Over at the WSJ, Kevin Delaney looks at how Google is quickly dominating new markets by offering products for free. By subsidising with AdWords, Google is able to wipe-out competition by offering products, such as wi-fi in San Francisco, for free.
Google’s announcements in recent weeks indicate that the company’s online advertising network could have a far-reaching impact on companies whose businesses are outside Google’s traditional turf. In effect, the tremendous revenue stream Google enjoys from ads subsidizes its entry into new lines of business, which in turn can generate more ad revenue. Some industry executives point to voice calling, cellphone service, console videogames, premium TV programming packages and digital music as areas where Google or its partners could supplant fee-based services with free, ad-supported ones.