Google Learns about Ben Franklin’s Maxims
July 19, 2008
This is an opinion piece.
My 7th-grade teacher, Miss Soapes, was a Ben Franklin groupie. Of course, Mr. Franklin departed early life in 1790, and I was in the 7th-grade in 1957. To Ms. Soapes, Mr. Franklin was at hand. Her favorite Ben-ism was:
There are no gains without pains.
Google certainly understands the meaning of Mr. Franklin’s insight. After a decade of effort, Google has arrived at the summit of the Web search and online advertising mountain.
The Google brand is one of the most recognized in the world even though most people who use Google every day don’t know that the company’s name is a corruption of googol, a number that is equal to the digit one followed by 100 zeros.
Google accounts for about 70 percent of the Web searches in North America and even more in Denmark and Germany where Google enjoys an 80 percent or more share of the Web search traffic. Only China (www.baidu.com) and Russia (www.yandex.com) resist the charms of the GOOG.
In a miserable economy, Google’s second quarter revenue missed Wall Street’s estimate by a few pennies. Within moments, Google was a loser. I was shocked by the negative turn, but my surprise was nothing to shareholders who watch the Google share price drop below $490 in after hours trading right after the results came out. Financial success in today’s high-technology sector is rare indeed. But Wall Street wizards have come to expect stellar performance from the Mountain View, California, company.
The company has been somewhat less successful with its non-search and non-ad initiatives. But the lack of success is a function of comparing Google’s ad revenues with revenues from its other units. For example, in FY2007, Google reported less than $200 million in revenues from its much-watched enterprise search and services unit.
However, when I worked through Google’s financials and their less-than-helpful revenue breakouts, I identified revenue from Google geospatial services, Google’s educational sales, and fees paid by developers. After fooling with assumptions and a quite bout of spreadsheet fever, I estimated that Google’s non-search earnings that could be viewed as enterprise-centric could have been as much as $400 million. Compared to Google’s FY2007 revenue of $16.6 billion, the $400 million is larger than Autonomy (about $300 million), Endeca (about $110 million) and Fast Search & Transfer (about $70 million but subject to change) in the same 12 month period. The acquisition of Postini is likely bump these revenues upward in FY2008.
So Google, at least in enterprise revenues, is outperforming some companies that have a bigger footprint in the enterprise and a longer track record in search, information processing, and related services.
In short, the Google seems to be at the top of its game, and it is pushing into other important business sectors. Mobile services have grabbed headlines, but there are others such as the payment system CheckOut and Google’s rapidly expanding developer program, among others.
Now back to Mr. Franklin.
The maxim reminds us that pain accompanies gains. There is no doubt that Google has worked hard to establish dominance in online search technology, online advertising, and digital services. You can find a recently update listing of the pies into which Googzilla has thrust a claw at http://en.wikipedia.org/wiki/List_of_Google_products.
However, in the last few months (it is late July 2008 as I write this column), Google has come under withering fusilades of barbs and darts. Here’s a run down of a few of these anti-GOOG actionsITEM: Google recently raised its employees’ day care rates by 75 percent, making the service practically unattainable except to the most well-paid – because the company thinks its services have to be the best of the best. Looks like Google’s halo is getting tarnished – day care shouldn’t be just a perk, it’s far too important to parents. Source
ITEM: The birth of Google.org, a philanthropic arm, is being eyed suspiciously, because it’s invested about $75 million into five projects. For a company that’s turning $16 billion a year, that’s a token effort–especially when co-founder Sergey Brin says “This is not a charity” about his company. Source
ITEM: Google News appears to be an afterthought, now stuck in neutral and falling behind. Even worse, there are no ads on the site, and traffic is way down–does Google even know what it’s doing with it? Source
Minor, one might assert, and I would agree. But there are two legal matters that are making headlines as well.
Viacom’s lawyers have kept Google hopping. Google has been ordered to provide scrubbed usage logs for the YouTube.com service. I am no legal whiz, but what’s clear to me is that Viacom’s $1 billion lawsuit makes a giant, traditional media company look like a giant, traditional media company wearing a white hat. Googzilla, on the other hand, is viewed as the outlaw. Google, as I understand the matter, is not taking proactive steps to protect the traditional media company’s intellectual property. Google counters that the company complies with the law. Based on my reading of the articles about the Google-Viacom showdown, there is a great deal of gray on both sides of the argument. Google, however, is not able to make the publicity dissipate.
In fact, the Viacom request for YouTube.com usage logs ignited a brush fire among privacy advocates. Set aside the Google-Viacom legal matter. Google is walking a knife-edge with its usage data. A core strength of Google could become its greatest liability in legal tussles and among its users. Lawyers and privacy–these two issues could hobble, cripple, or kill Google’s business as it exists today. Scary, negative, and new, and I don’t think Google knows how to mollify these jinn.
Another $1 billion problem is LimitNone. This small company filed suit against Google alleging that Google violated consumer fraud laws in Illinois and misappropriated LimitNone’s trade secrets. As I understand this dust up, LimitNone showed Google executives a LimitNone program in early 2007. Google made LimitNone part of its Enterprise Professional Program. To cut to the chase, Google fast-danced LimitNone and then rolled out a competitive product called Google E-Mail Uploader. LimitNone called its attorney and started the legal steamroller’s engine. Google, based on my research, has made some changes to its uploader, but the public relations buzz machine has cast Google in the role of a bully. Because Google settled a dispute with Yahoo with regard to online advertising, Google has a track record. As you recall, prior to Google’s initial public offering, Google paid about $1 billion to Yahoo. Yahoo dropped its legal action in this matter. One of my engineers said at lunch today, “Might be a pattern.” I don’t know, but LimitNone perceives its treatment, if true, is worth $1 billion. That’s a
lot of money even for Googzilla.
Let’s step back and ask this question, “What’s happening?”
Google is now 10 years old. If one converts that to Internet time, Google is long in the tooth and mature. Litigation is the life blood of some American professionals, but two $1 billion actions is somewhat unusual for a company that indexes Web sites and sells ads. Obviously Viacom and LimitNone have
strong feelings about Google’s behavior. Maybe Google is innocent, but I think the coverage of these actions is a 180 degree shift from the coverage Google received two or three years ago.
Google has been characterized as disorganized, arrogant, and like a college dorm. What was cute in 1998 is not amusing LimitNone, Viacom, and Googlers priced out of Google day care.
Google has been on a transparency campaign since April 2008, and I think many of the company’s announcements and interviews have helped me gain a better insight into this most important search company. However, with the negatives that are spilling into my news reader, I question whether transparency is intended to help me entertained Google or to exercise cognitive hacking on a large scale.
Cognitive hacking, if you are not familiar with the term is a form of information management designed to shape perceptions. In a sense, cognitive hacking is a step up from disinformation. When cognitive hacking is correctly implemented, the disinformation is information. Therefore, those cognitively hacked cannot perceive accurate information as accurate. Keats wrote “truth is beauty”. The cognitive hacker writes, “truth is the reality we provide”. Quite a change from 19th century romanticism to 21st century
informationism! See “Cognitive Hacking: A Battle for the Mind”, IEEE Computer, August 2002, Volume 35, Number 8 by George Cybenko, Annarita Giani, and Paul Thompson.
I have no solid evidence that Google is in the cognitive hacking, disinformation, or information control game. I did find quite interesting this Google invention, published on July 15, 2008, by the US Patent &
Trademark Office. US7401072, ³Named URL Entry². Awarded to Google, the patent discloses a system for performing natural language search on words typed in a browser¹s navigation bar. The idea is that when Google Toolbar, Google ig, or a Google-friendly browser is installed on a user¹s system, a user can type queries in the navigation bar, not just the search box.
The idea is that a user within a Google stateful environment such as the
Google Toolbar, Google “ig” or possibly a Google browser has a search alternative. The navigation bar
becomes a search box. Google parses the query in the navigation bar and returns a list of results. The user sees what Google wants the user to see.
I want to track this type of environmental function. As I do that, I think it is important to monitor how the media and users perceive Google. No longer an underdog, Google may be the “new Microsoft”, a company that everyone loves to hate.
In the meantime, Google’s public relations and marketing units may want to heed another of Miss Soapes favorite quotes from the canny Philadelphia scientist and raconteur:
A small leak can sink a great ship.
Stephen Arnold, July 18, 2008
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