Google Financial Services: Another Wobbly Step

September 4, 2009

I described in 2005 several market sectors where Google wanted to probe and then (if the clicks arrived in sufficient numbers) enter. The idea was that for Google to sustain rapid growth it had to jump into new market sectors, not hive off different chunks of the search and ad business. This notion is now clearly evident, although in 2005 even the banks who paid me to describe Google’s long term strategy thought I was a stand up comedian on Hee Haw. Now the telcos, publishers, and new media fund managers are not finding my comments quite so entertaining.

Back to Google Global Bank or GBB: I articulated this idea at the 2006 BearStearns’ Internet conference and gave some examples; namely, the financial plumbing that hoses around Google’s Mississippi River of cash from advertising. This is cash in and cash out, score keeping, and a number of other automated services that allow Google to keep certain overhead costs associated with money under control. I also pointed to the then little used Google Check Out service. One brilliant MBA in the audience told me that PayPal was in a “game over” position. I replied, “Well, maybe.” The final example I gave was Google’s pretty lousy service at I reported that I had heard Google had hired at least one person who had worked on the popular Yahoo Finance site. Another whizzy young thing now working as a Wal*Mart stock clerk pointed out that Yahoo Finance was a killer service and Google had a long way to go. I agreed.

With baby steps, the Google has been moving forward in the world that I sum up with the phrase Google Global Bank. You will have to spend money to get more pieces of the puzzle and descriptions of the technologies Google has disclosed to provide turbo chargers to its core revenue machine of advertising.

Google revealed after I had left to take my technical advisers Tyson and Tess to the park to chase rabbits and squirrels. You can read the somewhat disingenuous description of some new financial data services that Google made available for free in “Google Search Volumes and Economic Activity.” On the surface, Google’s resident economic wizard has dipped into some of Google’s data to make it possible to see how search volume relates to certain economic indicators. There’s the “aw, shucks” understatement and some Google-style graphics that are primitive compared to the shiny world of Microsoft’s user experience demos. Don’t be fooled.

Here are my observations:

First, countries issue economic indicators. Government agencies issue economic indicators. Ad companies usually issue proposals. Google is falling into the country and government agency camp, not the ad camp. This is important because I asserted in 2007 that in order to understand Google’s vision, the organization has to be seen as a new type of enterprise, one that operates in many ways like a nation state or at least like Monaco or Luxembourg. (Feel free to laugh and snort. I have come to expect these reactions.)

Second, the notion of an indicator is that only an entity with a super view of data can generate them. When blue chip consulting firms like Booz, Allen & Hamilton undertook SWEC (Study of World Economic Change) in the late 1970s, which I worked on. We had to enlist the support of William Simon (the charming former Secretary of the Treasury) and a number of major (at that time) financial institutions. Today is not 1977, of course, but it is interesting to note that Google is happily using its own data and no blue chip line up of commercial and governmental entities to produce the data., Google is just using its own data. There’s an important point in that self sufficiency. I think it is evident that Google is operating from a super view position. This is another important point in one’s analysis of Google.

Finally, the outputs are canned. Google has robust analytic routines and has disclosed in its public writings analytic tools that would make DE Shaw’s remaining quants and the founder of Financial Engines writhe in calculating excitement.  Yes, the Google is * that * good in analytics, probably one of the top financial analytics outfits in the world.

The point is that this new service is one more component of Google Global Bank. I am of the opinion that more Google financial services will wobble out of Mountain View in the next 12 months. A Google credit card with cash back for AdWords purchases? A Google personal finance service that is intuitive and mint flavored? Interesting in my view.

Stephen Arnold, September 3, 2009


One Response to “Google Financial Services: Another Wobbly Step”

  1. Blaine Johnson on January 31st, 2011 11:35 am

    I have run into several odd Jeep sales that are from military people (so they say) and are on their way to afganistan and want to sell their Jeep at quite a low price and google will handle the transaction. Is this on the up and up or should a person beware?

    Blaine Johnson
    Hackberry Arizona

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