Authors: Ken Auletta
Tags: #Industries, #Computer Industry, #Business & Economics
Googled (50 page)
The other external threat to Google is government, a threat engineers have difficulty understanding; the Silicon Valley bubble can be as insular as the Beltway’s. Google had fair warning when the Federal Trade Commission held up its DoubleClick acquisition, and when the Justice Department threatened antitrust charges if Google did not relinquish its advertising deal with Yahoo. And these challenges were under the anti-regulatory administration of George W Bush. There is, with merit, a common belief at Google that the administration of Barack Obama and the Democratic leadership in the House are more sympathetic to Valley companies and technology issues. Eric Schmidt was an important economic adviser to Obama, and other Google executives, like David Drummond, were early and fervent Obama supporters. But Google would forget at its peril that Democrats traditionally favor more regulation, not less; that Google has made some powerful frenemies that command attention in Washington; and that Google juggles nuclear issues—privacy, concentration of power, copyright—that could explode at any moment. In May 2009, the Obama administration’s new antitrust chief, Christine A. Varney, announced that her department would more rigorously police tech firms like Google.
There are court threats and festering opposition to Google’s Book Search settlement. By the spring of 2009, the settlement was separating Google from members of “the tribe,” as Lawrence Lessig dubs them, who treat openness as a cause and crusade against those who advance their own narrow commercial interests and choke competition. The federal district court judge who must sign off on the agreement between Google and the publishers and the Authors Guild received amicus briefs from various groups asking him to address their antitrust and monopoly concerns. Under the terms of the settlement, Google was granted nearly exclusive rights to millions of “orphaned” books, or those books still under copyright but whose copyright holders are unknown. Because only Google would be granted the right to digitize these books and to sell them, the judge was petitioned to prevent a Google monopoly Librarians expressed concern that Google would monitor reading habits and compile data. Some literary agents protested, as did Charles Nessen and a group of Harvard lawyers, that Google did not have the right to abrogate an orphaned copyright. And with Google effectively locking up the right to digitize all the books ever published, including orphaned books, the claim was that competitors would be shut out. Safeguards were required, they asserted, to ensure that Google would not one day jack up the prices it charges universities and others. The federal judge gave opponents until October 2009 to register their complaints. Seeking to head off growing concerns among libraries, in May 2009 Google reached an agreement with the University of Michigan to grant libraries a say in pricing decisions and to settle disagreements by arbitration, a model it hoped to extend to other libraries. Ominously, the Justice Department also opened an antitrust inquiry. Many who petitioned the court or lobbied Justice acknowledged that Google’s effort to digitize books was salutary. Yet the din grew louder that Google was a mechanized steamroller.
And the U.S. government is not the only government Google must contend with. The European Union held up the DoubleClick merger, and may well object to Google’s worldwide book deal that was made with American companies and authors. China censored their search engine and, in early 2009, blocked YouTube for a time from appearing before the world’s largest Internet audience. As the Iranian government brutally suppressed street demonstrations in June 2009 not just with clubs but by jamming the Internet, the government of China had ordered PC makers to load filtering software on all machines sold after July 1. China claimed this would block pornography, but it would also grant the government a weapon to block political content it considered subversive. Not surprising, many governments are hostile to the idea of a free and open Web that Google advances, believing their national values—or the governing regime—are threatened. I soured on attending the World Economic Forum in Davos several years ago because I found too many panels there to be insufferably polite and boring—designed to bestow backslaps on corporate and government attendees. But what is mind stretching about Davos, and different from most conferences, is that attendees come from all over the world and bring with them different sets of values and assumptions about the meaning of words. I remember a panel in the late nineties moderated by Esther Dyson, an early champion of the Internet. She opened by extolling the democratic values—freedom, liberty, access to all information—advanced by the Web. The former foreign minister of Denmark chimed in with his agreement, emphasizing that the Web gave individuals more freedom. He and Dyson thought they were taking the unassailable moral high ground.
For the next several minutes, they sat slack-jawed as Singapore’s ambassador to the United States challenged them. He said his government licensed Internet use with the idea that the Web must serve society, not the individual. “By licensing you are asking for responsible use,” he said. An Egyptian diplomat educated in America chimed his agreement. He favored regulating “human dignity” situations, such as expressions that might be construed as “racist.” He urged the adoption of international standards to prevent freedom of speech from being too free.
Astonished, Dyson and the former foreign minister challenged these ideas as threats to “liberal values.”
“I am not a liberal,” a member of the Iranian Parliament shot back, declaring that his government opposed the “pollution” of Western democratic values spread over the Web. “A nonliberal system does not equal intolerance,” he said, explaining that his country favored “community” over “individual” values.
This exchange was a reminder that “common values” are not always common, and that Google, whose mission is to share and make the world’s information accessible, will always have government bears to contend with.
THE THREATS FROM WITHIN GOOGLE are as significant as those from without. “What Google should fear most of all is hubris,” said Yossi Vardi, the Israeli entrepreneur who funds start-ups and is a friend of Page’s and Brin’s. “If you are successful and young and everything plays in your direction, you feel you can do anything.” When Marissa Mayer said that Googlers love to battle over ideas but “everyone” shares “a similar motivation to do good for the world,” or when chief cultural officer Stacy Savides Sullivan said, “What separates us is that our founders care about users, not making money,” they sincerely meant it. But history is littered with examples of people who believed too much in their own virtue and lost the humility that is a counterweight to hubris. Page and Brin, observed Stanford’s Terry Winograd, “are utopians,” believing deeply that “if people have better information they will live better lives.... They are technological optimists in the sense of saying, ‘Let’s produce this technology and things will work out.’” They don’t always work out, and some of the clashes Google has had—with book publishers and the AP, or with ad agencies and governments—resulted from an inability to hear.
In the 1990s a coterie of math whizzes that included Nobel Prize winners Robert C. Merton and Myron S. Scholes crafted formulas they were certain would allow Long-Term Capital Management to consistently out-perform the stock market; they failed spectacularly because their computer programs lacked common sense. This is the same mechanical thinking that often overlooks the needs of workers when designing assembly lines. In the same way, Google’s engineers can get too wedded to their algorithms. As Google search has become more dominant, a chorus of complaints from media companies that the PageRank algorithm penalizes them has grown louder. By giving so much weight to the number of links a page received rather than the quality of the information reported, members of Google’s Publisher’s Advisory Council, which includes ESPN, the
Wall Street Journal,
Hearst, and the
New York Times,
complained that their links often appeared on page three or lower in the search results. Nat Ives of
Advertising Age
reported that the
Times
senior vice president, Martin Nisenholtz, told of doing a search for
Gaza
after the Israeli army launched an invasion to stop rocket attacks around New Year’s 2009. “Google returned links,” Ives reported, “to outdated BBC stories, Wikipedia entries, and even an anti-Semitic YouTube video well before coverage by the
Times,
which had an experienced reporter covering the war from inside Gaza itself.” While it’s true that judging “quality” in news is subjective, it’s also true that Google’s proclaimed desire to offer the best information often conflicts with algorithms that reflexively push to the top of the search results those sites with the most links. If such complaints received wide currency, they would sabotage the trust essential to Google’s continued success.
Wall Street Journal,
Hearst, and the
New York Times,
complained that their links often appeared on page three or lower in the search results. Nat Ives of
Advertising Age
reported that the
Times
senior vice president, Martin Nisenholtz, told of doing a search for
Gaza
after the Israeli army launched an invasion to stop rocket attacks around New Year’s 2009. “Google returned links,” Ives reported, “to outdated BBC stories, Wikipedia entries, and even an anti-Semitic YouTube video well before coverage by the
Times,
which had an experienced reporter covering the war from inside Gaza itself.” While it’s true that judging “quality” in news is subjective, it’s also true that Google’s proclaimed desire to offer the best information often conflicts with algorithms that reflexively push to the top of the search results those sites with the most links. If such complaints received wide currency, they would sabotage the trust essential to Google’s continued success.
Hubristically, Google engineers were convinced they could devise a system to successfully sell ads for YouTube. So far at least, they’ve failed. Why? They failed to comprehend the fear major advertisers have of placing their ads alongside potentially unfriendly user-generated content, and they failed to sufficiently anticipate that users would find ads intrusive. In early 2008, when Eric Schmidt envisioned employing a Google sales force of a thousand to sell ads for radio, Danny Sullivan was dubious. “They have no experience,” he said, echoing Mel Karmazin’s comments from his 2003 visit. “They may be able to cut costs, but a lot of people at Google don’t understand that selling other ads is not like a search auction. They don’t understand it is an art, not a science.” In late 2008 and early 2009, a somewhat humbled Google canceled its print ads and its audio ads programs, and pared two hundred sales and marketing jobs.
Frantically, Google adopted a new approach to YouTube. With the site then on course to lose about five hundred million dollars in 2009, Schmidt transferred Salar Kamangar, who had crafted Google’s first business plan and shepherded AdWords, to YouTube headquarters to work closely with its founders to design a monetization plan. And the management team at Google recognized that to attract advertising, YouTube could not rely on user-generated videos or three-minute clips from the networks. They needed long-form content, and in April 2009 made ad-sharing deals with the Universal Music Group, the world’s largest music company, to create a music video channel on YouTube, and with several Hollywood studios and CBS to air movies and a library of TV shows. More ads appeared when Google accepted that YouTube needed more professional content, and its losses were shrinking.
Size is a concern for a company with more than twenty thousand employees. Venture capitalist Fred Wilson, a principal in Union Square Ventures, unhesitantly believes Google “is a great company.” But he also believes: “They are a big company Maybe they can’t innovate anymore. It takes them meetings and processes to make decisions. Things don’t get launched as quickly. They missed the whole video thing. YouTube beat them to it. They had to buy YouTube. They missed the whole social networking thing. Facebook beat them to that.”
Losing focus is another danger for a company this large and wealthy. “My sense is that Google is like that fourteen-year-old who suddenly gets to wear grown-up clothing and maybe looks old enough to get a drink at a bar,” said Strauss Zelnick, CEO of ZelnickMedia, which invests in and manages an array of media properties. “There’s really nothing that doesn’t look cool and interesting to a fourteen-year-old with an Amex card and no spending limit. Do you remember Michael Armstrong?” Zelnick recalled that Armstrong, the former CEO of AT&T, once boasted of spending a hundred billion dollars on acquisitions over four months. “I said, ‘He’s done.’ No one does that well.
Focus.
Google has done a phenomenal job. Right now they can afford to, but at some point in time they are going to need to have a crisp vision of who they are and where they’re going, and focus on that.”
Focus.
Google has done a phenomenal job. Right now they can afford to, but at some point in time they are going to need to have a crisp vision of who they are and where they’re going, and focus on that.”
Although Mary Meeker believes Google is a great company, she offers another caution: the power and precariousness of a culture shaped by its founders. When founders stay involved in the enterprise—she cited Steve Jobs of Apple and Larry Ellison of Oracle—they often maintain the core values and mission of the business and bring something invaluable to the enterprise. But Jobs and Ellison lost focus, and watched their companies suffer. They also profoundly learned from their ordeals, while Page and Brin have yet to “experience nasty failure” and its concurrent ability to teach, as Al Gore also noted. And now with wives, and a son born to Brin in early 2009 and Page expecting his first child in the fall of 2009, and with incomprehensible wealth and two huge airplanes more conveniently at their disposal—Brin and Page persuaded NASA to waive its prohibition on private planes parking or using the nearby NASA facility—both young men are in the office less, jumping on their planes to take photographs in Africa, to explore the wilds of Alaska; Page likes to tool around in his Tesla electric car or fly his own helicopter and Brin to spend time building his own kite-powered sailboat. Will their attention wander from Google?
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