There was a time when getting
around was a lot more complicated. It required planning, difficult to fold
maps, arguing with spouses and often needing to stop
and ask for directions. But 15 years ago, that changed. Today, digital map apps like Google,
Apple and Waze can navigate around traffic, remind you where you parked
and even notify you about natural disasters. It's hard to imagine a
time before we had these apps. Head west, then turn left. And Google Maps dominating. It has become essential in the daily
lives of its over one billion monthly users. It's mapped more than 220
countries and territories and is updated tens of thousands of times a day. When Maps first debuted, Google said it
was designed to simplify how to get from point A to point B. After a decade of investing, collecting
data and billions of images, it not only dominates the navigational app market,
but it's one of the most popular smartphone apps of
the last 10 years. There are billions of people around
the world who are using the navigation apps on on a daily basis. And Google Maps, we think, is
the leading player in that space. Google Maps can provide directions if
you're traveling by car, mass transit, walking or biking, you can even
virtually hike to the bottom of the Grand Canyon t hanks
to Street View Tracker. Alphabet does not separately report the
revenue from Maps, but Morgan Stanley estimates that Google Maps revenue
both from desktop, local search and mobile will total more than
11 billion dollars in 2023. And so if we think that over the
next few years, the Google map could grow into two, three or four billion dollars
of revenue and a pure multiple basis, it's not crazy to think that the map
could be worth 10 or 20 or 30 billion dollars of revenue
through that lens alone. Here's a look at how Google Maps
became a huge business and transformed how we get around. When Google Maps first launched in 2005,
it had far from a billion users and looked drastically different from
what it is today. In fact, its first map didn't
include much of the world. When you look at Google,
a core foundational goal from its birth is to
be the information center. Then it makes sense that they want to
own a vast amount of data that they can, including maps, Google Earth. They start by trying to
solve consumer pain points. And maps and navigation is
a consumer pain point. Google Maps started as a result
of acquisitions that Google made. The first one that was the
most key was in 2004. It was called Where2 technologies. It was a converted from a Web
application and it became really critical to how the company would eventually
make its core Google Maps product from. It also acquired Keyhole, another mapping
company that used satellite and aerial images to create 3D maps
whose technology would later become Google Earth. And ZipDash, a company that was
using GPS to provide real time traffic information. Everybody was using
MapQuest, so people are still printing directions out or even just getting
in their car and using a paper map. And so Google Maps was just
a totally different way to see how to get somewhere with pretty much A
to B line with turn by turn directions. Its early competitors on
the Web were Yahoo! Maps and MapQuest, which was owned by
AOL then and was the category leader at the time. In 2007, Street View
was born and the company embarked on a journey to map the entire world. Initially, cars mounted with cameras drove
around the streets of five U.S. cities. Over the next few years, and
with the help of trekkers, the Street View team collected more than 170
billion images from 87 countries. Users can now see a 360
degree view at street level. And with the help of computer
vision, the cameras identified street signs, speed limits and many other pieces of
information that you could not get from satellite imagery. This gave the company endless amounts of
data that it now owned and helped it create very detailed
and more accurate maps. I think Google Maps Street View sort of
showed people this way to sort of explore the world. You could drop in and
see exactly where you're going. That same year, Google Maps made its
mobile debut on BlackBerry and Palm devices, allowing users to utilize maps
anywhere they had their phone, especially in cars. Google was now competing with GPS
navigational systems like TomTom and Garmin. I want to show you
something truly remarkable, which is Google Maps on iPhone. In 2007, Apple launched the iPhone. So suddenly Google Maps was
on everybody's phones everywhere. And that was a big difference from
the maps you had on other phones because it was a multi touch for pinch
to zoom in and stuff like that. And it really just made
Google Maps spread rapidly. Google Maps came preloaded on the iPhone
in 2007 until Apple released its own map application in 2012 in ios6. We have built an entire new
mapping solution from the ground up. The relationship between the two
companies reportedly chilled after Google added features similar to
the iPhone into Android. There was also an issue of data. Apple executives were bothered by the fact
that Google could see the data of iPhone users. However, the debut of Apple Maps
did not go as many expected. It to me and a lot of other
people feels like a half baked product. The data isn't great and it's
not the the quality and the experience you would expect
from an Apple product. The Internet kind of went nuts,
like what is going on. All these places in the maps look
like they were melting into the world like a Salvador Dali
kind of painting. It was a mess. How big a fiasco is Apple
Maps I was just talking about? It's bad enough for CEO Tim Cook to
make an apology in a letter posted on Apple's website today. Cook said, quote, We strive to make
world class products and deliver the best experience possible to our customers with
the launch of our new maps. We fell short on this commitment. It's very rare for Apple CEO Tim
Cook to issue an apology for something like that. Cook advised users to use
alternatives like Waze and even the Google Web site. Google had an Android app
but now needed to create an iOS version for iPhone users. It debuted in the App
Store three months later. As smartphones became more popular and
users turned to mapping applications to get around, mobile ads started to
gain momentum in 2012, mobile ads associated with maps or locations were estimated
to be 25 percent of the roughly 2.5 billion spent
on mobile ads. And Google Maps was
already taking off. By 2012, Google Street View had
mapped 39 countries, three thousand cities and five million unique miles by combining
its own data, license and user generated data. It was now available
in 187 countries and had 26 million miles of driving directions. That project, while grand in scope and
has taken a lot of our time. Let us to think of something even bigger,
which was to build our own maps. And so we started embarking on creating
our own map data, using government data, any data that we could license in
and bring in to make part of our own maps. But basing
it on Street View. And while Apple struggled with its
own map application, Google set its sights on its next competitor, Waze. So one of the main differences between
Apple and Google or Waze is that Apple does not own its own data. It has partnered with different partners
around the world to actually build its map. And so its rate of
change is dependent on its partners and their ability to update their maps. Waze owns our own map. We don't use a map from a third
party, so we allow users to update the data themselves. Waze was like a
social network of driving and mapping. So if you hit a traffic jam
and had a bunch of Waze users, that information was real time data. But also everybody was able to report
things like car accidents or a police officer with a speed trap. And it had this gamification thing where
you would get points for sharing information and accurate information
or correcting information. And so lots of people, especially commuters,
turn to Waze and that kind of became a competitor, Google Maps
and then eventually takeover target. So we believe if you look five years out
there, going to be two maps of the world. There's going to be Google and
there's going to be ways there will be other maps. But in terms of the
ability to update and the speed of these maps reflect, the real world we think
is going to be the two of us. Apple and Facebook were rumored to be
interested in the company, but Google ended up buying it for more
than one billion dollars in 2013. And then what Google did is it left
ways to operate the way it does still, but it took some of that data
and brought it into Google Maps. So now you can see some of
the traffic data, more accurate things, whether there's a road closure
and that from Waze. The information is actually pulled into
Google Maps for people who aren't even using Waze. Waze has been
important to Google because it's gotten them access to a different set of
consumers who perhaps were not using the Google map as frequently. It's giving them a canvas to experiment
with new types of ad units that maybe show up on Waze before they
show up on the Google map. Google doesn't disclose how much
it invests in maps. We do know that data provided by
Google Maps users is incredibly valuable to a company whose main
source of revenue is advertising. Google Maps has been ad free for
years, but in 2019, Alphabet executives said that wouldn't be
the case any longer. Google map is still the most
under monetized asset that I cover. This is a utility where Google has
not yet turned on the monetization switch. You think about the idea
of better integrating paid search offerings into the Google map. You think about the idea of
promoted pins within the map. Companies like Starbucks or companies like
Dunkin Donuts would be very interested to show a promoted pin for
where their local stores are in that city. To people like myself who are
interested in coffee, we don't think it's unrealistic to think that this could
be a one, two, three, four or five billion dollar annual
revenue opportunity for Alphabet. But as the product has gotten more
advanced and the money coming in has grown, so has the scrutiny. The Internet giant has come under
fire over privacy concerns after users could see their house, license plate and
face captured on Google Maps by Street View cameras driving by. The company eventually began
blurring out faces. In 2013, it agreed to pay seven
million dollars to settle a lawsuit after it collected data from users
like email, passwords and financial information from unencrypted Wi-Fi networks as
Street View, cars drove by. Google admitted the mistake and said
a rogue engineer was to blame. MapQuest and Microsoft's Bing Maps rolled
out similar features to Street View and were confronted
with similar privacy concerns. Working my way through the 64 page
lawsuit that the Justice Department has filed against Google and in which
the department alleges that Google's anti-competitive behavior has been
going on for years. It's still going on. And in fact, it might be getting
worse, such as Google's core business and maps as a part of search. And there have been, you know, some
subtle mentions here and there of maps specifically, and the company
holding dominance with it. There were competitors early on, but
now Google owns the most advanced mapping systems. Over the past few years, Google has
added features like Incognito Mode to prevent searches from being saved, an
auto delete controls for location, history and web and app activity to
give users more control over their data. Any of the
regulatory investigations around Alphabet essentially does bring to the forefront
the importance that they are protecting people's data, only using people's
data in an appropriate way, and that consumers are very aware
of how their data is being used. And so when we think about that
from a map perspective, it puts an even higher importance on Google's efforts
to ensure that people opt in. And ultimately it does come down
to responsible management from a data perspective and just continuing to
improve awareness of the data that Google is capturing through
their map and how they're incorporating that into their
overall advertising products. Google also faces growing competition
from a competitive standpoint there. There's still other map players. There still is Apple Map and now you
have Snap Map, which is being built for Snapchat and its users. And so I think from a consumer perspective,
you are going to have more and more of these products that you can
open to try to connect with small, medium sized businesses and try to
navigate your way to them. And just the question is going to be,
one, how does the accuracy of the data stack up compared
to Google Maps? How are the directions from
a time perspective stacking up? And ultimately, how does the
user experience evolve over time? Last year, Apple invested billions
of dollars on its map. The company announced Look Around a
feature to compete with Google Street View. It also is trying
to compete on privacy. In a statement earlier this year, it said
it set out to create the best and most private maps app on the
planet and rebuilt the map from the ground up. An analysis of mapping
apps from 2018 shows the dominance Google Maps and Alphabets' owned Waze
have over Apple and other competitors. Google Maps has become much more than just
a tool that gets you from point A to point B. It has used cars,
people and even camels to collect more than 170 billion images from 87 countries
to keep its map up to date as the world constantly evolves. I think the biggest change we're going to
see in Google Maps in the coming years is the addition
of augmented reality. And if people move away from smartphones
to smart glasses, it needs to be this see through augmented reality, sort of
here's how you get to that place. And that's what I think the
future of Google Maps will be today. Over five million sites and
apps use Google Maps. It's also a supplier of mapping technology
to companies like Uber and Lyft. Having so much data of
existing roads, streets, traffic flow. It helps fuel Google's A.I.,
which is helping the company's self-driving car company WAMMO. I look at it as the company
trying to dominate the self-driving car industry and that mapping
is part of that. Among the many things you can now
use Google Maps for includes booking reservations and
exploring neighborhoods. At a high level l ocalized
navigation data is going to become more and more valuable to all
online advertising, all online companies. During the pandemic, it's added over
200 new features, which include a Covid layer that shows you how many cases
are in your area and trend times for shops and mass transit
to help people avoid crowds. When you have hundreds and thousands
of people driving around, walking around continuously updating the map and
ensuring that everything in there that people see is accurate as
possible is a real competitive moat. And there's no real sign of a let
up from an investment perspective out of Google to ensure that the map stays
cutting edge and ahead of the competitors.
