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a googled world « Previous | |Next »
August 16, 2011

In How Google Dominates Us at the New York Review of Books James Gleick gives us an insight into the information economy, advertising and Google. Advertising in the virtual economy is so different from what we have become used to in the street.

Gleick remarks:

How thoroughly and how radically Google has already transformed the information economy has not been well understood. The merchandise of the information economy is not information; it is attention. These commodities have an inverse relationship. When information is cheap, attention becomes expensive. Attention is what we, the users, give to Google, and our attention is what Google sells—concentrated, focused, and crystallized.Google’s business is not search but advertising. More than 96 percent of its $29 billion in revenue last year came directly from advertising, and most of the rest came from advertising-related services. Google makes more from advertising than all the nation’s newspapers combined

It's a money machine: a system of profitable cycles in place, positive feedback pushing advertisers to make more effective ads and giving them data to help them do it and giving users more satisfaction in clicking on ads, while punishing noise and spam. Today Google’s ad canvas is not just the search page but the entire Web.

That sure puts Murdoch's News International in the shade in terms of data mining (think of Google's maps, translations, street views, calendars, video, financial data, and pointers to goods and services) advertising and cash flow. Google now seems to be everywhere. Google continues to build the largest computing infrastructure on the planet, but still manages to generate large amounts of liquidity.

If the company derives much of its revenue from advertising, then to grow this market, it needs to stop people spending time in closed environments, such as social networks where Google has no direct access (such as Facebook). As David Glance points out at The Conversation:

Google is always striving for cleaner and more comprehensive information about consumers, their preferences, connections and habits. The company collects all of its information using computer software executing sophisticated algorithms.The more you control the way the information is presented and, more importantly, the links between that information (i.e. people’s identifiers), the easier that information is to collect. The last thing Google wants is the messy, anarchic environment of the Bazaar, where people can be anonymous, have multiple identities, interact with anyone they please, and remain unobserved.

It looks as if we need a data protection watchdog.

The potential threats to Google is any product that stands between the user and Google and has the potential to distract the choice of search destination is a threat to its search business, augmented by its amazing AdWords monetization framework. A great example is Firefox. In The Freight Train that is Android Bill Gurley says that:

Android, as well as Chrome and Chrome OS ... are not “products” in the classic business sense. .... Rather they are very expensive and very aggressive “moats,” funded by the height and magnitude of Google’s castle. Google’s aim is defensive not offensive. They are not trying to make a profit on Android or Chrome. They want to take any layer that lives between themselves and the consumer and make it free (or even less than free). Because these layers are basically software products with no variable costs, this is a very viable defensive strategy. In essence, they are not just building a moat; Google is also scorching the earth for 250 miles around the outside of the castle to ensure no one can approach it.

Google's strategy is to flatten anything or anyone that stands between its advertising business and us, the eyeballs. Google strategy is to use its products and services (smartphone OS, email, maps, photo-editing) in order to sell ads.

| Posted by Gary Sauer-Thompson at 4:40 PM | | Comments (1)
Comments

Comments

Google is the gateway to the internet for many. If you want to find something on the net, you google it.Google's power is undeniable.

Hence the anti-trust probes in the US by the Federal Trade Commission (FTC).