FX comment: Google, too big to fail
In 2009 Google reported net income in excess of $6.5 billion and assets in excess of $40 billion. It is likely to be a serious contender in any arena in which it chooses to compete.
I’m hearing that Philip Brittan has already made overtures to some major market-makers, having been in his seat for less than a week. One source at a top-five FX house says: “Google has already been in touch and has been talking to us with a view to setting up a more credible service”. Whether the discussions were about data provision or something bigger is not clear.
Initially Google might focus on data and analytics – certainly the prospect of a credible free offering is enticing when costs are being scrutinized. And FX traders are not slow when it comes to changing data platforms – it’s only 10 years since Bloomberg was seldom seen away from capital markets desks.
But Google’s entry into platforms is intriguing, given that it is the owner of 450,000 servers, according to a 2006 estimate cited by Wikipedia.
Java-based financial software is here to stay. Reuters may stress the importance of security and the reliability of a network-independent platform, but applications can be made secure with Java and users are willing to take responsibility for their own data. Google would be late to the game but its potential is huge – and diversification by a business model 97% reliant on advertising revenue would not go amiss.