Business Insight Zone

Google is a business, sure. It’s a corporation with a Delaware registry, a Silicon Valley headquarters, and a place in the upper half of the Fortune 500. But more than that, it’s an ecosystem. Like Rockefeller’s Standard Oil or the old East India Company, Google is the oxygen and the water for many other companies in the Internet world. Want Web traffic? Better optimize to suit Google’s crawlers. Want to advertise online? Play along with Google.

It has become an ecosystem by becoming, more or less, the only game in town for Internet search. Sure, you can look things up on Yahoo! or Ask, or more esoteric tools like Addict-o-matic, but who does? Eighty percent of all online searches use Google. When Microsoft complains about Google, as it is wont to do, it makes me wonder whether the Irresistable Force of Redmond is simply frustrated to encounter the Immovable Object of search: an outfit that dominates that niche as thoroughly as Microsoft dominates the desktop.

Google’s domination is hardly about bragging rights alone. It has led to top-line revenues ($16.6 billion last year!) that make it one of the biggest players in the high-tech world, and bottom-line results ($4.2 billion!) that have made it the toast of Wall Street — not least last night, when Google’s glowing profit report set off a rally even amid the Street’s many fears.

The scary part is, Google seems to be getting even smarter about how it runs its business. Its latest earnings came as a pleasant surprise to investors not just because the company was able to maintain advertising sales in a down economy, but because of how well Google contained operating expenses, something it’s never needed to do before. So even though Google’s share price has fallen 45% this year — even more than the major indexes — it looks healthy and growing at a time when so many companies have come down with the economic flu.

Beyond that, the company continues to grow into new areas, including the cell-phone business. And its internal ecosystem — so famous for generating a constant flow of innovations — has spread beyond the company to create a “Google diaspora” of technologists working in startups and other companies. In the long run, Google may end up being the GE or Procter & Gamble of the Internet industry: not just a huge, profitable company in its own right, but a breeding ground for talent and leadership in the business world at large.

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Related links:

• Microsoft decides to play hardball with Yahoo.
• Does Google owe me anything?
• Dell, Google, and the myth of invulnerability.
• Possibly Google is not as toasted as Mr. Scoble thinks.
• Is the game simply over in online search?
• Company of the Day archive.

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