avatarNouriel Gino Yazdinian

Summarize

How Does Google Maps Make Money?

All of you have probably used Google Maps. We’re all aware of the amazing tool that is Google Maps, whether we’re using it to get directions to a new restaurant or to spy on someone’s home using street view.

The fact that maps are totally free to use for as long as you like, in line with all of Google’s other offerings, is probably something that most of us take for granted.

In order to seamlessly stitch together petabytes of data, Google Maps needs a lot of physical resources. These resources include hundreds of street view cars and dozens of satellites that continuously monitor and take pictures of the planet, in addition to all the servers and supercomputers needed to complete millions of hours of processing.

Not to mention the numerous hours we dedicated to masking our faces, residences, license plates, and other personally identifiable information. Without a doubt, Google Maps requires a significant amount of energy to maintain functionality and updates. And although Google’s value case for maps wasn’t entirely obvious in the beginning, it has developed into one of the company’s most profitable ventures.

In fact, Morgan Stanley predicts that the revenue from Google Maps will exceed $11 billion in 2023 alone. In comparison, that is comparable to TikTok. Furthermore, Google Maps alone would be valued at about $62 billion if we applied the same metrics to it as we did to the alphabet. That is more than PayPal and Volkswagen and around the same as Mercedes-Benz.

That alone makes it a top 250 company. Still, how does Google make money off of maps? Neither search ads nor video ads are displayed. Furthermore, it doesn’t appear that there is much potential to gather and market our data based only on how we use Google Maps. It appears that Google has devised a number of inventive yet surprisingly moral ways to subtly profit from maps.

Here is the story of Google Maps’ meteoric rise and how much money it actually makes.

Gazing back, we can trace the history of Google Maps to the year 2003, which was 20 years ago. Similar to numerous other Google products, maps were not developed by Google internally. In actuality, they purchased it from four individuals by the names of Stephen Ma, Noah Gordon, Jens Rasmussen, and Lars Rasmussen. In Sydney, Australia, they had established a startup called Where to Technologies together.

The platform’s concept was to establish a next-generation desktop mapping platform. However, as time went on, they found that this was much easier said than done, and they quickly found themselves in need of a great deal more resources, which is how they met Google in late 2004. At first, the founder of Google wasn’t all that convinced about which technologies to use until he proposed turning the desktop program into a web platform that was much easier to use.

With that, Google would consent to providing the four founders with a bid for an amount that was probably not revealed. Significantly less than $50 million. But Google didn’t just buy a map-based business in 2004 called Where Two Technologies. They would buy Zipdash and Keyhole, two other map startups, at the same time.

Keyhole was a desktop program similar to where technologies, although it was more macro-scale-oriented and not as focused as where two technologies. seeing the entire planet and other nations rather than just certain streets and directions. It shouldn’t come as a surprise to learn that this is what would eventually become Google Earth and that Google would purchase the entire business for a mere $35 million.

However, nothing compares to their third acquisition, Zipdash, in terms of value. Given that Google just paid $2 million for the company, Zipdash may be the most economical acquisition in history. You may wonder, what did Zipdash do. They were experts at generating traffic data that was close to real time utilizing location information from cell phones.

For a few years, Google would undervalue and underuse this technology, but that would all drastically alter as smartphones gained popularity. However, dating back to 2004, following the completion of all the acquisitions, Google would spend a few months perfecting the technologies in preparation for the February 18, 2005, launch of Google Maps.

Google maps would reportedly get slash-dotted the night before they launched. If you’re also unfamiliar with the term, it basically indicates that the day before launch, Google Maps got popular on a forum, which resulted in a spectacular launch. However, this traffic was brief.

2005 may seem like a long time ago to many of us, including me, when it comes to the internet, but it turns out that some pretty amazing mapping tools, including Yahoo Maps and MapQuest, were available on the market prior to Google Maps. Even though Google Maps was always a better option than these, it was insufficient to overtake the industry leaders on its own.

Most individuals didn’t need to utilize Google Maps because Yahoo Maps and MapQuest were already sufficient for their purposes. According to the widespread consensus, Google Maps performed merely ok in the first year. It attracted some traffic, although nothing really heavy. Google might have simply stopped here and continued to generate maps as a side project, but they were determined to do far more with them than that, so they would throw everything out and start again.

Google chose to completely redesign Google Maps in reaction to the lackluster reception. It was discovered that although Google Maps outperformed Yahoo Maps and MapQuest by contemporary standards, it was still somewhat slow. Thus, maximizing performance and improving the user experience were their main objectives when they rewrote the code.

And after working on it for about a year, they would have a platform that was almost instantaneous, which would enable them to take far more daring steps, like launching a satellite view. To create Satellite View, Google would combine all of the imagery it acquired when it acquired Keyhole. It’s a fun fact that a satellite view isn’t truly that.

Actually, most of the time, it’s an aerial view captured from a low-flying aircraft. The Maps team actually debated calling it Aerial Mode or Satellite Mode, but after Sergey Brin settled on calling it Bird Mode, the other members of the team decided to band together and call it Satellite Mode instead of defying Sergey.

Though it seems Sergey would never remark on this name change, when Satellite Mode was released in late 2005, it quickly became a popular feature of Google Maps. When all is said and done, most users just like playing around with Satellite Mode. It was really cool to be able to view your home and city from above.

You had the impression of being a top-secret spy or something. Google's May 29, 2007, release of Street View simply elevated this novelty to a whole new level. It’s clear that Street View was a really ambitious endeavor. In essence, Google was committing to become an automobile bankroll, touring every street on the planet.

It did prove to be a very well-liked feature. You could now stroll through the streets of your city as if you were truly there, in addition to being able to watch it from above. However, although Street View and Satellite Mode undoubtedly contributed to Google Maps’ distinctiveness and widespread use, smartphones were the primary factor.

It should come as no surprise that about 90% of Google Maps’ revenue comes from smartphone usage. Billions of people use Android, making it the most widely used operating system globally. And what does an Android device’s pre-installed software include? Maps by Google Thus, whether Google Maps is the greatest or not, the majority of Android users will inevitably use it, much like everyone used to use Yahoo.

MapQuest and Maps now have over 1 billion monthly active users, thanks to all of this. Even though they were able to achieve dominance in the end, the journey wasn’t simple. Even though Google was able to purchase the three firms that form the basis of Google Maps for less than $100 million, it actually cost far more to make Google Maps successful.

One scholar claimed that the cost of the upfront vehicles, cameras, computers, and labor alone was approximately $400 million. Additionally, Google kept updating their image library. In fact, over time, they seem to do it more and more frequently. Therefore, it is undeniable that Google has spent billions of dollars developing and maintaining Google Maps throughout the years.

How did Google justify all of this?

There are two primary categories that comprise Google’s Maps monetization strategy. Considering that Google’s primary business is advertising, I doubt you would be shocked to learn that the first category consists of ads. However, it’s actually done in a very elegant manner. helpful way. You know how companies like Walmart, Home Depot, and Starbucks appear when you pan about on Google Maps?

In fact, anyone may list a business or place on Google Maps for free, as long as they have the necessary permissions and documentation. However, you can pay Google a fee to essentially turn your listing into a premium listing if you want to take it a step further with unique branding and maximum visibility.

Businesses can expand their brand presence in a subtle, non-intrusive way, and users can locate them more readily with their logos. However, that is only part of the story. Actually, APIs—Google's other revenue stream—are significantly more intriguing.

You know how occasionally an avenue’s location is displayed on a small map that appears when you visit the website of a nearby restaurant or bowling alley? Companies must pay for Google’s Map APIs, yet they are able to do this because of them. And that’s more of a minor application.

Just picture what would happen if Google Maps were implemented by FedEx, Uber, Airbnb, Zillow, or DoorDash, among others. All I can say is that’s just the most obvious way to use Google Maps, and it would be quite expensive. The Google Maps API that is probably used the most frequently has nothing to do with maps at all.

You know how the address automatically fills in when you begin typing a shipping or payment address? That’s because of the Google Places API, of course. Almost all businesses worldwide that gather address data utilize Google Places or a direct rival such as Microsoft’s Azure Maps. If not, they’re most likely mired in the nineties.

Google Places is reasonably priced when seen in that light. Each use only costs roughly three cents. However, consider how often you might use this yourself each year—perhaps 10 times. That generates $0.30 in income for Google on its own. With just one API, Google could make $1 billion in revenue annually if 3 billion individuals did this.

Adding hundreds of additional APIs and use cases, I think you can see how all of this can add up to $11 billion. But even leaving the money aside, Google has been able to create an incredibly accurate picture of the entire world via Google Maps.

This entails being aware of every single business and residential property’s precise address and position on the planet. As if that weren’t enough, they also have the precise whereabouts of billions of people at all times on this incredibly detailed map. I don’t know of any more absurdly large quantity of power than that.

For this reason, Google would truly triumph when it comes to Google Maps, even if the service never brought in a single penny for the search engine giant. It’s only a bonus that Google Maps generates an additional $11 billion in income annually.

If you enjoyed this article, consider trying out the AI service I recommend. It provides the same performance and functions to ChatGPT Plus(GPT-4) but more cost-effective, at just $6/month (Special offer for $1/month). Click here to try ZAI.chat.

Google Maps
Google
Monetization
Business
Nouriel Gino Yazdinian
Recommended from ReadMedium