Google's Goal

Google wants to have a fully integrated, vertical system for all technology.
But, before we take a look at Google, let's take a simpler example:


Let's say you're a farmer. You grow food, and you compete with other farmers to make a profit. You have to grow your food, and depending on the size of your farm, you probably harvest it and ship it to a food processing plant, who in turn, processes the food, packages it, labels it, and ships it to a grocery store, who then sells it to the consumer. In this chain there are several steps, and at each step someone is taking a cut of the profits. The consumer tends to pay a price that supports every step in the chain. The more steps, the higher the price.

Now, let's say you're very successful as a farmer, but instead of buying more farmland (horizontal expansion) you decide to enter a new market to cut out some of the middle men in the process (vertical expansion). You decide to purchase a shipping company.

Now when you grow your food and harvest it, you also ship it. Because you own both processes, you don't pay as much for the shipping (only overhead), and you're more efficient, since you know exactly when you're going to harvest the food. Perhaps you don't have as much spoilage, because you can ensure the shipping trucks are always ready when the harvest is ready.

So, because you have lowered your overall costs, you are now able to lower the cost of the food you're selling while retaining the same margins and expanding your market share over other farmers.

Since you're doing so well, you decide to enter a third market (more vertical expansion) to cut out even more middle men. Now you buy the food processing plant. In doing so you can streamline the process from field to store, cutting costs, building consistency, lowering prices, growing market share (since fewer and fewer farmers can compete).

Continuing forward, you start your own chain of stores, you develop your own fertilizer, pesticide, seed hybrids.

Before long, no one can compete with you, because you are vertically integrated. 

This is exactly what Google wants to do--only on the internet. They want to own the TV, the smartphone, the app store, the internet cable, the energy company, the cloud storage, the price comparison site, the maps, the news, the computer, the browser, the search engine, the email client, the chat client, the social network, the productivity suite, the videos, the photos, the blogs...eventually the car, home automation, robots, etc. etc. etc. to funnel everyone onto their ad platform, so they can make money. They want to be the provider for all your technology needs.

Sounds good to me, as long as there are other vertically integrated competitors (Apple, Amazon, Microsoft, Facebook, etc.)