Google Maps and Network Effects
Modern day GPS technology is no longer simply a computer generated route based on the inputted start and end points. Instead, it’s an ever evolving database of information collected from the millions of users these apps guide each day. Google’s near-monopoly of the mobile GPS market stems from its forward thinking coders, who implemented ways on Google Maps to incorporate the knowledge of its one-billion users into its interface. For example, Google has implemented many user-report features, including: report an issue, as well as MapMaker, which allows users to add details to Google’s maps. Both of these tools benefit from larger user networks, and experience direct network effects. Additionally, Google has rolled out a new tool for its arsenal: customizable location lists. This creates a new layer of user interaction, where sharing lists and creating inner-app user connections bolsters customer loyalty and network effects while reducing the prevalence of multihoming (refer to image below). Lastly, there is a subconscious addition to the network effects. Each time anyone uses Google Maps, their route usage is added to the traffic patterns Google maps uses to recommend the next route to the next customer. Therefore, every time you take a route given by Google, you are inadvertently aiding the next user in learning more about the traffic patterns and where there is congestion. All of these examples are pointing towards the fact that network effects when properly utilized can allow a company to achieve a near monopoly over any given market.
In class we’ve discussed the benefits of network effects, where a person’s actions can incur explicit benefits for themselves when they align their actions in tandem with others. Looking at the benefits of Google maps, there is a great example of a positive externality. The welfare of many google map users is benefited by the actions and usage of others on the app. The more collective information inputted by the billion Google Maps users, the better off each individual user will be. The aforementioned customizable lists also contribute to the positive externalities of Google Maps. If a user shares his/her list, it incentivizes others to begin to use Google Maps (if they don’t already), which means with every additional user the welfare of each user gets boosted. Google Maps also engaged its local businesses and companies. Google Maps allowed these businesses to create curated pages for their brands, alongside cherry-picking what they’d like to present to the public. These options for businesses added to the loyalty of Google Maps’ users. It created such a beneficial system for its users that not being a part of Google Maps’ network has become a detriment to the every-day person. Google Maps would not have survived its competition without taking advantage of all that network effects can accomplish. Google acquired Waze, it’s direct competitor in user-input based GPA, and now trumps Apple Maps in user-friendliness and accessibility.
(medium.com)
Articles used:
https://medium.com/harvard-business-school-digital-initiative/google-maps-doubles-down-on-network-effects-to-stave-off-formidable-competition-1e68a7c0321d
https://www.theatlantic.com/technology/archive/2012/09/how-google-builds-its-maps-and-what-it-means-for-the-future-of-everything/261913/
https://tech.hindustantimes.com/tech/news/google-maps-now-allows-to-create-share-lists-of-favourite-places-with-friends-family-story-GeuDfRxjWAzFolevTKKE3L.html