March 1st, 2007
Yes Donna, Google is overrated
Donna Bogatin is right — Google is indeed overrated.
In her Fast Company debate with Google apologist Danny Sullivan, Donna argues that the Mountain View based leviathan is not a "well-rounded" company. Donna is being excessively polite here. The truth is that Google is as "unrounded" as a Roman road. Through a mixture of algorithmic brilliance and even more brilliant good fortune, the Google guys won the digital lottery with the phenomenal commercial success of their search engine. But, as Donna argues, search represents 99% of Google's revenues. That's a we-got-lucky-with-one-product company rather than a grown-up diversified business. Even Microsoft, having won an earlier version of the lottery (inside and outside the law courts), successfully diversified into areas outside its monopolistic operating system.
Donna exposes the "democratic" illusion in which Google has veiled itself. Listening to Eric Schmidt these days, you'd think that Google was simultaneously committed to solving world economic inequality and providing free knowledge to the world's intellectually undernourished masses. But, as Donna notes, there is nothing "democratic" about its PageRank software which puts search advertisers in Google's "black box", thereby forcing its small business customers to "bid up their own ad rates." Is this democracy? More like plutocracy — an unrounded plutocracy with all the cash flowing into the Googleplex's bulging coffers.
Where Donna is most convincing is in her exposure of Google's "unsustainable business model":
"GOOG is fueled by an unsustainable business model: The selling of ads against content that it does not own, that it has not compensated IP owners for and that it has no explicit legal right to exploit commercially. The "millions" of businesses and individuals "voluntarily" forking over their proprietary content and personal data to Google "every day," sell themselves and their assets short, while Google's market cap balloons."
Exactly. The February 13, 2007 decision by a Belgian court to fine Google for violating Belgium's copyright laws, represents an important legal challenge to the way that Google unreasonably profits from the labor of traditional content creators. The truth about Google is that the behemoth owns nothing but the secret sauce of its own search engine algorithm. By caching links to news stories, the search engine is monetizing the physical content of newspapers, magazines and publishers and then not sharing this revenue with these content providers. Some would call this theft; others would describe it as smart business. But whatever you call it, such a legally ambivalent business model isn't sustainable for a company now with a market cap north of $150 billion. Google has been lucky to date. But I agree with Donna. Don't count on the Google guys indefinitely maintaining their Midas touch.
Andrew Keen is author of Cult of the Amateur. See his full profile and disclosure of his industry affiliations.
