Ken Auletta - Googled - The End of the World as We Know It

Google appears to be well positioned for the foreseeable future, but it is worth remembering that few companies maintain their dominance. At one point, few thought the Big Three auto companies would ever falter-or the three television networks or AT amp;T, IBM, or AOL. For companies with histories of serious missteps-Apple, IBM-it was difficult to imagine that they’d rebound, until they did. To avoid the roller coaster, Google has to avoid two sets of obstacles, one external, the other internal.

THE EXTERNAL HURDLES START with Microsoft, but they don’t end there. Because Google has been so audacious, it has “waked up the bears,” colliding with various industries and companies. Alert to Google’s growing dominance, Verizon in late 2008 chose Microsoft’s search engine for its mobile phones. Newspapers and magazines now want Google to pay to link to their stories. Television and movies seek license fees from YouTube. Telephone companies fear Google’s Android. Advertising agencies seesaw back and forth between wariness and hostility. Cable and telephone broadband providers are angry about Google’s call for an “open net.” Rupert Murdoch is unhappy that Google is likely to end its lucrative advertising guarantee to his MySpace when the contract expires in 2010, as Time Warner was when Google announced in early 2009 that it would sell its 5 percent stake in AOL, cheapening the value of AOL and of Time Warner’s stock. Microsoft needs no reminders that Google is their enemy and was reminded of this in July 2009 when Google announced-as Netscape, to Microsoft’s chagrin and alarm, did a decade earlier-that it was retooling its browser to become an operating system for PCs, one without boot-up delays and that would be simpler and faster and cheaper than Windows. (Of course, Microsoft countered with a Web-based version of its Office software that is also free.) Overseas, Google is challenged. Its social network site, Orkut, has seen its market share slip in countries like India and Brazil, where it was once dominant. Even in search, there has been slippage; in Russia, a private start-up named Yandex has a market share approaching 50 percent, well ahead of Google. As with nations, there are few permanent allies. Friends like Apple are angry about Android, and although Jeff Bezos was an original Google investor (and declines to say if he still owns Google stock), Amazon is mounting a cloud-computing challenge as Google is mounting an electronic book challenge. “These companies air kiss each other, just as any Hollywood company does,” observed Andrew Lack, the former president of NBC and the CEO of Sony Music, now the CEO of the multimedia division of Bloomberg LP. “So their level of sincerity is not much different than the traditional Hollywood. Usually we think of Hollywood and Washington, D.C., as company towns. Ironically, Silicon Valley is often right there with them.”

Google knows that one day its cold war with Facebook could turn hot. By March 2009, Facebook had 200 million users, double the number it had when Sheryl Sandberg joined a year earlier. Sandberg projected that by the end of the year, Facebook would have 1,200 employees. Despite sneers that Facebook makes no money, Sandberg said if her company extracted the money it reinvests in its computerized infrastructure, “we’ve been profitable for seven quarters.” (Of course, one can’t extract these core business expense.) By the fall of 2009, she predicted that Facebook would take in more cash than it expends. Asked whether Facebook was a threat, Bill Campbell replied without hesitating, “Anybody that gets a widely accepted user platform is to be worried about.They could be the start page for people that use the Web.” The Google model is based on getting users out of Google and to other sites, on maintaining the Internet as the primary platform. Facebook and other social networks seek to keep users on their sites, to become the hub of their online lives, to become their home.

Social networks might pose a threat to Google search. At the MIT Media Lab in the winter of 2009, a Ph.D. student named Kwan Lee was devising a mobile phone application for a social network search function. Lee began with the premise that “Ads on the side are not useful to me.” Google search, he said, “is a pull model,” in which the search program aggregates data and lets users decide what is useful. Lee thinks it is difficult for users to “pull” the data they want from the hundreds of thousands of links received in response to a single search query, much of which he considers spam. As a substitute, he is devising a “push” model with which friends who are part of a social network could push tips to friends, sharing what they purchased. It would also allow participants to ask questions of friends, who are likely to deliver more precise and trusted answers. “This makes search much more efficient,” said Lee, fondling his iPhone in his space on the fourth floor of the Lab. “My goal is to reduce and eliminate spam,” to allow “people to get recommendations from friends.”

This could pose a threat to Google, for although it has a broader base of data, social networks like Facebook, Twitter, Ning, or Linkedin retain more in-depth information about individuals and their community of friends. A familiar brand name like Amazon could also pose a challenge. “What happens if people searching for a product go right to Amazon and not to Google?” asked an important Google adviser.

Google’s founders are acutely aware that search is still fairly primitive. Type into your Google search box “Was Shakespeare real?” and in less than a second up pop 5,06,000 results. Because many books have been written exploring whether someone other than William Shakespeare penned his plays, one result would not be possible or even desirable. But 5 million? Page and Brin often say that their ideal is to have so much information about their users that Google can devise an algorithm that provides a single perfect answer.

Kwan Lee is not alone in thinking that Google is mistaken to treat search as an engineering problem. John Borthwick, who created one of the first city Web sites, sold it to AOL in 1997, and later became senior vice president of technology and alliances for Time Warner, thinks Google “lacks a social gene.” (Borthwick has since founded and now runs Betaworks, which seeds money for social media.) Information, he said, “needs a social context. You need to incorporate the social graph [the connections among people] into search. Twitter becomes a platform for search. People put out Tweets-‘I’m thinking about buying a camera. What does anyone think of this camera?’” It’s the wisdom of crowds-your crowd of friends. “Google is just focused on CPU-central processing computers-and ignores the processing of the human brain.” He believes this makes its search vulnerable. Google obviously has come to share this concern for a senior Google executive confirms that they tried-and failed-to acquire Twitter.

Search Engine Land ’s Danny Sullivan identifies another variation of this threat. “If I were Google I’d be worried about vertical searches,” he said-searches that tap the knowledge of experts. Jason Calacanis, a Web entrepreneur, started a niche search engine, Mahalo.com. The problem with horizontal search, Calacanis said, is that it spews out too much information and assumes that the most linked sites are best. “The ‘wisdom of crowds’ is great to find trends,” but there is such a “mob” of voices on the Web that search results produce too much useless information. He said he raised twenty million dollars to hire experts who produce targeted sets of no more than seven results-the seven best hotels in Paris, for instance. He hoped experts in various fields could produce answers to twenty-five thousand questions and computerize these. He vowed not to assign cookies to track a user’s past searches, and said he’d be content in ten years if Mahalo had ten percent of all search traffic. He saw Google more as a partner than a competitor; the AdSense program generates a good deal of his site’s income. The competition he worried about is from old media. “I would have been afraid if the New York Times or Bloomberg took a bunch of editors to compete with us.” Calacanis still can’t understand why they didn’t enter vertical search themselves. With experts in food, wine, movies, art, Iraq, finance-you name it-big newspapers might have been a search contender.