As Google Readies 'Buy Button,' Search Giant Runs Risk Of Alienating Top Advertisers

Struggling to maintain its relevance in the world of mobile, Google will reportedly soon add a "buy" button to its mobile search results that could attract more users and advertisers. As it enters the e-commerce realm, however, Google must take care not to overstep its boundaries and compete too closely with some of its biggest advertisers, including Amazon and other online retailers.

Encroaching on e-commerce could tarnish Google’s ties with online retailers, many of which are among the search engine’s top sources of revenue, and it could draw more antitrust scrutiny from regulators around the globe. But as more users head directly into apps and skip Google when shopping on their phones, Google has little choice but to add a feature that will make shopping more seamless for consumers.

“With apps on mobile phones, such as the Amazon app, consumers have a direct relationship with their top sellers, and as a result, people may start their search for product in Amazon, bypassing Google. This bypassing of Google has an impact on what they can charge for ads and ultimately decreases search traffic,” said Gene Alvarez, Gartner’s lead e-commerce analyst.

The so-called Google buy button will be added to the company’s mobile search results in the “coming weeks,” according to the Wall Street Journal. The new feature will appear when users search for products and will accompany only sponsored results from advertisers who opt in. Though Google will facilitate the transactions, all inventory and shipping will be handled by the retailers, which will keep 100 percent of the payment and simply pay the tech company for its advertising services.

Over the past few years, Google has struggled to keep pace in the mobile market as more and more users skip the search engine and head to apps like Amazon and eBay for their shopping needs. Making mobile shopping quicker and simpler on Google could help the company compete with these vertical search services, as they are formally known.

"A lot of search business is shifting over to Amazon as people go to Amazon just to look for products,” said Yory Wurmser of eMarketer. "They’re trying to make their search more attractive.”

The feature could potentially be a huge help for small businesses that don’t do a good job attracting online shoppers on their own, but big players stand to lose much as Google gets more of their data and becomes an even more important part of their business.

"Depending on the execution, it will be viewed cautiously (or perhaps threatening) by large big-box and multi-brand retailers who will be concerned about giving up too much of the shopping experience and customer data to Google,” said Jonathan Opdyke, CEO of HookLogic, which provides commerce search advertising for some of the leading global retailer websites. “Google is walking a fine line between innovating on its model and alienating its largest advertisers.”

If Google does a poor job handling the implementation of this feature, it could face a backlash from online retailers. According to a study by Ad Age and AdGooroo, seven retailers cracked the list of Google's top 25 search advertisers in 2013. That list includes Amazon, Walmart, Best Buy, Target and Macy's, which is said to be in talks to be among Google's partners for the launch of the buy button.

Additionally, Google’s push beyond advertising could draw more attention from antitrust agencies. Already, the European Union has decided to go after Google, alleging that the tech giant has broken competition rules.

Because Google holds so much power, many retailers will have no choice but to opt into the new buy button, said Rob Enderle, president and principal analyst of the Enderle Group. “Google is effectively a monopoly in the space. I would expect far more pressure on the U.S. and E.U. taking antitrust action based on this,” Enderle said.

If the buy button proves to be more harmful than helpful to the companies Google works with, they could decide that it is best to cut ties with the Mountain View, California, tech giant. But ultimately, it will come down to whether this can help online retailers’ bottom lines. "Amazon would need to decide if it can thrive without advertising on Google. I mean, Google is Google, and the position that they're in as such a dominant leader in the market -- who needs who more?" said Dave Ragals, global managing director for IgnitionOne, a digital marketing firm.

"It's all going to come down to the numbers,” Ragals added. “If the first few to try this -- whether it's Macy's or someone else -- are seeing an uptick, are seeing a lift in dollars in the near term, it's hard to imagine retailers staying away from it.”