Google As Publisher...

Jul 11th

They might prefer to use different labels (so as to minimize fear in the marketplace & slow down regulators), and they might claim that aggregate statistics control the investments & thus they are not really publishers, but they plan on skimming a big piece off of the top of many big markets.

AdWords was just the start!

Videos, maps & product search...look how Google self-deals in each while managing to call it a value added feature (or some such).

If Google collects data, hosts data, sorts data, recommends personalized consumption habits, and then makes small investments in new content from proven past performers (and then give them a bit of stealth promotion on their network)...how is it possible for Google to lose money? (Outside of lawsuits)?

Google can claim they are "democratizing" media while showing a string of successful partnerships based on investing using real time data that nobody else as access to. Meanwhile if you are a publisher they are gutting your business model through paying people to snag your content and wrap it in their ads, while they also redirect user attention to the companies and acts they have invested in.

"One day we had a conversation where we figured we could just try and predict the stock market... and then we decided it was illegal. So we stopped doing that." - Eric Schmidt, Google CEO

Note that there was no moral debate on the table. Their only internal limitation to setting up a hedge fund and swaying the markets to increase the profits of their trades would be that they thought it was illegal.

How much of the online ecosystem can Google consume before publishers promote other views of the web?

One way to fight this sort of strategy is Yahoo!'s sell or outsource everything but the logo strategy. It increases short term margins, but in the longrun it makes one that much more vulnerable. Google can always buy the partner of choice and then ride off the free promotion & validation that the acquisition gained from earlier partnerships. Sure adding more noise to a noisy market can bring in eyeballs, but fleeting ones. Death by a thousand compromises.

The other is to work in markets too small for Google to be interested in. Or to define & create a new vertical, like Zynga did. Even with as shady as Zynga's founder is, longterm that company is in a better position than Yahoo! is.

Published: July 11, 2010

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Comments

July 11, 2010 - 5:21am

"Note that there was no moral debate on the table. Their only internal limitation ... would be that they thought it was illegal."

If you take the 'geek mindset' into account, this isn't actually unreasonable.
The aspergic mindset is 'i am acting in a logical fashion and everyone else does to"
(Your average geek has noticed that other people usually don't act 'logically', but wishes they did, and thinks they ought to.)
From that point of view, 'ethics' is the code we live by and 'laws' are the code we live by, so the easy test for 'whether I ought to X or not' is 'is it legal'.

This viewpoint ignores the fact of the real world that not all unethical actions have been declared illegal - but thats not the way the Geek thinks.

IMHO YMMV

July 11, 2010 - 5:47am

The geek way is a blind religious-like belief in markets.

But then markets are often mislead by advertising by vested interests in other markets.

And all those folks who elected politicians who put in place regulators who didn't believe in regulation... well they promptly gutted regulation and caused 10's of trillions of Dollars in losses.

Worse yet, much of what happened *was* illegal, but due to politicians giving bankers blow jobs for campaign contributions there has been no enforcement of *existing* laws.

Worse yet, we then bailed out the criminal enterprises responsible for the damage.

Worse yet, currently accounting *FRAUD* has since been legalized to help keep the banks afloat. The FASB relaxed accounting standards to give some banks a chance to dig themselves out of their holes, but that money has went nowhere other than to the banker bonus brigade.

Moral of the story? Capitalism is not a purveyor of morals. :D

If you can do damage and get the profits while offloading a lot of the expenses onto broader society, they why not? That is basically the thinking baked into the short term opportunistic view of capitalism where a CFO has to do whatever it takes to "make the number."

So when companies in positions of power at (or near) the utility level make it publicly known that their only limitation from profit by any means is existing laws, you know there will be some pretty nasty externalities coming. Doubly true if it is a technology company which puts itself between content and users, and wraps everything it can in a layer of ads.

Of course, selfish western culture means nobody cares until it is their own job which went away.

Which is precisely why the bankers got their bailouts and were not prosecuted for their criminal offenses. They are friends with the politicians.

Donate 0.1% of profits to a political kickbacks and corruption fund. Not a bad business strategy.

The people who do it preach the ideology of free markets. But they forget to tell you that they would be bankrupt if free markets were actually allowed to do their job!

July 11, 2010 - 2:11pm

Google has been in a kind of panic for its 12 years. When you have one revenue stream - a REALLY big one - you also have a lot of fears and worries with being the owner of one, single, HUGE revenue stream. You don't want it to dry up. You want another source of income that can help prop up the company. With these kinds of fears, you get irrational thinking. If Google's ad stream starts to dwindle, expect to see some quite radical business plans from Google from that point on.

July 11, 2010 - 2:36pm

I agree that Google has been in a panic, though I'd say it's been in the last 2 or 3 years, when they realized that the growth trajectory for search wasn't going to keep up. It was then that they realized they'd need more revenue streams to make their 'street' numbers.

Instead of letting products struggle along for a long time they began shutting them down. Remember the 1 month run of Lively?

They're absolutely looking for another revenue stream. I believe they saw it coming in large degree, which is why they began scanning books as far back as 2004. Taking a rev share on digital books - an iTunes like marketplace for books - was their big bet early on.

Google was/is obsessed with books - even Google Base was built with Books, Movies and Music as the main product focus.

But that's taken a lot longer than they'd have liked and gotten bogged down in court. So, they are looking for others. Products and reviews is of interest (aka - trim a point or two - or more - off of the eCommerce business), the ITA purchase makes it clear they're interested in Travel and now the news is that they're going to get into games.

For SEO this translates into more Onebox results, which wicks away traffic from the 10 blue links and to another ecosystem instead - one where Google has more control. Google Product Search and the product Onebox has caused many eCommerce folks consternation.

Imagine how a real gBooks Onebox or Travel Onebox could change the dynamics of traffic for those verticals. And maybe participation is free at first, but you have to think the other shoe is going to drop.

July 12, 2010 - 10:27pm

Aaron

I like how you tell it like it is. I am surprised you didn't mention Google's huge affiliate network too.

I heard someone say Google is not a search company but a data mining company.

Are they too big to fail? To big to care what anyone thinks of what they do? Do they ever really know the result of everything they do?

One has to wonder because "power corrupts..." always has and always will.

I hope Google can always maintain the highest integrity in everything they do.

Warner Carter
http://pageonebusiness.com

July 13, 2010 - 10:24pm

And let's not forget letting big AdWords spenders double, triple, and quadruple serve ads on multiple private domains in highly competitive verticals all while talking about how immoral and evil it is to everybody else. "Ah, but it helps the user experience and allows us to keep the free organic vegan food in the cafeteria." Everyone loves us! Keep buying your clicks boys and girls! And remember...Don't Be Evil!...we're watching you.

August 3, 2010 - 10:08pm

Thanks Aaron!
I don't know if Google even cares about moral issue with regards some of their business practices. As always what make the world move is money. And Google is one of it's owners!

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