Can I get a show of hands of those who were genuinely surprised to find out that Google (NASDAQ:GOOG) is now an accredited registrar of domain names?
This doesn't mean that Google will be offering anytime soon to set you up in the dot-com homestead of your choice -- at least in what little prime real estate is left. However, it does move Google closer toward becoming a diversified portal.
That may not be a good thing. David Meier and I disagreed this past summer on the direction that Google should ultimately take. I argued in favor of the Internet's most valuable company taking steps toward becoming more than just a search engine traffic cop, but the more I think about this move, the less I like it.
It's true that Google is riding a one-trick pony when it comes to paid search -- but it's such a nimble jockey.
Registering domains is a cutthroat business. It's so bad that at one time Register.com (NASDAQ:RCOM) was essentially trading for the cash on its balance sheet, despite its premium-priced domain registrations. And while discounter Tucows.com (NASDAQ:TCOW) has started to bounce back in recent weeks, it's still a forgotten penny stock.
But the domain business isn't simply about doling out virtual property at meager markups. As Google's rival Yahoo! (NASDAQ:YHOO) knows, the real money to be made is in hosting services and other premium add-ons. More importantly for Google, its AdSense product has been a big winner with content sites of all sizes, so Google will be able to offer an early introductory handshake to new webmasters -- possibly even offering a revenue-based parked page alternative for domain buyers until their sites are ready. Yet here is where things start to get sticky.
Conspiracy theories are already sprouting up all over the Internet. Did Google become a registrar so it can keep closer tabs on deleted domains and wipe clean its indexed pages and established Page Rank metrics? Will those who turn to Google as both a registrar and a host receive preferential search engine placement?
While that last theory sounds ludicrous, if the perception is out there that a conflict of interest exists, it may hurt Google's credibility as a search engine -- and with that goes its market-leading share of contextual advertising riches.
Somewhere along the way, as Yahoo! diversified into email, personals, auctions, job listings and more, it lost its identity as a great search engine, and Google took the baton and ran with it.
That is why Google needs to stay focused -- as tempting as its Gmail email service and Blogger.com blog site may seem as outlets to pump out relevant AdWords text ads. Online you can't be all things to all people. That should register with any Web historian -- whether or not they register a domain or not.
Longtime Fool contributor Rick Munarriz does own more than a few domain names, but he doesn't know if he can picture himself snapping them up from Google just yet. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
