[governance] FW: [OIA] Google and the Search for the Future

[Michael Gurstein]

I think this article is of more general interest as it points to the range
of Internet relad issues that are emerging at least from Google's
perspective--but of course, Google is, at least for the moment, at the very
centre of much of that world.
 
M
-----Original Message-----
From: oia-bounces at lists.bway.net [mailto:oia-bounces at lists.bway.net] On
Behalf Of Charles Brown
Sent: Sunday, August 15, 2010 10:32 AM
To: OIA List
Subject: [OIA] Google and the Search for the Future


Some thoughtful discussion for a change via a MSM conduit.  

Hat tip:  Frank Collucio


Google and the Search for the Future 


The Web icon's CEO on the mobile computing revolution, the future of
newspapers, and privacy in the digital age.

http://online.wsj.com/article/SB10001424052748704901104575423294099527212.ht
ml?mod=WSJ_Opinion_LEADTop#articleTabs%3Darticle

 By HOLMAN
<http://online.wsj.com/search/term.html?KEYWORDS=HOLMAN+W.+JENKINS%2C+JR.&by
linesearch=true> W. JENKINS, JR. 


To some, Google has been looking a bit sallow lately. The stock is down.
Where once everything seemed to go the company's way, along came Apple's
iPhone, launching a new wave of Web growth on a platform that largely
bypassed the browser and Google's search box. The "app" revolution was going
to spell an end to Google's dominance of Web advertising.

But that's all so six-months-ago. When a group of Journal editors sat down
with Eric Schmidt on a recent Friday, Google's CEO sounded nothing like a
man whose company was facing a midlife crisis, let alone intimations of
mortality.

For one thing, just a couple days earlier, Google had publicly estimated
that 200,000 Android smartphones were being activated daily by cell carriers
on behalf of customers. That's a doubling in just three months. Since the
beginning of the year, Android phones have been outselling iPhones by an
increasing clip and seem destined soon to outstrip Apple in global market
share.

True, Apple sells its phones for luscious margins, while Google gives away
Android to handset makers for free. But not to worry, says Mr. Schmidt: "You
get a billion people doing something, there's lots of ways to make money.
Absolutely, trust me. We'll get lots of money for it."

"In general in technology," he says, "if you own a platform that's valuable,
you can monetize it." Example: Google is obliged to share with Apple search
revenue generated by iPhone users. On Android, Google gets to keep 100%.
That difference alone, says Mr. Schmidt, is more than enough to foot the
bill for Android's continued development.

And coming soon is Chrome OS, which Google hopes will do in tablets and
netbooks what Android is doing in smartphones, i.e., give Google a
commanding share of the future and leave, in this case, Microsoft in the
dust.

Can it all be so easy? Google's stock price has fallen nearly $250 since the
beginning of the year. Financial pundits have started to ask skeptical
questions, wondering why it doesn't give more of its ample cash back to
shareholders in the form of buybacks and dividends. Some suspect that all
that temptation merely encourages Mr. Schmidt, along with founders Sergey
Brin and Larry Page-the triumvirate running the company-to splurge on
gimmicky ideas that never pay off. Fortune magazine recently called Google a
"cash cow" and suggested more attention be paid to milking it rather than
running off in search of the next big thing.

But to hear Mr. Schmidt tell it, the real challenge is one not yet on most
investors' minds: how to preserve Google's franchise in Web advertising, the
source of almost all its profits, when "search" is outmoded.

The day is coming when the Google search box-and the activity known as
Googling-no longer will be at the center of our online lives. Then what?
"We're trying to figure out what the future of search is," Mr. Schmidt
acknowledges. "I mean that in a positive way. We're still happy to be in
search, believe me. But one idea is that more and more searches are done on
your behalf without you needing to type."

"I actually think most people don't want Google to answer their questions,"
he elaborates. "They want Google to tell them what they should be doing
next."

Let's say you're walking down the street. Because of the info Google has
collected about you, "we know roughly who you are, roughly what you care
about, roughly who your friends are." Google also knows, to within a foot,
where you are. Mr. Schmidt leaves it to a listener to imagine the
possibilities: If you need milk and there's a place nearby to get milk,
Google will remind you to get milk. It will tell you a store ahead has a
collection of horse-racing posters, that a 19th-century murder you've been
reading about took place on the next block.

Says Mr. Schmidt, a generation of powerful handheld devices is just around
the corner that will be adept at surprising you with information that you
didn't know you wanted to know. "The thing that makes newspapers so
fundamentally fascinating-that serendipity-can be calculated now. We can
actually produce it electronically," Mr. Schmidt says.

Mr. Schmidt obviously has an eye to his audience, which this day consists of
folks with an abiding devotion to the newspaper business. He speaks in
sorrowful tones about the "economic disaster that is the American
newspaper." He assures us that in the coming deluge trusted "brands" will be
more important than ever. Just as quickly, though, he adds that whether the
winners will be new brands or existing brands remains to be seen. On one
thing, however, Google is willing to bet: "The only way the problem [of
insufficient revenue for news gathering] is going to be solved is by
increasing monetization, and the only way I know of to increase monetization
is through targeted ads. That's our business."

Mr. Schmidt is a believer in targeted advertising because, simply, he's a
believer in targeted everything: "The power of individual targeting-the
technology will be so good it will be very hard for people to watch or
consume something that has not in some sense been tailored for them."

That's a bit scary when you think about it. But for investors and executives
the big question, of course, is which companies will control these
opportunities. Google may see itself as friend and helper to the media
business, but it also clearly sees itself in control of the targeting
information. Says Mr. Schmidt: "As you go from the search box [to the next
phase of Google], you really want to go from syntax to semantics, from what
you typed to what you meant. And that's basically the role of [Artificial
Intelligence]. I think we will be the world leader in that for a long time."

Between here and there, though, the company faces ever-growing legal,
political and regulatory obstacles. The net neutrality debate, which Google
has led, has taken a sudden turn that has many of its former allies in the
"public interest" sector shouting "treason."

What was most striking about the set of net neut "principles" Google
produced this week with former antagonist Verizon was that they didn't apply
to wireless. "The issues of wireless versus wireline gets very messy," Mr.
Schmidt told one news site. "And that's really an FCC issue, not a Google
issue."

Wait. Isn't the future of the Internet wireless these days? Isn't wireless
the very basis of the new partnership between Google and Verizon, built on
promoting Google's Android software? But Google has now broken ranks with
its allies and dared to speak about the sheer impracticality of net
neutrality on mobile networks where demand is likely to outstrip capacity
for the foreseeable future. 

If that weren't about to become a sticky political wicket for the company,
it also faces growing antitrust, privacy and patent scrutiny, fanned by a
growing phalanx of Beltway opponents, the latest being Larry Ellison and
Oracle. "There's a set of people who are intrinsic oppositionists to
everything Google does," Mr. Schmidt acknowledges resignedly. "The first
opponent will be Microsoft." 

Mr. Schmidt is familiar with the game-as chief technology officer of Sun
Microsystems in the 1990s, he was a chief fomenter of the antitrust assault
on Bill Gates & Co. Now that the tables are turned, he says, Google will
persevere and prevail by doing what he says Microsoft failed to do-make sure
its every move is "good for consumers" and "fair" to competitors.

Uh huh. Google takes a similarly generous view of its own motives on the
politically vexed issue of privacy. Mr. Schmidt says regulation is
unnecessary because Google faces such strong incentives to treat its users
right, since they will walk away the minute Google does anything with their
personal information they find "creepy."

Really? Some might be skeptical that a user with, say, a thousand photos on
Picasa would find it so easy to walk away. Or a guy with 10 years of emails
on Gmail. Or a small business owner who has come to rely on Google Docs as
an alternative to Microsoft Office. Isn't stickiness-even slightly
extortionate stickiness-what these Google services aim for?

Mr. Schmidt is surely right, though, that the questions go far beyond
Google. "I don't believe society understands what happens when everything is
available, knowable and recorded by everyone all the time," he says. He
predicts, apparently seriously, that every young person one day will be
entitled automatically to change his or her name on reaching adulthood in
order to disown youthful hijinks stored on their friends' social media
sites. 

"I mean we really have to think about these things as a society," he adds.
"I'm not even talking about the really terrible stuff, terrorism and access
to evil things," he says.

Not that Google is a doubter of the value of social media. Mr. Schmidt
awards Facebook his highest accolade, calling it a "company of consequence."
And though "there is a lot of hot air, a lot of venture money" in the sector
right now, he predicts that one or two more "companies of consequence" will
be born among the horde of new players just coming to life now.

A skeptic might wonder whether, despite present glory, Google itself might
yet prove a flash in the pan. The company has enormous technological
confidence. Mr. Schmidt describes how YouTube, its video-serving site,
almost "took down" the company in its early days, thanks to the swelling
outflow of video dispatched from its servers to users around the globe.
Salvation was the "proxy cache"-lots of local servers around the world
holding the most popular videos. "The technology that Google invented allows
us to put those things very close to you," says Mr. Schmidt. "It was a
tremendous technological achievement."

But with YouTube, as with lots of Google projects, there remains the
question of how to make money. Google captured the search wave and shows
every sign of positioning itself successfully for the mobile wave. As for
the waves after that, your guess may be as good as Mr. Schmidt's.

Mr. Jenkins writes the Journal's weekly Business World column. 

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