If You Think That Google Maps Is Free, Think Again

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GOOGLE MAPS: I’m sure you’ve all used Google Maps.   Whether it’s to get directions to a new restaurant  or stalk someone’s house through street view,   we’re all familiar with the tremendous resource  that is Google Maps. Ssomething that most of us   likely take for granted is that just like all  of Google’s other products, Maps is completely   free to use for as long as you want. This sort of  freemium model isn’t too surprising with search or   email where everything you need is virtual, but  maps is a pretty grueling business that requires   a lot of physical resources. From the dozens of  satellites and hundreds of street view cars that   constantly monitor and take pictures of the  Earth to all the servers and supercomputers   required to complete millions hours of processing  to seamlessly stitch together petabytes of data.   And let’s not forget about all the hours spent  on blurring out license plates, faces, houses,   and other personally identifiable information.  Clearly, there’s no question that Google Maps   takes a lot of resources to keep functional and  up to date. And while its value proposition to   Google wasn’t too clear in the early days, Maps  has grown to be one of Google’s most lucrative   businesses. In fact, Morgan Stanley estimates  that Google Maps will pull in over $11 billion   in revenue in 2023 alone. For perspective,  that’s about the same as TikTok. And if we   valued Google Maps the same way as Alphabet,  Google Maps itself would be worth roughly   $62 billion. That’s about the same as Mercedes  Benz and more than Volkswagen and PayPal. Heck,   that’s enough to be a top 250 company by itself.  But how does Google even monetize Maps? They don’t   show video ads or search ads, and there doesn’t  seem to be much opportunity to collect and sell   our data based on just our Google Maps usage.  Well, it turns out that Google has come up with   some pretty creative ways to indirectly monetize  Maps while staying surprisingly ethical. So,   here’s the insane rise of Google Maps  and how Google Maps makes so much money. AN UNDERWHELMING START: Taking a look back, the story of Google   Maps takes as back 20 years to 2003. Like many  of Google’s products, Maps wasn’t something that   Google created in house, it was actually something  that they bought from 4 men named Lars Rasmussen,   Jens Rasmussen, Noel Gordon, and Stephen Ma.  Together, they had founded a startup called   Where 2 Technologies in Sydney Australia. The  idea for the platform was pretty simple: create   a desktop map program. But it turns out that this  was a lot easier said than down and pretty soon,   they needed a lot more resources leading them  to meet up with Google in late 2004. Initially,   Google wasn’t actually convinced about Where 2  Technologies until the founders suggested the   idea of converting the desktop application into  a web platform that could be accessed much more   easily. With that, Google would agree to take a  flier on the company for an undisclosed amount   which was likely well below $50 million. Where  2 Technologies wasn’t the only map based company   that Google purchased in 2004 though. Around  the same time, they would purchase two other   map companies called Keyhole and ZipDash.  Like Where 2 Technologies, Keyhole was a   desktop application unlike Where 2 Technologies,  Keyhole was more focused on the macro scale. Aka,   viewing the earth and various countries as opposed  to specific streets and directions. I don’t think   you’d be surprised to hear that this is what would  turn into Google Earth, and Google got this entire   company for just $35 million. But, in terms of  value, nothing comes close to ZipDash. In fact,   ZipDash might be Google’s most bang for  the buck acqusition of all time as they   were able to purchase the company for just $2  million. What did ZipDash do you ask? Well,   they specialized in using location data from  mobile phones to create approximate real time   traffic data. This tech would be underappreciated  and under used by Google for several years,   but once smartphones started taking off, all  of that would completely change. But anyway,   going back to 2004, after all the acquisitions  were done, Google would spend a few months   refining the technologies before finally launching  Google Maps on February 18, 2005. Apparently,   Google Maps would get Slashdotted the night before  its launch. If you also don’t what that means,   it basically means that Google Maps went viral  on a forum the day before launch which led to   an explosive launch right out the gate but this  traffic didn’t last. You see, for a lot of us,   myself included, 2005 probably sounds like  the stone ages when it comes to the internet,   but it turns out that there were already  some pretty great mapping solutions on the   market before Google Maps specifically Yahoo  Maps and MapQuest. And while Google Maps was   superior to these offerings from day one, that  by itself was by no means enough displace the   market leaders. For most people, Yahoo Maps and  MapQuest already accomplished what they needed,   and they had no reason to use Google Maps instead.  So, the general consensus for year 1 was that   Google Maps did just okay. It pulled in a decent  amount of traffic but nothing too crazy. Google   could’ve easily just called it here and kept Maps  a small side business, but they were determined   to make Maps much more than just that. And as  such, they would scrap everything and start over. A COMPLETE DO OVER: Given the underwhelming response,   Google would decide to do a complete rewrite of  Google Maps. In turns out that while Google Maps   was better than MapQuest and Yahoo Maps, for  modern standards, it was still rather slow,   so their number one goal with the rewrite was to  maximize speed and optimize the user experience.   After about an year, they would get the platform  to be nearly instantaneous, allowing them to make   much more ambitious moves starting with Satellite  view. Google would stitch together all of the   imagery that they got from the Keyhole acquisition  to create satellite view. Fun fact, satellite view   isn’t actually satellite view in most cases. It’s  actually arial view taken from low flying planes.   The Google team was actually debating on whether  to call it arial mode or satellite mode. But when   Sergey Brin made the decision to call it Bird  Mode, the rest of the team would decide to unite   and defy Sergey by just calling it Satellite Mode.  Apparently, Sergey would never comment on this   name change. But anyway, Satellite Mode would  come out in late 2005 and this was immediately   a selling feature for Google Maps. Putting the  actual utility Satellite Mode aside, most users   just liked messing around with it. Being able  to see your house and city from a birds eye   perspective was super neat. You kind of felt like  you were top secret spy or something. Google would   simply take this novelty to the next level in May  29, 2007 with the debut of Street View. Street   View was obviously an extremely ambitious project.  Google was basically signing up to bankroll cars   driving around every single street in the entire  world. It turned out to be really popular feature   though. Now, not only could you see your city from  an arial perspective, but you could literally walk   through it as if you were actually there. But  while satellite mode and street view definitely   made Google Maps unique and drove popularity, the  number one trend that made Google Maps ubiquitous   was of course smartphones. In fact, smartphone  based revenue accounts for nearly 90% of Google   Map’s revenue which is not that surprising.  Android is the most popular operating system   in the world used by billions of people. And you  know what comes preinstalled on Android devices?   It’s of course Google Maps. So, most Android users  are naturally just gonna use Google Maps whether   it’s the best or not just like how everyone used  to use Yahoo Maps and Mapquest. All of this has   allowed Google Maps to reach over 1 billion  monthly active users. But, while they were   eventually able to get to a dominant position,  it was by no means an easy road. While Google   was able to acquire the core 3 companies that  make up Google Maps for less than a $100 million,   actually making Google Maps successful cost a lot  more money. According to one professor, just the   upfront cars, cameras, computers, and manpower  alone cost over $400 million. And Google never   stopped updating their imagery. If anything, they  actually do it more and more often with time. So,   there’s no question that creating and maintaining  Google Maps has cost Google billions of dollars   over the years which brings us to the question of  the day: how did they make all of this worthwhile? MONETIZATION: Google’s monetization strategy when it   comes to Maps breaksdown into 2 main categories.  Given that Google is an advertising company at the   end of the day, I don’t think you’d be surprised  to hear that the first category is ads, but it’s   actually done in a really tasteful helpful  way. You know when you pan around Google Maps,   you see businesses like Walmart and Home Depot and  Starbucks? Well, listing a business or location   on Google Maps is actually completely free and  basically anyone can do it provided you have the   right documents and rights. If you wanna take this  to the next level though with custom branding and   high visibility, you can pay Google a fee and  basically make your listing a premium listing.   To be honest, this seems like a win win scenario.  Users are able to find businesses more easily with   their logos and companies are able to increase  their brand presence in a discrete non intrusive   way. But that’s only half the story. Google’s  other mode of monetization is honestly far more   interesting which is through APIs. You know how  when you go to the website of a restaurant or a   local bowling alley, you’ll sometimes see a small  map showing you the location of the avenue? Well,   companies are able to do this thanks to Google  APIs for which they have to pay. And that’s   more of a small use case. Imagine what happens  when someone like Fedex, Uber, AirBnB, Zillow,   or DoorDash implements Google Maps. All I can  say is that that would cost quite a bit of money,   and that’s just the most obvious implementation  of Google Maps API. Likely the most commonly   used Google Maps API actually has nothing  to do with Maps directly. You know how when   you start entering in a billing address or a  shipping address, the address autofills? Well,   that’s thanks to Google Places API. Basically  every company in the entire world who collects   address information uses Google Places or a direct  competitor like Microsoft’s Azure Maps. If they   don’t, they’re probably stuck in the 1990s. On  a per use basis, Google Places is relatively   cheap. It’s only about 3 cents per use but think  about how many times you yourself might use this   every year. Maybe 10 times? That itself is 30  cents worth of revenue for Google. If 3 billion   people were to do this every year, that itself  is $1 billion worth of revenue for Google from   just one API. I think you can start to see how  all of this can add up to $11 billion when you   throw in hundreds of different APIs and uses  cases. But even putting the financials aside,   thanks to Google Maps, Google has been able to  map out the entire globe in pinpoint detail. This   means knowing the exact address and location of  any and every commerical and residential property   in the entire world. And if that wasn’t enough,  they know the exact location of billions of people   on this highly detailed map at any given point  in time. If that isn’t an insane amount of power,   I don’t know what is. And that’s why even if  Google Maps never even made a single dime,   Google would be the real winner when it comes to  Google Maps. That fact that Google Maps pulls in   $11 billion in revenue on top of that is simply  a bonus. With historically high interest rates,   the appeal bills and bonds is the higher than  ever, yet traditional brokerages haven’t really   adapted with the times. They still expect people  to use clunky bond tables, scroll through long   overwhleming lists, and even use virtual keyboards  till recently. And that’s why we created our own   modern bond platform: Silo. At Silo, we prioritize  the user experience and the ease of finding and   investing in the issuers you know and trust,  so that you too can lock in high yields. Also,   choosing a strong user experience doesn’t  mean sacrificing on safety. Every Silo account   is insured by $500,000 in SIPC insurance  and $2.5 million in FDIC insurance. Also,   all funds deposited on the platform will  be maintained by our trusted custodian,   Interactive Brokers, who has experience managing  $373 billion worth of assets over the past 45   years. So, if you’re looking for a modern way  to invest in bonds, please consider checking   out Silo in the description below. Another  business that’s extremely powerful despite   its profitability is WhatsApp.  Check out this video to learn more.
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Channel: Logically Answered
Views: 783,358
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Keywords: google maps, how does google maps make money, does google maps make money, the truth about google maps, history of google maps, google maps history, story of google maps, how did google build maps, how did google build google maps, the rise of google maps, how google maps works, how google maps street view works, how google maps satellite view works, google maps street view, google maps satellite view, google maps api, google places api, google maps revenue explained, maps
Id: Ekuc7MBhkdc
Channel Id: undefined
Length: 13min 7sec (787 seconds)
Published: Mon Nov 27 2023
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