Does Google choose acquisition over innovation?

by Sharon Lobo    Apr 08, 2013

Google Acquisition

If reports are to be believed, the latest rumors going around in the tech world is the possible acquisition of WhatsApp by Google. Since inception, WhatsApp has been a popular ad-free multi-platform messaging service, which currently sees over a billion messages being sent each day. With such an immense popularity, it is not surprising that WhatsApp has become a lucrative acquisition target, which is why Google is apparently offering $1 billion for it.

The beauty of WhatsApp is that it follows a no advertising model and a blogpost has stated a good reason for it. Users are allowed to use the service free for the first after which they are charged a measly $1 per year. However, if Google manages to acquire WhatsApp, it is possible that this brilliant revenue model will give way to advertisements. However, what is interesting here is that on one hand Google shuts a host of existing products, (Google Reader being one of the latest victims), while on the other it looks at acquiring innovative products, whose ideas it did not leverage in the first place.

Today, some of Google’s popular products are those which it acquired over the years, including YouTube, Android, Picasa, Blogger etc. Additionally, it has used some of its other acquisitions to beef up its products such as Gmail, Google+ etc, which it developed in-house. In recent times, all new launches from Google has managed to attract a lukewarm response.

With such a trend, it is no surprise that today Google believes in acquisition than innovation. Last year James Whittaker, a former engineering director at Google, who is currently with Microsoft wrote in a blog post on how Google has increasingly lost focus on innovation and instead focused on advertising.

The Google I left was an advertising company with a single corporate-mandated focus. Technically I suppose Google has always been an advertising company, but for the better part of the last three years, it didn’t feel like one. Google was an ad company only in the sense that a good TV show is an ad company: having great content attracts advertisers.
-James Whittaker, former engineering director at Google

James mentions how Google was run like an innovation factory, where employees were empowered to be entrepreneurial through loads of incentives, thanks to the ad revenues, which the employees never gave a thought to.

So while a major chunk of Google’s earning continues to come from advertising this trend doesn’t seem like changing anytime soon. Meanwhile, acquisition or not, we hope WhatsApp continues to be as innovative it has always been.