Posts tagged google
No no, the original title was War (What Is It Good For)
In the matter of Google vs. Bing, this blog post sums up my thoughts pretty well:
For a company that indexes other people’s content as a business, it seems insane to think they have any case in chastising Bing for indexing some extreme outlier search terms that it lacked.
The Google Tax
There was an incredibly provocative slideshow that made the web rounds in late November 2009 created by serial entrepreneur and trading analyst Philip Davis. Simply titled “The $2.5 Trillion Global Oil Scam,” it highlighted the dubious actions of the ICE (Intercontinental Exchange). I’ll paraphrase: In 2000, the ICE was founded by Goldman Sachs, Morgan Stanley, BP, Total, Shell, Deutsche Bank and Societe Generale. It’s a commodities and futures marketplace existing outside of the United States legal arena. Among other commodities, it chiefly trades oil. The primary transaction of the ICE is what is known as a Round-Trip Trade. “These trades occur when one firm sells energy to another and then the second firm simultaneously sells the same amount of energy back to the first company at exactly the same price - no commodity ever actually changes hands,” Davis stated. What this does is set an artificial price in the market, while also fabricating revenue for the company. One statistic Davis uncovered was that in a congressional investigation, DSM Energy admitted 80% of its trades were Round Trip. Round Trip trading also allows the exchange to create artificial shortages and demand. Davis predicted the trading amounted to, on average, an extra dollar per gallon of gas, or nearly $50 billion per month. It’s an absolutely mesmerizing concept. Simple and terrifying. And there is very little, if anything, consumers can do about it. The control has, for the most part, been taken out of the public’s hands.
What is a monopoly? Websters defines it as “exclusive ownership through legal privilege, command of supply, or concerted action.” It is the elimination or lack of competition, or more broadly, the distinct lack of choice. A cartel, while slightly different, essentially has the same goal. Multiple competitors work together to fix the prices and services offered in a specific industry, ultimately eliminating any appreciable choice for the consumer, because the service and price are so similar. Today Google announced an experimental fiber network of ultra high speed broadband that would be delivered to anywhere from 50,000 to 500,000 people throughout America. The service would be competitively priced (that is to say, in line with current broadband prices), except this service would offer speed of 1 gigabit per second. That’s 100 times faster than almost anything we’ve seen in this country from an ISP to date. In Google’s example, HD feature lengths films could be downloaded in less than five minutes. In my own mind I can imagine real time film editing with friends across the country via a web based Avid or Final Cut with the speed of a native application. Google is currently vetting which geographic communities will have access to the broadband.
TechCrunch, as well as many other web news establishments, have been reporting the story throughout the day, and after reading most of them, I’ve noticed a fairly even split of the opinion of commenters. Half seem to be truly charmed by the move, and the other half incredibly disdainful, declaring the Google anti-trust and monopoly is continuing to grow. “Google has the power to unfairly enter any market and dominate it,” declares one commenter. “They are an all-devouring entity,” another proclaims. What makes this situation so interesting is that these commenters are wrong for the reasons they think they’re right, but also completely in the right for reasons they’re not even complaining about.
If we historically look at the products and markets Google has entered post-search it’s very difficult to find a negative from a consumer perspective. Gmail is an incredible addition to the poorly designed existing webmail clients, and a superior product offering remarkable benefits over existing desktop clients. It was completely free, which is not atypical for email clients. Google Docs offers the best of Microsoft Office, completely cloud based, both collaborative and mobile. While one cost in the hundreds of dollars, the other is absolutely free. Google Checkout, Google Earth, Maps, Finance, Books, Chrome, Blogger, Alerts, Wave, Buzz, Health, YouTube, Reader, Translation, not to mention incredible new services with unknown implications, such as Google Voice and Google Chrome OS, Android and the Nexus One have flooded the marketplace. The list goes on and on. The industries Google has touched are vast. In each and every entrance into a new market, they have done so with the intention of being disruptive. They are not just trying to enter a market, they are trying to change the status quo, and offer a fundamentally better product that the existing forces in the market. Google’s goal is to offer more choice, not less. Eric Schmidt published an OpEd on the 9th in the Washington Post titled “Erasing our innovation deficit.” He addresses concerns about the lack of congressional support for smaller business. He encourages congress to ensure that “every bill it passes promotes competition over protecting the interest of incumbents.” And Google practices what it preaches. It’s one of the largest proponents of Net Neutrality. It wants small businesses to have the same advantages as it did when it started out over a decade ago. Google has put billions into industries far from the consumer web. Investing in clean energy, health, and more; even establishing its own VC fund to take action on a wider level.
What makes Google so incredible is that they genuinely have goals outside of a profit. That may seem naive, but what’s arguably more valuable than money? Power. I don’t mean that in the sense that Google’s goal is to be all powerful, but, in some respects, the most awe-inspring action we can take in our time on earth is to change the world for the better, or, more appropriately, better from our point of view. Google has an idea of what the world could be. Could their profit margin be significantly higher? Yes, it could. Google spent 12% of its revenue on R&D in 2009, with a national R&D average of companies with similar revenue in North America being near 4.9%. The truth of the the matter is that while future revenue is a factor, most of this money is being spent with a goal of being disruptive. Changing dynamics of additional markets that ultimately put them in a position of more influence. It’s no coincidence that Google’s influence and disruption of markets are very much non-zero-sum, and closely aligned with the consuming public’s own interest. Case in point, the telecom industry delivers sub par service while maintaining high profit margins. AT&T operates its wireless business at a 40% profit margin while offering notoriously one of the most problem-ridden and load heavy infrastructures, especially when compared with its competitors. It has taken steps to address this with increased capital spending of up to 10 percent in 2010, but it’s too little too late, and Google envisions a world where AT&T and phone contracts are irrelevant. Why not instead use a client like Google Voice and talk over WiFi? In creating a scenario where Google would have more influence, they’ve simultaneously increased AT&T’s likeliness of increasing infrastructure and lowering prices to provide a competing service, ultimately benefiting the consumer.
From a very broad consumer standpoint, Google had done nothing but offer positive competition to any market it enters, and in terms of our original definition of a monopoly, it has absolutely not limited the choices of the consumers, and it has even supported the increase of choice in its own industry (net neutrality).
All that being said, one must wonder where Google gets the money to do so much positive disruption? That answer is simple, Google Search is a monopoly. One of the other definitions of a monopoly, outside of limiting choice, is exhibiting market power. Google Search is not a monopoly from a consumer standpoint - it is not as though Google is the only search engine, or even that it’s easier to get to Google than other engines such as Bing or Yahoo. Consumers use it more than any other because it is the best. Its market share is about 65%. What this enables it to do is exercise market power over the corporations that engage in the keyword auctions on Google. Google abuses this power by overcharging those advertisers. Advertisers, because of Google’s vast market share, must either pay those elevated prices, or be dropped from google sponsored results. The effects of being dropped from Google sponsored results are so detrimental to those businesses that they must maintain a presence in order to be seen by that 65% market share. This has nothing to do with the quality of Google’s organic search - it only matters that Google’s market share is powerful enough to have the ability to exercise market power, and that they are in fact exercising it. This is bad for corporations, but why is it bad for consumers? Well corporations have to increase their ad spending and ultimately that increase is passed on to consumers.
Only now do we begin to understand the situation we are in. Google has positioned itself as an entity with near governmental power. With ostensibly benevolent intentions it disrupts the state of affairs in industry after industry for the better. Telecoms may soon have to lower prices, broadband quality may soon increase nation wide, not through Google, but through Google’s competition. Collaboration and file storage online will become infinitely easier. Google’s entrance into the energy sector and the smart grid may very well disrupt the entire energy world. And it would be difficult to argue that the disruption would be for the worse when there is evidence of a 2.5 trillion dollar oil scam in plain sight and there is nothing the public can do about it.
So, we have to ask ourselves a question. First, look at Goldman Sachs, Morgan Stanley, BP, Total, Shell, Deutsche Bank and Societe Generale. Try and name some of the products they have built for you that have made your life better. What industries have they tried to positively disrupt by effectively utilizing their cartel and the profits it generated for them? Look at the federal government. Really look at it. I see a group of ambitious minds with the best of intentions dealing with a system that is essentially run by 300 million people, all with different points of view. Is the bureaucracy fixable? Yes, I haven’t given up hope quite yet. Will it happen any time soon? Most likely not. In a world surrounded by those with good intentions but the inability to act, and those with the worst intentions with all the ability to act, Google stands out as truly a force of good. So, we have to ask ourselves one last question, are we willing to accept a monopoly that slightly raises the cost of consumer goods and services throughout the nation in exchange for what Google has offered us, and plans to offer us in the future?
I’ve already made my decision. For the time being, as long as the Google mission of “don’t be evil” holds strong, I’ll consider that search monopoly a Google Tax that I’ll gladly pay. And when that mission falls by the wayside, I’ll be the first one pounding on the doors of the DoJ. Until then, Google has put more control into my hands than it has taken out. Why would I want to disrupt that?
-Skip
February 11, 2010
Transactive Memory and the Difference Between Facebook and Twitter
Last summer I received a forwarded email from a friend of mine. This email contained a passionate note, or plea rather, from a young woman, let’s call her Liz, begging for her Facebook account to be reinstated. The night prior, as a desperate last minute attempt to complete a class assignment, Liz had sent hundreds of her Facebook friends messages containing a psychology survey. She had sent one too many messages, and due to automated Facebook restrictions protecting against spam, her account had been suspended. Just like that, it was over for her.
To most of us, this is yet another story of yet another deleted Facebook account. It doesn’t phase us; it hardly even registers anymore. But Liz’s story doesn’t end here.
Her email was incredibly detailed. She cited the loss of all of her photo albums, all of her videos, all of the friends she had and their contact information - the usual suspects. But she continued: she lost her ‘wall to walls’, she lost her message histories, she lost photos tagged of her, and all the tags she had ever created of her friends. Notes she had written to her friends and gifts she had given, scrabble games currently in progress - this email was downright painful. She was in mourning. She simply didn’t lose access to an online account - she lost a significant catalog of her past.
In 1985 Daniel Wegner introduced the concept of transactive memory. In short, transactive memory, often referred to as ‘groupthink’, is the idea that we can store and retrieve knowledge from those closest to us. Fellow employees we work with on a daily basis, classmates, family members, wives, husbands, and anyone we might consider a teammate in some capacity. Malcolm Gladwell makes significant reference to it in The Tipping Point, if you’re familiar. We simply don’t store all of the information we need to function and thrive in our own brains, we assign and shelve it in those around us. Transactive memory is one of the reasons that we find breakups or divorces so emotionally devastating. We’re losing a part of our memory, we’re losing major portions of our past. From what I’ve researched, transactive memory is predominantly only applied to other people. Living beings that we can utilize to quickly retrieve information from our past, and vice versa. However, upon reexamination of Liz’s note, she’s not reeling over losing data - it wasn’t just contact information - she lost memories, and more importantly her relationships to those memories. The tags on the photos, not the photos themselves. The wall to wall signings, message histories, these are memories that you haven’t backed up and stored on a hard drive, or a journal, or a flickr account. They were stored in a living breathing piece of software, compiled of hundreds of her closest relationships. She drew on these relationships to extract information from her past. She tagged photos to create relevant timelines, to remember names, faces, experiences. Facebook, and the relationships she had harbored there, built a context around an enormous amount of otherwise stagnant text and data.
When I examine my current experience with the dominant social utilities, Facebook and Twitter, a startling realization is made: I don’t store any transactive memory on Twitter, or anywhere else for that matter online: except Facebook.
We all have become aware over the past 12 months of the incredible power of ‘the stream’. It’s a waterfall, it’s endless, it’s real-time, and you can drink from it as little or as much as you please. But when I contribute to it, it’s gone as quickly as it was created. The real-time web is a powerful force for staying informed, but it could not be weaker when it comes to groupthink.
This is the great divide I see between software like Twitter, Flickr, YouTube, Tumblr, even Google, and Facebook. If absolutely nothing else, Facebook has created a system for us to associate past and current relationships with data and create context. My friends mention to me how little they use Facebook anymore, and how much they use Twitter - I can attest this is true. But when pictures from Halloween were to be uploaded, they all went on Facebook and were promptly auto tagged, commented on, categorized and filed away neatly and efficiently. Sure one or two photos or videos go up here and there on Twitter - but they’re gone as soon as they’re posted. There’s no dam, there’s no reservoir. The same holds true for Tumblr, while more filtered and permanent, posts lack context, organization and relationships. Tags on Tumblr are weak relationships to irrelevant posts of irrelevant people at irrelevant times.
Liz’s Facebook was reinstated and all was right with the world. Her survey probably ended disastrously, but hey, that’s Karma. As for me, my money is on Facebook for the long haul. Facebook Connect will expand, and my dream is that someday we’ll be able to tag any element on the web with our friends: from photos on Gawker to videos on YouTube, to articles on The New Yorker. These tagged elements will be archived and efficiently filed in our Facebook albums, just like posted items. Twitter may be the instant ‘what’, but Facebook is the who, what, when, where, why and how. Google’s goal may be to organize the world’s information, and Facebook’s stated mission may be to make the world more connected - but combine the two and you’ve got yourself timeless context - now that’s a worthy mission.
Oh, hello there!
Skip Bronkie here.
I've kind-of-sort-of stopped posting here. Maybe I'll get it going again at some point, but for now, you can find me on Facebook or at www.skipbronkie.com
