS systems, most of their drivers still use Waze or Google Maps due to trust, loyalty, and quality. Therefore, Google Maps can collect data from Uber, Lyft and Waze users and use it to improve the accuracy of its features. As its user base grows, the amount of data collected grows, and so, the accuracy and quality of the service gets better. So although Google Maps’ market size is intimidating, that same size can actually lead to a better navigation service for consumers.

With all of this control in the market, financial strength, and large infrastructure, it is easy to fear that Google Maps can limit short-term technological innovation in the web mapping space. That is, we can think of short-term innovation in terms of product line extensions and enhanced features.As mentioned previously, through acquiring Waze, Google Maps demonstrated that it had the financial power to limit the permeability of the market. In fact, Waze came up with the technology to collect real time data for traffic and ETA predictions. Moreover, Google Maps’ unparalleled, large infrastructure — in terms of satellites, data collection ability, global servers, many end-users of its features (even large companies, such as Tesla, outsource their geographical information systems to Google)— may highlight that short-term technological innovation is not a big threat to its core business.

Another common fear is that Google Maps has successfully established a sufficient mote, or, barrier to entry, which is the greatest fear for innovation. That is, Google Maps will lag in its innovation because it does not fear other companies will create a service that will grow large enough to hurt it. If another mobile navigation app company comes up with a innovative technology and disrupts the industry, Google Maps’ can simply acquire it like with Waze; or, it can use its infrastructure to execute the same technology with superior quality. In fact, John Van Reenen of MIT stated in The Economistthat divisions, such as Google Maps, have mastered technologies and enjoy network effects that help fend off slower competitors. The Economist went on to emphasize that these characteristics emphasize avoiding major confrontations and wiping out potential competitors.

However, the lens in which The Economistobserves the relationship between Google Maps and its competition is that of the short-term. What can threaten Google Maps’ market dominance is long-term technological progression.

Thus far, the history of personal navigation has gone through paper maps (dominated by Rand McNally), desktop maps (dominated by Yahoo), and now mobile app maps (currently dominated by Google). However, the trajectory will continue at a faster rate based on recent patterns of technological advancement. The next forms of personal navigation could be 3D maps, then self-driving cars with an integrated maps interface, and then integrated maps autonomous drones. The possibilities are endless. When and how these technological advancements will take place is unknown, but it is also unknown who will dominate every new stage. Every new stage will require a completely new map interface (birds-eye view for the drone!) and will be dominated by the company that offers the best solution. The pattern over time shows that every new stage is dominated by another company: Users don’t hesitate to switch if there is a product that works better for their purpose. Whether that be Google Maps or not is unknown. Thus, Google does have incentive to innovate and progress if it wants to remain on top.

At the end of the day, speculation is the only option. Google Maps does have dominating traits; however, after examination, it’s not the worst case scenario for service quality and accuracy. Presently, Google’s dominance in this segment seems to be working well for users, but, as we’ve witnessed with GM and IBM, their appetite for innovation and offering more advanced products may die down in the long-run. Whether Google Maps’ market domination entails a higher quality service or a decrease in future technological progression, what remains certain is that it is a company with significant presence… at least for now.

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