[kictanet] Who's afraid of Google?]

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Who's afraid of Google?
Aug 30th 2007
 >From The Economist print edition

The world's internet superpower faces testing times

RARELY if ever has a company risen so fast in so many ways as Google,
the world's most popular search engine. This is true by just about
any measure: the growth in its market value and revenues; the number
of people clicking in search of news, the nearest pizza parlour or a
satellite image of their neighbour's garden; the volume of its
advertisers; or the number of its lawyers and lobbyists.

Such an ascent is enough to evoke concerns—both paranoid and
justified. The list of constituencies that hate or fear Google grows
by the week. Television networks, book publishers and newspaper
owners feel that Google has grown by using their content without
paying for it. Telecoms firms such as America's AT&T and Verizon are
miffed that Google prospers, in their eyes, by free-riding on the
bandwidth that they provide; and it is about to bid against them in a
forthcoming auction for radio spectrum. Many small firms hate Google
because they relied on exploiting its search formulas to win prime
positions in its rankings, but dropped to the internet's equivalent
of Hades after Google tweaked these algorithms.

And now come the politicians. Libertarians dislike Google's deal with
China's censors. Conservatives moan about its uncensored videos. But
the big new fear is to do with the privacy of its users. Google's
business model (see article) assumes that people will entrust it with
ever more information about their lives, to be stored in the
company's "cloud" of remote computers. These data begin with the logs
of a user's searches (in effect, a record of his interests) and his
responses to advertisements. Often they extend to the user's e-mail,
calendar, contacts, documents, spreadsheets, photos and videos. They
could soon include even the user's medical records and precise
location (determined from his mobile phone).

More JP Morgan than Bill Gates
Google is often compared to Microsoft (another enemy, incidentally);
but its evolution is actually closer to that of the banking industry.
Just as financial institutions grew to become repositories of
people's money, and thus guardians of private information about their
finances, Google is now turning into a custodian of a far wider and
more intimate range of information about individuals. Yes, this
applies also to rivals such as Yahoo! and Microsoft. But Google,
through the sheer speed with which it accumulates the treasure of
information, will be the one to test the limits of what society can
tolerate.

It does not help that Google is often seen as arrogant. Granted, this
complaint often comes from sour-grapes rivals. But many others are
put off by Google's cocksure assertion of its own holiness, as if it
merited unquestioning trust. This after all is the firm that
chose "Don't be evil" as its corporate motto and that explicitly
intones that its goal is "not to make money", as its boss, Eric
Schmidt, puts it, but "to change the world". Its ownership structure
is set up to protect that vision.

Ironically, there is something rather cloudlike about the multiple
complaints surrounding Google. The issues are best parted into two
cumuli: a set of "public" arguments about how to regulate Google; and
a set of "private" ones for Google's managers, to do with the
strategy the firm needs to get through the coming storm. On both
counts, Google—contrary to its own propaganda—is much better judged
as being just like any other "evil" money-grabbing company.

Grab the money
That is because, from the public point of view, the main contribution
of all companies to society comes from making profits, not giving
things away. Google is a good example of this. Its "goodness" stems
less from all that guff about corporate altruism than from Adam
Smith's invisible hand. It provides a service that others find very
useful—namely helping people to find information (at no charge) and
letting advertisers promote their wares to those people in a finely
targeted way.

Given this, the onus of proof is with Google's would-be prosecutors
to prove it is doing something wrong. On antitrust, the price that
Google charges its advertisers is set by auction, so its monopolistic
clout is limited; and it has yet to use its dominance in one market
to muscle into others in the way Microsoft did. The same presumption
of innocence goes for copyright and privacy. Google's book-search
product, for instance, arguably helps rather than hurts publishers
and authors by rescuing books from obscurity and encouraging readers
to buy copyrighted works. And, despite Big Brotherish talk about
knowing what choices people will be making tomorrow, Google has not
betrayed the trust of its users over their privacy. If anything, it
has been better than its rivals in standing up to prying governments
in both America and China.

That said, conflicts of interest will become inevitable—especially
with privacy. Google in effect controls a dial that, as it sells ever
more services to you, could move in two directions. Set to one side,
Google could voluntarily destroy very quickly any user data that it
collects. That would assure privacy, but it would limit Google's
profits from selling to advertisers information about what you are
doing, and make those services less useful. If the dial is set to the
other side and Google hangs on to the information, the services will
be more useful, but some dreadful intrusions into privacy could occur.

The answer, as with banks in the past, must lie somewhere in the
middle; and the right point for the dial is likely to change, as
circumstances change. That will be the main public interest in
Google. But, as the bankers (and Bill Gates) can attest, public
scrutiny also creates a private challenge for Google's managers: how
should they present their case?

One obvious strategy is to allay concerns over Google's
trustworthiness by becoming more transparent and opening up more of
its processes and plans to scrutiny. But it also needs a deeper
change of heart. Pretending that, just because your founders are nice
young men and you give away lots of services, society has no right to
question your motives no longer seems sensible. Google is a
capitalist tool—and a useful one. Better, surely, to face the coming
storm on that foundation, than on a trite slogan that could be your
undoing.

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