Get Ready for the Google Squeeze

Google is facing up to difficult times. Get ready for lower revenue shares.

A few years ago I read an article with a quote from a Google (NASDAQ: GOOG) human resources executive. He was commenting on the company’s lavish perks and how they were unique to Google. When the reporter pointed out that many companies have offered similar perks, the executive responded something like, “Yes, but the difference is we won’t cut our perks when times are tough.”

I had to laugh. In 2000-2001 I worked at a company that offered a lot of perks like Google. Open kitchens. Free beer. Free taxi rides. Free cruises. Jay Leno at the annual company meeting. When the tech recession hit, the first things to go were people and perks.

It seems that the tough times are starting to weigh on Google, as illustrated in an article in today’s Wall Street Journal. Some of the first things to go, as always, are people and perks.

As Google struggles to keep its earnings growing, another place the company will look is to squeeze its content partners. All it has to do is dial back the revenue share it provides to content publishers. That includes domain name owners. Since Google has essentially killed off most of its competition, it’s difficult for publishers to threaten to jump ship.

Yahoo (NASDAQ: YHOO) is hurting more. Although we all know it has lagged Google, it has done generally well with auto and finance advertisers. It’s a painful time to count on auto and finance advertising dollars.

So batten down the hatches. And get ready for the great Google squeeze.