Google so dominates the internet industry that it's hard to imagine how it could become even more powerful, yet a series of events over the past few weeks suggest that's exactly what's happening.

There was, first off, the collapse of the Yahoo!-Microsoft merger. The deal was conceived as a way to challenge Google, and Google helped make sure it didn't get done, threatening to lead an anti-trust challenge and dangling a lucrative search deal in front of Yahoo!. Even though Yahoo! and Microsoft are again discussing a more limited transaction, the failure of the merger leaves both companies weaker, and both are farther than they ever were from challenging Google in search.

Then there is what appears to be a sudden dimming of the Facebook star. When the social networking site announced its "platform" strategy a year ago and took in an investment from Microsoft that valued the company at $15 billion, it looked like Google might have its first true challenger. If people spent most of their web time on Facebook, with Facebook tools and applications, so the logic went, then they'd be spending less time with Google tools and applications – even though Facebook isn't in the search business.

But Facebook has had trouble figuring out an advertising strategy that generates substantial revenue without alienating its users. The platform has generated tons of new applications, but a lot of them are junky, and Facebook denizens have quickly grown tired of the relentless invitations to install trivial new gadgets. New social applications, notably Twitter, also threaten the success of Facebook.

True, Facebook has hired some strong new management of late – even poaching several Google stars – and an upcoming redesign could help it re-establish momentum. But the recent hiccups are a stark reminder that social networks can quickly lose their cool factor. Efforts by Google and others to make social networks portable across the web could create new challenges.

Chinks in Google's armour, by contrast, seem to vanish without a trace. A report from a research company early this year that appeared to show a dip in Google search advertising performance sent the company's stock down. But then Google announced its earnings, which were better than ever, and Google's stock quickly rebounded from its dour stretch. It is still well off its brief all-time high of $750, but at $545 a share it's up more than $100 from its recent low.

Some well-regarded pundits are now suggesting that everyone else should just give up on search and focus on other things, because there is no way to compete with Google. That's counter-intuitive in almost every way – Google itself took over the search market simply by doing a better job of it – but it's the kind of thing that gets said when a company has 60 per cent to 70 per cent of a market and is still increasing its share.

Google is so profitable that it can keep hiring the best and the brightest, it can keep improving its core service even as it expands into software applications and countless other areas and it can buy the political muscle it needs to keep prospective regulators at bay. Its key executives are still, well, young.

Personally, I've never felt comfortable with a single company dominating an industry, but I do take some comfort from the history of the sector. When I first began covering technology in the mid-1980s, IBM appeared to control almost every aspect of the computer industry and struck fear in the heart everyone else in the business. Less than a decade later, IBM was practically bankrupt.

Similarly, Microsoft's dominance of the computer business from the late 1980s to the late 1990s was complete and unassailable. Even a mortal threat from the federal government – an anti-trust lawsuit – was considered more of a nuisance than a real problem. Yet despite the fact that company leaders were aware of the challenges, Microsoft has not been able to transfer its dominance to the internet era. Today, it's just another lumbering tech giant.

Google too will eventually begin to decline. Hardly any companies are able to come up with epoch-changing breakthroughs more than once. Almost all highly successful firms are ultimately undermined by arrogance and insularity. But we're just at the beginning of the Google era, and it looks like it will be Google's world for quite some time to come.

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Jonathan Weber is the founder and editor in chief of NewWest.Net, a regional news service focused on the Rocky Mountain West in the United States. He was previously the co-founder and editor in chief of the Industry Standard

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