Dueling Fools: Google Bear Rebuttal

I agree wholeheartedly with my Foolish dueling partner John Bluis that Google (NASDAQ:GOOG) is on top of the world. When it comes to monetizing Internet search and context-based advertising, nobody does it better right now. And yes, I did admit that the market for the Internet advertising could likely be in the $65 billion range in just four short years.

The problem, however, is that the Internet is wide open and cheap to access. In fact, one of Google's original claims to fame was how cheap its infrastructure was. Its network of small search servers were collectively more powerful than the giant, expensive individual machines others used. But where there's profit, there will soon be competition. Thanks to the relatively low barriers to entry on the Internet, as Google's profits soar, so will the desire for competitors to muscle in on some of the action.

For a parallel of what may happen, consider network television. There were once three major players: CBS (NYSE:CBS), General Electric's (NYSE:GE) NBC, and Disney's (NYSE:DIS) ABC. Those television networks had the advantage of a limited broadcast spectrum to protect their competitive moats. Yet they were still dethroned by News Corp.'s (NYSE:NWS) Fox and a plethora of cable broadcasters. On the Internet, the only monopoly license is a domain name.

With deep enough pockets, anyone can build a competitive offering. With pockets the size of Microsoft's (NASDAQ:MSFT) now focused on Google as a legitimate threat, it's likely that Google's road ahead will be tougher than its climb thus far. With such high expectations baked into its stock, however, Google had better execute perfectly. Otherwise, its shareholders could be in for years of pain as competition stiffens.

Think you're done with the Duel? You're not! Go back and read the other three arguments, and then vote for a winner.

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At the time of publication, Fool contributor Chuck Saletta owned shares of General Electric and Microsoft. The Motley Fool has a disclosure policy.