Eric Schmidt, Google's former CEO and current executive chairman, recently made some provocative statements to a crowd in Berlin that have received some buzz on the Internet. Schmidt was discussing who Google's biggest rival is and it isn't a search engine; he revealed that Google’s biggest rival is Amazon. Chad and Adam wanted to cover this news and provide you with some stats. In this Daily Brown Bag, you’ll learn more about Google’s biggest competitor - Amazon, why Amazon is such a threat to Google, and other insights about Google and Amazon.

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Hello and welcome to The Daily Brown Bag. Today we are going to be talking about Google's biggest competitor. I am Chad Hill and I am joined by Adam Stetzer.

Good afternoon. Welcome to the Brown Bag. This is an interesting topic, Chad. We are covering some news today, specifically Eric Schmidt, which is Google's former CEO and current executive chairman. He made some provocative statements to a crowd in Berlin that's got a little bit of buzz on the Internet. He was talking about Google's biggest competition... who Google's biggest rival is and it isn't a search engine. There is a little bit of news here, at least to get into. Eric Schmidt said to this crowd in Berlin that their biggest rival is Amazon and that's pretty surprising news. First because we think of Google focused mostly on search. Google... a couple of stats here Chad to set up the discussion is the most visited place on the Internet... that's obviously a verb, which most of all know at this point and it's synonymous with search. According to comScore, there were 233 million unique visitors to Google in August alone. It's an interesting reference point but it's even more interesting when you realize total unique visitors on the entire web in August was 248 million. That puts into perspective that almost every unique user and a good percentage of them are visiting Google. Amazon was behind many of the people you probably would have said are Google's biggest competition. Yahoo, Facebook, AOL, and Microsoft, coming in at number six in terms of most unique visitors in August at 172 million. I guess that queues up the question for you, Chad. Why is it that Amazon is such a threat to Google?

Yeah, it is a little counterintuitive at first because we usually would think that it's Bing or Yahoo who'd be Google's biggest rival but the reality is that Google probably sees themselves well ahead of those guys. I think the reason that Amazon is the person that Eric Schmidt mentioned was because they are competing against each other in a lot of different spaces. First of all, Amazon has it's own OS that it's using on it's tablets or at least a highly customized version of some of the Google platforms so again they are very active in the device space. They have recently rolled out phones to compete with Amazon and what Google has now with Android and Apple has with iOS out, they are basically competing in the drone space. Google has Project Wing. Amazon has Prime Air. Google is rolling out something to compete against Amazon Prime. They recently competed to buy the streaming service Twitch and Amazon ended up buying it but Google was right there in the same discussions, so I think they are competing against each other in a lot of fronts but I think the real kicker here is that back in August, Amazon actually announced that they were going to be developing their own advertising platform. Now they said at first this advertising platform will be something that they will use to replace some of the Google ads on the Amazon service that currently we are seeing with their own Amazon hosted ads but you can only imagine that that's a very fertile testing ground for something they can expand beyond that and we all know that the value that Amazon could potentially... that holds in terms of unlocking people buying stuff could be very enticing for a lot of websites out there who're looking to better monetize their websites. Maybe Amazon can come up with a whole new way of paying for ad space. Could be something very interesting. I think that's it Adam. It's definitely a competition. I guess the final kicker here is that Amazon actually is Google's biggest single customer for AdWords. They spent 157 million dollars a year on advertising through Google. Pretty interesting stats here.

Yeah, yeah. I think that last one is a kicker when your single biggest customer, spending that much money with you, you have to wonder if they are considering alternatives. I think it's also worth pointing out, Chad that Amazon has had a long history of very robust affiliate program so that may give them a lot of the context they need to do some of their own display advertising, build their own content network because those would be some of the very same website owners who would be in AdSense so I am not sure exactly what their direction is but it makes sense. I think the last point is as we think of Google as the search engine but as you went down that list, they are trying at least futuristic things and of course Amazon is right there with them, trying out all these new products and ideas. Some of them out there in left field but we don't hear about Yahoo and Microsoft being... these other guys really having any play in that space so it is interesting when you start to look at it 10 years down the road. Well that's our coverage of the news about what Eric Schmidt said about Google and Amazon. We will be interested in your thoughts. If you think this is really where the market is going, drop us a comment on our blog or better yet subscribe. We will see you right back here for another Brown Bag.