Travel firms reliant on Google will continue to suffer the longer it takes the search engine to figure out what comes next after 20 years of domination.
Venture capitalist and Virgin Galactic backer Chamath Palihapitiya told Phocuswright that Google has been “fabulous” for investors.
As a monopoly player it has pricing power, meaningful networking effects, control over consumers and reliable and predictable revenues, he said.
But he added as the first 20-year window of Google’s story closes the equity and public markets are looking for it to “figure out what its next act is”.
Palihapitiya said this can be seen in how Google is being run. “The first thing they do is separate the core search business, which is effectively Google, from everything else.
“The second thing to buy themselves more time is they turn up the heat on the core search business to make more money. The longer they take to find that second act the more you’re fucked.”
Palihapitiya added this means that every firm that feeds off Google will see their profitability erode while Google’s remains stable.
“If you have not figured out how to be unique, you are in a very bad situation. I see this playing out with TripAdvisor and Expedia.
“At the core is a decision that they [Google] will capture the overwhelming majority of profit in travel search.” Palihapitiya estimated Google makes over $10 billion EBITDA (profit) in travel alone.