A few years ago they purchased an analytics company called, Urchin. They were a leader in their space, their product was very good and they charged thousands of dollars for it. They were charging $500/month and up for the service. As I recall, their average was around a couple grand per month. Analytics companies were charging thousands of dollars per month for providing data to companies with a large amount of traffic. Here is an archive.org cache of their home page before they were purchased:

[web.archive.org...]

Analytics was a business that was about providing a service for a price. There is no way to provide this level of service without charging for it, unless you subsidize it with something else. This is what Google does.

Take the case of WebsideStory, which offered the popular Hitbox product. They had produced a popular analytics program that was used by many businesses and individuals. WebsideStory was purchased by Omniture, who in their heyday was charging up to $18,000 for their product, before Google purchased Urchin. Previous to Google purchasing Urchin, a small business could purchase the HitBox service for under fifty dollars per month.

Here is an article about WebsideStory and their rates:
[pcmag.com...]

Omniture, which purchased WebsideStory and HitBox, was purchased by Adobe for about 1.8 Billion dollars. [omniture.com...] Adobe is still charging for their product. They don't publish how much they charge. But it must be difficult to compete with free. This must be why they no longer offer their low priced HitBox service. Even the industry leading WebTrends product had had to abandon their low price offerings to focus on top tier level companies.

[webtrends.com...] They only have 7,500 customers.

Back in their heyday WebTrends offered a $35/month plan for small businesses: [web.archive.org...]

Along with HitBox, that service is no longer offered.

Now Google is moving into providing free GPS information via cell phones, providing a free Android operating system to compete with Windows and OS X, as well as moving into offering free applications to compete with Microsoft Office. They are underwriting all these offerings with AdWords, offering those services at a loss. This is similar to what the Japanese did to American car manufacturers in the eighties when they controlled the closed Japanese market and were able to charge a premium to their home market in order to subsidize lower prices in the United States, prices that American car companies could not compete with, which resulted in penalties for "dumping". Here is a Wikipedia page about dumping: [google.com...]

Dumping is traditionally defined as subsidizing sales in one country from the sales in another country. The twist is that Google is subsidizing sales in one industry from sales in another industry, the online advertising market. This is similar to what Microsoft was criticized for when it offered Internet Explorer for free, which destroyed Netscape. Offering IE for free was a "Kill Netscape" strategy. Looking at everything Google is offering, it's hard not to come away thinking that perhaps Google is pursuing a "KILL" strategy that focuses on Kill Microsoft Office, Kill Internet Explorer. Kill Palm, Kill iPhone, Kill Omniture, Kill, kill, kill....

While many, including webmasters, see this as benign, that Google is cool for giving away useful services for free, is it possible that something is wrong about disrupting industries with free products that are subsidized by something else?