SWOT Analysis of Alphabet/Google

Alphabet Google swot analysis

About Alphabet/Google Company

Alphabet Inc. is an American multinational conglomerate headquartered in Mountain View, California. It was created on October 2nd, 2015, through the restructuring of Google and became the parent company of Google and many other former subsidiaries of Google such as YouTube, Android, and Nest. The two co-founders Larry Page and Sergey Brin of Google remained as shareholders, board members, and employees at Alphabet. Alphabet is the world’s fourth-largest company by revenue and one of the world’s most valuable companies. As of 2020, Alphabet was ranked 11th on the Fortune 500 rankings and continues to dominate as the world’s leader in digital ad revenue.
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In 2019, the company generated nearly $162 billion in revenue, an increase of more than 18%. The company made $34 billion in profit as well (Fortune, 2020). Alphabet is a collection of businesses — the largest of which is Google, and industries such as the Internet (Google Search, Google Ads, Gmail, YouTube) Calico, Verily (Healthcare), Computer software (Android, Chrome), venture capital (CapitalG, GV), consumer electronics (Chromecast, Google TV, Pixel), The establishment of Alphabet Inc. was inspired by a desire to make the core Google business “cleaner and more accountable” (Homewood, 2015) allowing greater autonomy to group companies that operate in businesses other than Internet services. Now, Alphabet is a massive corporation – ranking in size behind Apple, Samsung, and Microsoft – that covers everything from internet-beaming hot air balloons to self-driving cars to Google Cloud (Hartmans, 2017).

Key Facts about Alphabet Inc./Google

Company: Google (a subsidiary of Alphabet Inc.)
CEO: Sundar Pichai
Year founded: 1998
Headquarter: Mountain View, USA
Number of Employees (FY2019): 118,899
Public or Private: Public
Ticker Symbol: GOOGL(Class A) and GOOG(Class C)
Market Cap (Sept 2020): $1.032 Trillion
Annual Revenue (FY2019): $161.86 Billion
Profit |Net income (FY2019): $34.34 Billion

SWOT Analysis of Alphabet Inc (Google)

A. Strengths of Alphabet/Google Company

1. King of the Online Search: Google is the undisputed king of the online search engine department. Statista reports that in July 2020, Google had a market share of 86.86% in desktop searches worldwide.
2. Unbeatable: Till now, no competitor has come close to challenging its position let alone reaching its market shares in search engines. Next closest competitors of Google are Bing (with 6.43%), Yahoo (with 2.84%) and Baidu (with 0.68%) market share in desktop search engines worldwide.
3. Most Valuable Brand: Google is a highly recognized brand in the world. According to Forbes, “the world’s most valuable brand list,” Google is ranked at # 2 position after Apple.
4. Brand Valuation: In 2019, the brand value of Google is $207 Billion, as per the Forbes brand list.
5. Strong dominance in mobile OS and software world: More than 72% of all smartphones in the world runs on Android which is owned and managed by Alphabet Inc.
6. Search Queries: This powerful brand processes more than 40,000 search queries per second on average, which is equivalent to about 3.5 billion searches per day. It is the biggest traffic generator and has a clear advantage over its competitors such as Bing, Yahoo, Baidu.
7. High Revenue: The huge revenue of $161.86 Billion (2019) that Google has garnered through advertisement has ensured its growth.
8. Adaptability: Google has successfully adapted mobile and Android technologies, giving it potential to compete directly with Apple’s iPhone.
9. Rapid Growth: Google is one of the fastest-growing companies in the world. In 2001, the company had fewer than 300 employees; then it increased 10-fold to 3000 in 2004, it grew 10-fold again to 32,470 in 2011, and more than doubled to 61,814 by 2015. By 2018, Google had more than 98,000 employees and increased by more than 20,000 to over 118,899 by December 2019.
10. Excellent acquisition capabilities: Since 2016, Alphabet has acquired 58 companies. From 2016 to 2020, the company has averaged 1 acquisition per month, which is one of the highest business acquisition rates between its competitors.

B. Weaknesses of Alphabet/Google Company

1. Privacy policies: Google has been slammed by many experts for its excessive reliance on privacy, especially when it comes to hiding information about algorithms. The company has since taken steps to address the allegations.
2. Overdependence on Advertisement: Google’s overdependence on advertising has increased speculations regarding the company’s future. In 2019, the company made 83.9% of its total revenue from advertisement related projects. Advertisement space is highly cyclical, competitive, and relies heavily on macroeconomic conditions.
3. Boycott of Google and Youtube by Major Advertisers: Major brands boycotted against Google and Youtube when they discovered that their ads were running alongside extremist, hate-filled content. It has negatively affected Google’s image. The companies that boycotted against the search engine and video platform included Johnson & Johnson, AT&T, and Verizon in the U.S, L’Oreal, HSBC, RBS, the BBC, the Guardian newspaper, British retailer Marks & Spencer, Lloyd’s of London in U.K, and Audi, Havas, Tesco, Volkswagen, Sainsbury. In addition to these brands, even the British government boycotted.
4. Unfair Business Practices: As the most used search engine, Google exploits this advantage unfairly to prevent the entry of new players in the sector. In the U.S., the company was recently sued for colluding with Apple to make it the default search engine for Apple’s browser.
5. Breach of Privacy: In Europe, Google was fined $56 million by France’s top court for breaching E.U.’s online privacy rules.
6. Failure in Social Media Revolution: Before the emergence of social media giants like Facebook and Twitter, most people relied on Google to access the latest news digitally. Now, people can access the latest news via social media platforms. To protect its interests, Google has attempted to launch several social media platforms unsuccessfully like Google Plus and Shoelace, which failed to gain traction and forced the company to shut it down.
7. Poor Pricing Strategy: On June 30, 2020, Google raised the subscription price of its YouTube TV service from $49.99 to $64.99 per month. According to Google, the $15 increase (30%) reflects the rising cost of content, but critics argue that the increase is absurd. Most streaming services like Netflix, Disney+, and Peacock offer more content than the 80 TV channels offered by YouTube and charge between $5 and $15. Google can lose a majority of the 2 million YouTube subscribers due to the price hike.
8. Self Driving Cars are still not a practical reality: Other companies like Tesla are miles ahead of Google when it comes to self driving cars. This is Google’s more than a decade long project which is still far from practical reality and general public usage.
9. Employees Protest: Consumers dislike companies that advance evils and suppression in society or collaborate with the oppressors. In June 2020, more than 1,600 Google employees petitioned the company to stop offering its G-suite services to police departments in the light of Black Lives Matter protest.
10. Failure of many businesses: Many businesses like Google class, Notebook, Wave, Nest – the smart home products business of the company, are declining with a significant decline in sales. Even Google Cloud computing business is making losses with a very low growth rate when compared to Amazon Web Services.

C. Opportunities for Alphabet/Google Company

1. Wearable Market: In Nov 2019, Google acquired Fitbit for $ 2.1 Billion to compete with Apple and Samsung in the lucrative and growing wearable (smartwatch and fitness band) market.
2. Android OS: The most substantial opportunity for Google is its noticeable efforts in the Android Operating System provision. This has strengthened its prospects to directly compete with Apple iOS.
3. Google Glasses and Google Play: Google is prepared to market its newly introduced Google Glasses and Google Play. It can boost Google’s progress and development.
4. Cloud Services: In fiscal year 2019, about 5.5% ($8.9 Billion) of Google’s annual revenue came from its Google Cloud Platform (GCP) and its services. Google is placing big bets on its cloud services to diversify its revenue stream.
5. Remote Work: Recent events have increased demand for remote work solutions immensely, with Microsoft and Zoom making billions from its video calling services. Google is already making moves to exploit the demand for remote work solutions and recently added video-calling features and other collaboration tools in Gmail to attract companies seeking to empower their employees to work from home or remotely.
6. Expand Services to Emerging Markets: Emerging economies offer growth opportunities. In July 2020, Google expanded its cloud services to offer the world’s first commercial high-speed internet. The service was introduced in Kenya and used balloons to provide affordable 4G internet to under-covered rural communities in the East African nation.
7. Cloud Store: With its storage and cloud solutions, cloud computing can play a vital role in Google’s enterprise.  Google introduced a new digital store, which offers cloud-based software to all organizations. In line with this, the company collaborated with MobileIron, Inc., to integrate its cloud Orbitera commerce platform with MobileIron’s app distribution, security, and analytics capabilities.
8. Non-Advertising Revenue: Google needs to undertake a diversification strategy and aim to build a non-Ad Business Model. In this effort, Google has introduced paid services such as Google Cloud, Youtube TV subscription, Google Play (sales of apps), Hardware (Nest, Pixel phones, Fitbit) etc.
9. Other company acquisitions: Alphabet is one of the highest revenue generating companies in the world with offices all around. It is easier for a company like Alphabet to invest in new emerging startups and innovative ideas than any other company.
10. Global Opportunities: Growing internet penetration and internet usage in developing countries will offer more revenue streams for the company.

D. Threats for Alphabet/Google Company

1. Decline in market shares: According to data gathered from emarketer, Google’s US digital ad revenue is expected to see a decline in market shares. It was 38.8% (2017), 37.2% (2018), 36.2% (2019). This is because of the growing competition from Facebook, Amazon, Instagram and Snapchat for ads market share.
2. Gender Bias: A Google memo published by its employer James Damore highlighting its diversity policy has sparked a strong debate regarding the issue of gender bias and free speech in the company.
3. Alteration of Information: Google has received considerable criticism over its alleged collaboration with China over a censored search engine project (Dragonfly).
4. Antitrust Controversies: Google has been involved in antitrust controversies for years by both US and EU lawmakers. The EU antitrust regulators imposed a 5 billion Euro fine which Google has sought to challenge.
5. Censorship Policy: Google has not managed to protect itself from backlash over its censorship policy. Many whistleblowers have begun leaking formation over its political, ideological leanings.
6. Growing Competitors: The primary threat that Google faces is from its competitors Facebook and Amazon. The two competitors are slowly catching up with Google. Their new features and increasing popularity can take the spotlight away from Google.
7. Ad Blocking Technologies: Alphabet’s large source income is dependent on the ad views and PPC (Pay per click). However, in recent years users have found plugins that remove the ads from the website and videos thus enriching the streaming experience without paying to Google. Alphabet is constantly cracking down on such softwares but use of such technologies is a big threat to Google’s high and dependent business model.
8. Economic Uncertainty due to Pandemic: Recent events have devastated the operations and earnings of many companies, including Google. It is projected that Google’s net U.S. advertising revenue will drop by 5.3%, respectively, for the first time since the 2008 recession. Its net U.S. ad revenue was $41.8 billion in 2019, but it is projected to drop to $39.58 billion in 2020. Economic uncertainty threatens Google’s Revenue and profits.
9. Anti-encryption drive to reduce Child Abuse: In the past few years, cases of online child exploitation images have increased from thousands per year to tens of millions. Multiple governments and child welfare groups are pushing for the elimination of encryption technologies to ensure child exploiters online are revealed promptly. Even though Google has pledged to standardize disclosure of the culprits, governments and child welfare groups still insist that Google and other tech giants should stop using encryption technologies. Without user anonymity online, Google can lose customers.
10. Tension with China: Google had planned to provide cloud service in China but was forced to scrap the plan due to rising geopolitical tensions. If the political tensions spread to other regions across the world, it can affect Google’s global operations.
swot analysis of google


The above SWOT Analysis of Alphabet company shows the strengths, weaknesses, opportunities, and threats of one of biggest internet giants in the world.
SWOT analysis reveals that Alphabet is a highly innovative company as it aims to deliver exceptional value through its products/services. The company offers a number of products free of cost even though Google can be found as relying on advertisements to generate revenue. Overall, the value proposition of the company is very visible and unbeatable by the competition in a number of areas of its business. The company holds a leadership position by a clear margin in the case of some industries such as Mobile Operating System, Search Engine and Web Browser. This analysis reveals that the strengths of the company are disproportionately higher due to this consistent financial and stock market performance. Thanks to the leadership and culture of the company, the conglomerate has become an innovation powerhouse. Nevertheless, it has made a number of failures in the past. The future opportunities seem positive, and Alphabet seems to be poised to capitalize on that.
The popularity of Google allows it to enjoy huge profits. The search engine keeps on growing every year and keeps on improving its technology. If Alphabet addresses its weaknesses and threats, no other competitor can outperform or even match this company.
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