The Fall of The Benevolent Google

logo.gif Louis Gray has a post where he declares that Google will never be “evil”. I found it very interesting for a few reasons. Why does Google seem so benevolent? Why do so many people implicitly trust them? As Louis highlights, part of it is the corporate culture they’ve built. I think, however, there is a more concrete reason, one that is not guaranteed no matter how much you want to like the company.

How many of Google endeavors really generate revenue? In my mind, there is only one reason why they are able to embark on so many projects that seem to place the users best interests first, because the whole company is subsidized by the real Google, the advertising company.

Google has the luxury of being highly profitable, which allows it to branch out in many non-traditional ways.

Asked what a business is, the typical business man is likely to answer, “An organization to make profit”. The typical economist is likely to give the same answer. The answer is not only false, it is irrelevant.

The prevailing economic theory of the mission of business enterprise and behavior, the maximization of profit [...] cannot explain how Sears, Roebuck or any other business operates, or how it should operate. The concept of profit maximization is, in fact, meaningless. The danger in the concept of profit maximization is that it makes profitability appear a myth.

Profit and profitability are, however, crucial – for society even more than for the individual business. Yet profitability is not the purpose of, but the limiting factor on business enterprise and business activity…
– “The Essential Drucker”, Peter Drucker
emphasis mine

Sure, you can argue that most of their projects to improve the web users experience ultimately benefit their ad business, but that kind of thinking is only tolerated when a company is highly profitable and experiencing significant growth. The only thing that needs to happen for Google to start acting “Evil” is for ad profits to decline and/or company growth to start missing Wall Street expectations.

54132892_7efdaf2347_t.jpgYou would immediately see projects that could only loosely be justified start to get canceled. Anything not generating direct profits would be scrutinized. If the ad business were to become really threatened, you would begin to see Google tapping a lot more of the value it has stored up in the power it has accumulated.

As long as things are going well, the decisions to create these projects, and the way they’re handled in “non-Evil” ways won’t be questioned. The moment that profitability comes into question, there will be a natural pressure to exploit Google’s power position. If the management, employees, and engineers are unwilling to exploit the advantages they’ve accumulated, it is highly likely they will be replaced by ones who will (implicitly by the shareholders).

For those that think Google can never be Evil, I hope they’re right. I hope Google always generates enough profits to place users, and user experience, first. I don’t think it can last forever. Their advertising cash-cow will being to dry up at some point. That will likely be the end of the benevolent Google. It is, after all, still a corporation whose business activities are limited by profitability.

Update: Doc Searls has written a much more eloquent piece describing this same concern.

Neither Google nor its business model are trees that grow to the sky.

Advertising is a bubble. If that’s a true statement, Google is a bubble too. And if that’s true, many of the goods we take for granted on the Web are at risk. Let’s run down some evidence.


Comments on this entry are closed.

  • http://hette.ma Dennis Hettema

    I wouldn't have been able to say this any better. Great post mate!

  • http://www.victusspiritus.com/ Mark Essel

    That's the test Mike, when the chips are down what will we see as the true character of the Google business. I hope to see it spur further creative leveraging of their assets inline with their modo (Paul Buchheit's influence), do no evil.

    We'll see.

  • http://www.mattcutts.com/blog/ Matt Cutts

    Hi Mike, I think the past year has actually been a pretty good test. The economy tanked and Google had to examine/prioritize our resources and efforts just like every company. Yet in this past year, you've seen a strong push for open-source (Chrome->Chromium, Chrome OS->Chromium OS, Android, Wave). You've seen a renewed commitment to let people remove their data from Google (e.g. easy batch export of their Google Docs), increased efforts on transparency (e.g. Google Dashboard to show the sort of information that we know about you), and work to make the net better (e.g. Public DNS, Page Speed, Closure, Google Web Toolkit, AJAX Libraries API, improvements to webmaster console) that don't make Google any money, but make the web better for everyone. So I think the past year when the economy has been uncertain has been a pretty good way to show that Google's intentions remain to make the net better.

  • http://mikepk.com mikepk

    Matt that's true, but I don't think it's the full test that I was talking about. I'd have to go back and check the numbers, but Google continued to grow and hit their profit and revenue targets throughout this uncertain time, right? Even so, I think we saw the beginnings of what I was talking about. Google canceled several projects (Google Notebook and others I can't remember off the top of my head) that weren't generating direct revenue. There were experiments in making the advertisements more aggressive (ads that slid out from the side bar to cover content, etc…).

    I think you guys do great work, have contributed tons, and I appreciate your corporate philosophy, but I think Google has yet to really experience the downturn in a company that all companies inevitably face. I guess I have some personal experience since I worked at a company that had already experienced the downfall after gangbuster growth (Data General) and worked at one that transitioned through a peak from crazy growth to a decline (EMC). The stories from the “old timers” were really eye opening about how things were when no one questioned decisions because the company was making money vs. how corporation behaved once the chips were really down.

    I don't think this will happen tomorrow, or anytime soon, but I think it *will* happen at some point. I hope you guys can keep to your ideals when that happens.

  • http://www.louisgray.com/live/ Louis Gray

    Your summary is essentially the gist of my post – and it doesn't even start to take into account many of the Open Web-related 20% projects from Google team members.. PubSubHubbub, WebFinger, Salmon, you name it. Google has had its opportunities to do evil and opted not to.

  • sue_anne

    One thing you didn't mention, and it directly relates to the ad program, is Google's decision to give free ad “grants” to non-profits. They give thousands of $$$ of advertising away on a daily basis. It's a great program that they've really nurtured and grown.

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