Economist|Who is afraid of Google

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The internet
Who‘s afraid of Google?
Aug 30th 2007
From The Economist print edition
The world‘s internet superpower faces testing times

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RARELYif ever has a company risen so fast in so many ways as Google, theworld‘s most popular search engine. This is true by just about anymeasure: the growth in its market value and revenues; the number ofpeople clicking in search of news, the nearest pizza parlour or asatellite image of their neighbour‘s garden; the volume of itsadvertisers; or the number of its lawyers and lobbyists.
Such anascent is enough to evoke concerns—both paranoid and justified. Thelist of constituencies that hate or fear Google grows by the week.Television networks, book publishers and newspaper owners feel thatGoogle has grown by using their content without paying for it. Telecomsfirms such as America‘s AT&T and Verizonare miffed that Google prospers, in their eyes, by free-riding on thebandwidth that they provide; and it is about to bid against them in aforthcoming auction for radio spectrum. Many small firms hate Googlebecause they relied on exploiting its search formulas to win primepositions in its rankings, but dropped to the internet‘s equivalent ofHades after Google tweaked these algorithms.
And now comethe politicians. Libertarians dislike Google‘s deal with China‘scensors. Conservatives moan about its uncensored videos. But the bignew fear is to do with the privacy of its users. Google‘s businessmodel (seearticle)assumes that people will entrust it with ever more information abouttheir 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, arecord of his interests) and his responses to advertisements. Oftenthey extend to the user‘s e-mail, calendar, contacts, documents,spreadsheets, photos and videos. They could soon include even theuser‘s medical records and precise location (determined from his mobilephone).
Google isoften compared to Microsoft (another enemy, incidentally); but itsevolution is actually closer to that of the banking industry. Just asfinancial institutions grew to become repositories of people‘s money,and thus guardians of private information about their finances, Googleis now turning into a custodian of a far wider and more intimate rangeof information about individuals. Yes, this applies also to rivals suchas Yahoo! and Microsoft. But Google, through the sheer speed with whichit accumulates the treasure of information, will be the one to test thelimits of what society can tolerate.
It does nothelp that Google is often seen as arrogant. Granted, this complaintoften comes from sour-grapes rivals. But many others are put off byGoogle‘s cocksure assertion of its own holiness, as if it meritedunquestioning trust. This after all is the firm that chose “Don‘t beevil” as its corporate motto and that explicitly intones that its goalis “not to make money”, as its boss, Eric Schmidt, puts it, but “tochange the world”. Its ownership structure is set up to protect thatvision.
Ironically,there is something rather cloudlike about the multiple complaintssurrounding Google. The issues are best parted into two cumuli: a setof “public” arguments about how to regulate Google; and a set of“private” ones for Google‘s managers, to do with the strategy the firmneeds to get through the coming storm. On both counts, Google—contraryto its own propaganda—is much better judged as being just like anyother “evil” money-grabbing company.
That isbecause, from the public point of view, the main contribution of allcompanies to society comes from making profits, not giving things away.Google is a good example of this. Its “goodness” stems less from allthat guff about corporate altruism than from Adam Smith‘s invisiblehand. It provides a service that others find very useful—namely helpingpeople to find information (at no charge) and letting advertiserspromote 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 isdoing something wrong. On antitrust, the price that Google charges itsadvertisers is set by auction, so its monopolistic clout is limited;and it has yet to use its dominance in one market to muscle into othersin the way Microsoft did. The same presumption of innocence goes forcopyright and privacy. Google‘s book-search product, for instance,arguably helps rather than hurts publishers and authors by rescuingbooks from obscurity and encouraging readers to buy copyrighted works.And, despite Big Brotherish talk about knowing what choices people willbe making tomorrow, Google has not betrayed the trust of its users overtheir privacy. If anything, it has been better than its rivals instanding 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 servicesto you, could move in two directions. Set to one side, Google couldvoluntarily destroy very quickly any user data that it collects. Thatwould assure privacy, but it would limit Google‘s profits from sellingto advertisers information about what you are doing, and make thoseservices less useful. If the dial is set to the other side and Googlehangs on to the information, the services will be more useful, but somedreadful intrusions into privacy could occur.
The answer,as with banks in the past, must lie somewhere in the middle; and theright 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 privatechallenge for Google‘s managers: how should they present their case?
One obviousstrategy is to allay concerns over Google‘s trustworthiness by becomingmore transparent and opening up more of its processes and plans toscrutiny. But it also needs a deeper change of heart. Pretending that,just because your founders are nice young men and you give away lots ofservices, society has no right to question your motives no longer seemssensible. Google is a capitalist tool—and a useful one. Better, surely,to face the coming storm on that foundation, than on a trite sloganthat could be your undoing.


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