Google is selling Google Domains to Squarespace... and I don't really understand why.
Is it for the money?
Unlikely...
The deal is reportedly worth $180 million.
For most people, $180 million is a lot of money... but Google isn't a person.
It's a company that reported revenue of $279.8 BILLION in 2022, which means $180 million is a rounding error for them. (Literally... do the math.) Google doesn't need the money.
Did SquareSpace offer an incredible premium for the business?
It doesn't seem like it...
Google reportedly has 10.1 million domains. If you try to register a name on Google Domains right now, it'll cost you $12 USD. If EVERY domain registered generated $12 USD, that would mean the business is generating $121 million USD every single year. I'm not a venture capitalist, but a 1.49 multiple to revenue doesn't sound like an offer you can't refuse.
Is it because the company is trying to "sharpen (its) focus", as Matt Madrigal (VP/GM Merchant Shopping at Google) suggested in the press release issued on June 15, 2023?
Maybe... but that's the part I don't understand.
Because Google would not exist without websites.
Its entire business is predicated on people building and using websites so that it can then analyze them and monetize them.
And every website needs a domain name.
(Okay, technically, a website doesn't NEED a domain name... but when was the last time you tried to access a website by typing its public IP address into your browser?)
Google Domains offered people an easy and affordable way to buy domain names, removing a hurdle for someone looking to build a website...
... you know, those things Google needs to earn its next $280 billion.
I've read domain registrar businesses are not particularly profitable. And shedding unprofitable businesses seems like a good idea, especially when a company has other business priorities to fund. (Hello, Bard!)
But milk, bread, and other staples aren't particularly profitable for grocery stores... why do grocery stores carry them?
Because people need these items, and so by making them available, affordable, and easy to purchase, grocery stores bring people into their "ecosystem"... and generate profits from the other items it sells.
I have long admired Google for its willingness to strategically offer products and services to consumers "for free". Of course, they weren't actually free: we paid with our data, which Google proceeded to monetize. But most of us receiving free email, free online storage, free directions, and more were aware of that deal and okay with it... and that's what was so strategic about Google offering these things in the first place. More free tools for us meant higher usage of those tools... which led to more data (and money) for Google. Smart!
Of course, people won't stop buying domain names as a result of this transaction. The world will keep turning, and Squarespace (and other domain registrars) will continue to sell domain names to those who need them.
But Google Domain customers (who were almost certainly already users of other Google products and services) now need to deal with an additional provider... and will almost certainly need to deal with higher prices.
That's a loss for existing Google customers.
It's a loss for people needing affordable domain names; one less competitor in the market reduces the need for competitive pricing.
And I think it's a loss for Google; once this transaction is complete, people will be a little bit less reliant on the internet behemoth.
And after decades spent making people so reliant on everything Google offers, what's the value in giving any of that up?
