How Amazon Competes With Google (AMZN, GOOG)

Google's (GOOG) direct competitor across the Internet is Amazon (AMZN), and the competition between these two Internet companies has only become more intense in the past few years. Many people consider Google a search engine first and an email provider and ad seller through its AdWords program second. And most people consider Amazon an online shopping platform. However, both companies are Internet giants focused on the selling of goods and services. In the Internet marketplace, the goods and services these companies are trying to sell increasingly result in head-to-head competition.

Amazon, not Yahoo, is Google's main search engine competitor. When people are shopping online, they very often hop right over Google Search and go straight to Amazon. According to an eMarketer reporting on a survey by Adeptmind, almost 48% of online shoppers start directly on Amazon compared with 35% who start on Google. Amazon has worked hard to increase this trend by offering, in addition to just buy-and-sell information, product reviews and answers to customer questions outperforming Google Search in terms of providing the information that consumers want to see.

Every time someone bypasses Google, the company loses the opportunity to show the viewer ads, which remains Google's bread and butter business. Google has countered with Google Express, a delivery service designed to at least partially steal away some of Amazon's buying traffic and compete with Amazon's Prime service. Not to be outdone, Amazon is experimenting with drones for delivery services.

Part of Amazon Prime has been its music and video service expanded by the development of the Kindle Fire tablet. Google has Google Play. Google also has the Google Play Store, with its Android operating system apps, but then Amazon has its own app store. In the area of video service, both have developed direct television viewing software, Google's Chromecast and Amazon's Fire TV. These two options have swooped in and taken away significant market share from Apple's Roku television service.

Amazon has even made inroads against Google's well-known market analytics program, Google Analytics, with its own service called Amazon Kinesis. The largest market battleground of the future for these massive Internet sector firms may well be the Internet cloud. Amazon, through its Amazon Web Services, or AWS, penetrated the large-scale cloud computing services well ahead of Google. The marketplace in this area is not so much for individual consumers who can already store tons of personal data online for free but for large corporations with amounts of data massive enough to justify paying for storage and data analysis services.

Cloud computing is where huge revenues lie. Consider that between data storage servers, software and all other Internet technology services combined, worldwide public cloud services market revenue is projected to reach $186.4 billion in 2018 up from $153.5 billion in 2017.

While Google has more data space available on its servers worldwide, Amazon has the most cloud space dedicated to providing cloud IT services. Google has attempted to make inroads by undercutting Amazon on price but, thus far, Amazon's lead in developing, refining and streamlining services has enabled it to match every price cut by Google. But IBM and Microsoft are both strong competitors in the cloud market. In 2017, IBM was beating Amazon in cloud revenue for the preceding 12 months, $15.1 billion to $14.5 billion.

Amazon's practice from the beginning of collecting the most extensive data on its customer's buying habits and desires has served it well so far in achieving the highest level of targeted marketing. And, while some analysts think Google's financial resources and larger global reach give it an edge in the cloud computing market, it looks like Google has been outpaced by Amazon, IBM and Microsoft.