Android & DistributionNarrow moat

Google understood early, and more clearly than most, a danger that could have undone it: that whoever controlled the devices and the software people used to reach the internet could lock Google out of its own market. So it set about owning the roads to the customer directly, and that campaign is now one of the most underappreciated pieces of its moat. Distribution, in this business, is very nearly destiny — it does not much matter how good your search engine is if a rival's is the one that comes up by default on the device in the customer's hand.

Android is the cornerstone. By developing a mobile operating system and giving it away to handset makers, Google ensured that the majority of the world's smartphones would come with its services woven in from the moment they were switched on. It is a remarkable thing to have the dominant operating system of the mobile era and to use it not primarily to sell software but to guarantee the reach of an advertising business — a strategy that only makes sense once you see that the real product being protected is the front door to search.

Reinforcing Android is a web of default-placement agreements — arrangements that make Google the pre-set search engine on browsers and devices the company does not itself control¹, keeping it one tap away wherever people go. These deals are immensely valuable precisely because defaults are so powerful; the overwhelming majority of people never change the setting they are given, so being the default is very nearly the same as being the only choice. That is also, not coincidentally, the piece of the empire that regulators find easiest to attack.

Chrome and Google's other entry points complete the enclosure. By owning the browser that a large share of the world uses to reach the web, Google owns the very doorway people walk through to get online, and it can ensure that doorway opens, by default, onto its own services. Between Android below and Chrome in front, the company has built redundant guarantees of reach that protect it no matter how any single part of the device landscape shifts.

And then there is YouTube, which is a distribution channel and an attention empire in one — the default home of online video for much of humanity, a second front door feeding the same advertising machine. Taken together, these channels are a moat because they guarantee Google's reach independent of the fortunes of any one gadget or partner. They are also, candidly, the part of the business under the heaviest legal fire, because default placement is at once enormously valuable and easy to portray to a court as unfair — which is why this particular wall, sturdy as it is, is the one an owner should watch the regulators circling most warily.