Still, only about 3 million U.S. users are added each year, according to Nielsen Online data. The potential for growth is limited. As with many industries, emerging markets hold the key: Hundreds of millions of users are added annually.
But therein lies the risk. Countries from Brazil to India are home to domestic Internet search companies -- from China's
in Russia to even smaller players such as
China accounts for 384 million Internet users, almost 80 million more than the U.S., and that number is growing fast. Last year, the country added 131 million users.
While Google has a wide footprint in the country, with 38% of search traffic, the market leader is Baidu, which just had a blowout quarter and a stock that's tripled over the past year.
Google's status in China, the world's most populous nation, is tenuous. The relationship between the search giant and the repressive government has soured, as Google has tried to circumvent the country's censorship by moving Chinese searches to Hong Kong.
Losing China would be devastating to Google. Although the company still has a hammerlock on India and Brazil, China offers the most explosive growth potential.
Another hot market is Russia, which is adding about twice as many Internet users as the U.S. The homegrown Yandex is nipping at Google's heels. Google controls 55% of the market, while Yandex has 42%.
Search market share is somewhat removed from the
. But the premise is that Google, the bully on the playground, has only a bit to gain, but a lot to lose. America is Google's possession at this point. Google has become a verb, after all. Growth will come from abroad.
The BRIC countries (Brazil, Russia, India and China) will have more say in the future of the Internet than they have until now. Baidu, Yandex and the smaller operators can erode Google's market share in a serious way. Invest accordingly.
-- Reported by David MacDougall in Boston.
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Prior to joining TheStreet Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.