Larry Page Jeff Bezos Google v AmazonMichael Seto Photography and REUTERS/Rick WilkingAmazon CEO Jeff Bezos vs Google CEO Larry Page

Amazon's shopping membership program, Amazon Prime, is growing nicely.

The service — which offers free, two-day shipping as well as movie and music streaming, among other things — could have more than 35 million subscribers, according to a new note from analysts at Macquarie Research. That's great news for Amazon because studies have shown that Prime members may spend more than double what non-members do.
Amid the stats about Prime's strong growth, Macquarie tucked two numbers that should make Google very nervous. 
Macquarie pulled the data points from a recent report by market research consultant Millward Brown Digital:
  • More and more Amazon Prime members start their product searches on Amazon  — not Google. There was a 300% year-over-year increase in traffic to Amazon.com from Prime users, versus 53% growth in user accounts, which suggests that Prime subscribers often go straight to Amazon's homepage to begin a product search. 
  • Prime users don't price-compare with other sites. Less than 1% of Prime users visited competing retail sites while shopping on Amazon, versus 12% and 8% at Walmart and Target for non-Prime Amazon users. 
This is bad news for Google, which makes almost all of its money from selling ads. It wants users to search for products like "backpack" or "iPhone charger," so it can sell advertisements against those searches. When users start their searches on e-commerce sites like Amazon, Google gets cut out of the equation. An increase in people starting their searches on Amazon isn't a new trend, but its continuation is worrisome for the search giant, which has seen the growth in its number of paid ad clicks decelerating for several quarters.
Macquarie boldly predicts that 37% of US households will use Prime by 2016, and that 52% will use Prime by 2020. That's a lot of product searches that Google would lose. 
Of course, Google isn't just sitting around, letting this happen. 
In 2012, Google launched a new ad format called product listing ads, or PLAs, to let companies buy visual advertisements. PLAs include prices and product reviews which makes them look more like product descriptions on Amazon. Google wants to make its product useful enough that people won't start their searches on Amazon. 
Sales from Google Shopping and PLAs are growing nicely, according to the latest post by ChannelAdvisor. However, there's a catch: PLAs are cannibalizing Google's AdWords product, as advertisers decide to split their Google budgets between PLAs and AdWords instead of spending on both. That represents a big challenge for Google: Finding a way to keep Amazon at bay while still growing its own revenue fast enough