Google Chrome may re-ignite the Web browser war

Google yesterday launched its Web browser called Chrome. Compared to dozens of products that Google now offers in its mission "to organize the world's information and make it universally accessible and useful," Chrome may be one of the company's most significant launches since Google Search, the company's debut product which generated 99% of its total revenue of $16.6Bn last year.

If Internet is the revolutionary land of new opportunity, browser is the "car" everyone needs to explore the "land" and enjoy the journey. The Web browser therefore is the ultimate Trojan horse a company can use to influence users' online experience and introduce new products & services. Chrome will enable Google to tie together its major products into a seamless user-friendly experience (e.g., Search, Gmail, maps, docs, analytics, etc). Some of its products will work more efficiently with Chrome. For example, Google Analytics has relied on server-side information to provide analytics data to clients. Chrome will allow Google to gather and provide much stronger analytics data by grabbing browsing information from the client side.

Additionally, by developing its own browser, Google can speed up releases of its own Web software, which have always hinged on working with Internet Explorer and were therefore dependent on Microsoft's development cycles. Now, Google can release new applications that initially run just with Chrome, providing it an alternative product launch platform, and simultaneously driving Chrome's adoption through popular Google applications.

On aggregate, Chrome should increase adoption of other Google products and significantly boost its revenue potential beyond Search. The ultimate mission for Google is to optimize revenue streams by having all of users' data all the time - search data, publisher ad-serving data (thru DoubleClick) and now browser data.

Why now? While above reasons sound quite compelling, some may wonder why did not Google develop a browser sooner. There are new browsers on the market and in development (Microsoft's Internet Explorer 8) which give consumers the option to surf the Web in anonymity. Anonymous browsing, which allows users to have an online experience without leaving any trace/digital footprints, is probably the single biggest threat to Google's monetization model. Its revenue generation is based on its ability to collect information from its users as they search, and serve them targeted ads and search results.

Microsoft IE 8, expected to launch in Q1 09, has developed "InPrivate Browsing," a feature that allows users to surf in private. There has been a long-expected threat that Microsoft (IE) or Apple (Safari) could mess with the Web cookies that are critical to the functioning of online advertising networks/exchanges, such as DoubleClick (now owned by Google). Competitive threat, including recent U.S. government efforts to make a stink about Google's privacy policies, probably pushed Google to make a proactive effort in launching Chrome and including its own "incognito mode" in the browser.

Chrome in all likelihood will be the default browser on Google's soon-to-be-released Android mobile operating system. The launch timing therefore makes perfect sense.

Google apparently had been working on the browser for two years, and the launch over the long weekend was leaked through its comic explaining the product rationale.

Chrome, an open-source Web browser, faces a tough market with three players currently controlling 98%+ of the browser market. Microsoft's Internet Explorer (IE) has a dominating 72%+ share, which has however decreased from over 90% share during the past three-four years due to the success of Mozilla's open-source Firefox browser.


Source: Net Applications, August 2008

I know a bit about the Web browser space. I led the marketing and distribution of AOL's Web browser (one of my several roles at that "constantly transforming" firm).

Yes, AOL did launch a Web browser in late 2004. The goal was to promote AOL.com when AOL opened its content walled garden for free consumption through an open portal. The secondary goal for AOL Browser was to generate search revenue through AOL Search. Microsoft's IE at the time commanded a powerful 90%+ global market share (post Netscape's demise), but had not introduced a major new version after IE 6 for over three years - a lifetime in the Web world. That's what monopoly does. The AOL Browser was built on the IE 6 rendering engine, given IE's ubiquity, and a royalty free license that AOL won from Microsoft. AOL introduced several industry leading features in its browser - a separate search box, tabbed browsing, back/forward preview button, arguably the fastest speed for browser launch and page rendering, separate pull-out side panel for bookmark management & previews, etc. Initially Microsoft openly encouraged AOL to innovate, and later on copied most of the AOL Browser features when it rolled out IE 7 almost a year and half later - a typical Microsoft response.

Power of default: The best way to distribute a new, free, utility software is to make it the default application on the hardware users buy to use that software. Web browser is a classic example of such a software. The majority of users don't actively pick their Web browser - it's an utility application to surf the Internet, and as long as the default browser on their PC does an OK job, users do not actively download and try a new browser. And the default browser on almost 100% of PCs is Microsoft's IE. Even though the U.S. Justice Department has clearly mandated that Microsoft cannot use its monopoly power in one area, say, the Windows Operating System, to bundle new Microsoft products in a manner that limits competition, PC OEMs, who have 100% freedom to choose the software they bundle with new PCs, hesitate to take on Microsoft head-on unless the stakes are very high. Almost all PC OEMs therefore make the Microsoft IE the default browser, not least because its monopoly power is self sustaining - since IE is the dominant browsing platform, all Web sites and third party applications are designed to work on IE, which is not true even for Firefox, the #2 browser. Even if OEMs bundle a new browser, it is added as the second browser to IE, and IE is the default browser, the definition of which is the browser launched by default if the user, say, clicks on a Web link in a Word document. Some PC OEMs let users choose their default browser (if more than one are bundled) during the set-up process of their new PC when it's taken out of the box.

Since browser is a free product (ever since Microsoft started distributing IE for free in order to kill Netscape, the first Web browser), its distribution economics are governed by Web search generated through the browser. We had built a separate search box in the AOL Browser chrome. Revenue share with OEMs for distribution was therefore based on search revenue through the browser. Having a persistent and separate search box right at your finger tips on the browser chrome was a big convenience for users (no need to open another window and go to, say, google.com), and the default search engine in that box ended up being a big winner (again, the power of default). Even though users could change the default search to the search engine of their choice, most never did. Google therefore made a huge fuss when Microsoft made its MSN Search as the default search engine in IE 7 when it was launched in 2006.

It'll therefore be interesting to see how Microsoft responds to Google making its search as the default search on Chrome, which has also merged the browser address and search box into one. We should not expect any complaints from Microsoft until Chrome gets some traction.

While Chrome may seem a threat to Microsoft given IE's 72% market share, I believe Chrome's adoption, at least initially, will come at Firefox's expense. As discussed above, only tech savvy users will experiment with Chrome in the beginning - the kind of users who switched to Firefox from IE at the first place.


On my first use, Chrome provides a very clean experience and appears fast. While Google may offer better features rolled out with faster frequency, better technology does not necessarily guarantee a win in the browser war (remember, Netscape). The power of default as discussed above and the entrenched distribution of IE present a tough hurdle.

While Google has not discussed Chrome in relation to social networking, where Google has been a laggard in the U.S., making a user's "social graph" (network of contacts) as part of the browser, and allowing 3rd party plug-ins and applications can be an easy product extension. Users potentially can access their social graph from a variety of Web services such as Facebook, MySpace, Flickr, Twitter, etc., all hooked into the browser itself. Chrome can shift the battle for the default Web platform from social networks to Web browsers.

Theoretically, a browser is a better platform compared to social networking sites like Facebook to aggregate various Web services. But it still faces all the basic challenges discussed earlier, that have to be overcome in order for browser to become the default platform on the Internet. However, Chrome's attempt to become users' and developers' common platform on which Web applications & services can be aggregated and built on may be another of those futile efforts from companies that have tried their proprietary products to become the common standard on the Internet. As argued earlier, the Web itself is the ultimate Internet platform, that is open and free for anyone and everyone without any potential conflict of interests. Having said that, Chrome may have a better shot than any other product thus far to become the Web operating system.