Google’s Impact

Google has just released an Economic Impact Statement – Google has attempted to measure what impact Google’s search engine and other services has had on the US and by implication, World economics. But as well there is the impact of Google on the basic technology of the Internet and therefore global communication. Google seems to be like the Absent-minded professor – not always in control of its impact.

Take the Google Wifi data gathering fiasco
– where Google was already skating on thin ice by gathering street images for its 3D Earth Maps application and invading walkers personal privacy, the company pulled a massive Goofle. This privacy violation was compounded by the fact that it also recorded network affiliation and individual Web addresses of local PC users at the same time. The matter is made worse by a)Google’s “Do no evil pledge” and b)the fact that full disclosure to governments and authorities involved was simply not done. So Google’s “Do no evil” takes it on the chin.

Essentially, this episode underlines two facts: 1)Google has huge economic, technical, and social impact and 2)Google has yet to learn to manage their steps in various markets so that they do not antagonize diverse stakeholders such as corporates, governments, suppliers and ordinary people.

Take 2 instances. As the the World moves towards Web-based delivery of communication and computing with the rapid rise of smartphones, slates, pads and tablets; Google, not Apple, is the leader of the change. Apple had leadership until this year but recently ceded that position because Steve Jobs is determined to establish a Microsoft-like monopoly over mobile device hardware and software. Google with its line-up of Cloud-based Services is rapidly becoming dominant across a broad set of Web markets. But the IT industry and major corporate users have seen this scenario before with Microsoft and they are very reluctant to cede such dominant power to one entity.

This in turn thrusts Google onto the radar of governments because Google already has a PC based search monopoly – 65% share worldwide. Indeed, in all aspects of media and communication Google is setting the standards for Web-based use in so many sectors:
Maps and Earth – its free and very competent, and leading in features
Online mail and documents – Google’s nearly free mail and low cost office suite is getting increasing corporate adoption
Mobile smartphone – Google Android, Voice, Maps+geolocation are all gaining market share
Google Books – Google Books has suffered a rocky road because Google has swept up books invasively like street “data”.
Chrome Browser and Reader – setting the browser speed standards and bookmarking feature top list
Google TV+media – rescuing Flash from Jobsian Scorn, HTML5 promoter and Fall intro for Google TV[see top review] So Google is a pervasive player in all things mobile and Web or Cloud based.  Google does not yet have dominant, monopoly shares. But it easily could because of the Google Advantage and that is a source of unease in industry, government and the Press.

The Google Advantages

The  primary Google advantage is that it is a catalyst. Google is leading the transition to smart marketing with pay-per-click  advertising. Instead of hit or miss broadcast ads, advertising is rapidly changing to the “pay only when a user clicks on your ad” model. Google currently has a 65%++ share of that market. Google does not need to make huge profits in many of the markets it participates in because it makes money from selling advertising in those markets. Take mobile phones.

Google is giving away for free the Android Operating system as part of the Open Handset Alliance. The Google Nexus One is intended to be a standards setter – not a major cash cow. Nexus One was created because Google was worried that some of the Android phones coming to market simply were not taking full advantage of the Android API. That has certainly changed with Motorola Droid and Sprint/HTC EVO as just two examples.

With Google’s purchase of AdMob it has insured that it will be a major player in the Mobile Phone advertising market. As Apple introduces iAds and restricts use of Google Voice on iPhones, Google had to guarantee to have a path to deliver its ads not just on smartphones but the broader tablet/netbook/smart device marketplace. Android now and Chrome OS upcoming are those guarantees.

Imagine being a vendor that can make money just by selling advertising on any connected device. Again, this is the first Google Advantage.

The second Google advantage is that it is using mostly free and mostly Open Source software.
It seems like a contradiction – how do you make money with mostly free software and services? But remember the first Google Advanatage, they make money primarily from advertising. Only in some of their newest services like Google Books and Google TV will Google be charging for market-making services.  So one has to be careful and say mostly free because for some services and some categories of customers [think large scale corporates], Google is or will be charging a fee for some of its services.

But the services themselves are free to develop on and largely Open Source. This in turn has 3 advantages for Google and its stakeholders both. First, Apple or Microsoft or Nokia or Whomever cannot come in and take developers or customers  away from Google by pricing their tools and/or services for free. How do you beat free already with zero pricing ? Second, the low cost of entry attracts developers, hardware vendors, and telecom service providers because who can pass up a bargain. But also because  Google supports a wide range of hardware platforms and development tools [think Adobe Flash, Java, and most generator tools. Also think Windows, Linux, Apple OS. Finally, on processors, think Atom, ARM, X86, etc]. This acts as an incentive since developers and users both know that good software and apps will likely appear on their chosen platform if Google services are available.  Third and most important  for developers, hardware vendors and telecom providers: they know they can a)add their own proprietary services[the Apache License of Android and some other Google services allows this] and b)they have an insurance policy – if Google does not meet their needs they can walk away with all the Open Code and do it themselves. This latter point helps Google because it attracts smart players to its products and alliances.

So Google attracts vendors, developers and users  not just because  they are free or low-cost but also  because they can change , customize,  fix and finally go their own way as circumstances require.

This leads to the the third Google Advantage – to date, Google has proved to be very agile in delivering in every market they have entered. Take mobile phones. By going with Android with an Apache License they beat both Apple and Microsoft. Both of these vendors are highly proprietary and closed – as Adobe has learned you do it Apples way or take the highway.  Also, by using a pared down Linux version in Android, Google has been able to deliver a slim and capable OS much faster than Microsoft which is lumbering to get its   Phone 7 mobile OS  to market by Christmas this year. The problem is that withEclair and now Froyo, Google has added to Androids feature set such that even Apple with its upcoming iPhone OS4 will be pressed to match Android current 2.2 Froyo version.

But being agile was the Microsoft competitive advantage in the late 1980’s and early 1990’s. Redmond beat IBM and Apple despite their decided   leads in the PC hardware and software markets during that era.  So Agility is a hard attribute to preserve, especially for large players over time. So this observer remains from Missouri on how long Google will maintain this third advantage. Google in the case of its China strategy, in the arena of Security, in its hamfisted Wifi-data gathering  and other cases – has proved to be capable of arrogant Goofles >= Facebooks.

This is becoming ever more important because in a society subject to greater changes and much of those having larger downside risks, both business and the country cannot tolerate Goofles that lead to one arrogant Redmond monopoly being replaced by another in one  Mountain View.

Post Meltdown Reaction

One of the fallouts of the financial meltdown has been the anathema that is “too big to fail”. Your “partners”/suppliers incompetence can bring you down – and so you have to support the incompetence no matter what. Also governments are taking it on the chin for its regulators having acceded to the corporate elites and monopolists. They should have but did not enforce regulations or retired them at the behest of corporate lobby communities. Notably antitrust comes to bear with too-big-too-fail banks becoming rampant financial gamblers and Microsoft lording it over vendors and customers alike  despite the antitrust actions.

This is important to Google because under the Democrats and the Obama Administration, Justice’s Antitrust Division has risen from the Bush Dead and is actively considering actions. And given Google’s dominance of PC based Search and its active thrust into other markets, there is plenty of room for watching and reviewing Google’s market dealings. The industry experts are of mixed minds – here is theAtlantic’s James Fallows who sees positives in Google attempting to stem the the flow of readership away from printed media – and here is the opposite reaction of some IT veterans on Google’s Book strategy. It appears that IT community including VCs and major vendors, having suffered thru the Microsoft monopolies in OS, Office, Browser and Exchange software are reluctant to allow any one player to become so singularly dominant again.

In sum, Google has to watch its impact steps. So far it has proved reasonable; but as in the closet Wifi readings it has also proved to be almost immaturely rash and unreasonable. Currently Google has a VP just watching its apps UI and making sure they are KISS usable. Google needs to have a similar antitrust  or business behavior VP or Board member talking directly to the Holy Trinity … uhh, Schmidt, Page and Brin -making sure they “do no evil” – especially now that every step Google takes, every breath Google makes  … lots of ornery creatures will be watching you.

1 thought on “Google’s Impact”

  1. Even as I like a physical keyboard, after managing the Samsung Captivate for roughly 15 minutes, it is hard to go back. Presently I am debating whether to visit Verizon for the Droid X, cross to Dash for the EVO, or stick with AT&T for the Captivate…choices, decisions.

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