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Jan. 11, 2008 at 9:28am Eastern by Danny Sullivan
The New Yorker On Google: Avoiding Regulation, Arrogance
Just before New Year's, I published a fictional look at what might happen to Google if it was forced to breakup due to government regulation. In The Search Party this week from The New Yorker, there's a nice long look by author Ken Auletta on how such efforts to regulate Google might be developing in reality. It also covers some of the inner dynamics of the company's three major executives.
The article looks at how Google's growth has frightened those with vested interests (Viacom, Microsoft), as well as consumer and privacy advocates. From the article's opening:
In response to prodding by consumer activists, some government officials—notably Senator Herb Kohl, a Wisconsin Democrat—have begun to ask: Does Google, which today is among America’s ten richest corporations, with a market value of just over two hundred billion dollars, have too much power? (ExxonMobil, valued at just under five hundred billion, is No. 1.) Unlike Microsoft, which in 2000 was found guilty of anti-competitive behavior, a finding upheld in a federal appellate court, Google has not been charged with violating any laws. But there has never been a company whose influence extended so far over the media landscape, and which had the ability to disrupt so many existing business models.
It would be interesting to see some stats on the idea that Google has influence over media unlike any other company. Google has virtually no influence over broadcast media, which I believe is still the largest of the media outlets. Despite efforts with print advertising sales, it doesn't control nor have much influence over the vast print media industry. It doesn't control outdoor billboards, instead having to purchase space on them. Despite selling radio ads, it's still not a major player in that space much less actual radio programming. It has huge power on the internet, in terms of how it can send traffic to sites and the number of sites that are funded by Google. But even there, Google is not all powerful (if it were, it would have never needed to buy YouTube).
Somehow, I suspect there are examples of traditional media companies that have indeed had more influence than Google. But I agree with the second point -- Google is a disrupter unlike anything I can recall in my years. The company has apparently no limits on what it will try, making traditional businesses more than a little wary of it.
The article covers Google's now 30-strong lobbying organization in Washington DC, then touches on some of the many interests that are worried about Google, with ample quotes sprinkled in along the way, such as from Facebook's Marc Zuckerburg and Intel's Andy Grove. It covers some of the privacy concerns that have been raised, though a key quote from Google co-founder Sergey Brin resonates as counter to that:
How many people do you think had embarrassing information about them disclosed yesterday because of some cookie? Zero. It never happens. Yet I’m sure thousands of people had their mail stolen yesterday, or identity theft.
Auletta was also allowed to sit in on Google's executive management group product meetings, where CEO Eric Schmidt, Google co-founder Larry Page, and Brin have engineers come in one-by-one to defend and explain their current projects:
Page and Brin had wanted an upgrade of an existing product, and they were unhappy with what they were hearing from the engineers. At first, they were stonily silent, slid down in their chairs, and occasionally leaned over to whisper to each other. Schmidt began with technical questions, but then he switched roles and tried to draw out Page and Brin, saying, “Larry, say what’s really bugging you.”
Page said that the engineers were not ambitious enough. Brin agreed, and said that the proposals were “muddled” and too cautious.
“We wanted something big,” Page added. “Instead, you proposed something small. Why are you so resistant?”....
The product team went on to make a slide presentation, but everyone there realized that the issues would not be resolved that day. Schmidt told the team to report back with a detailed design “that is responsive to Larry and Sergey’s criticism,” and to clarify “what it takes to build a good product,” and what it would cost in time and money. However, he balanced this with praise: “But this is very well done. I love it when people show me the flaws in our products.”
In meetings such as this, Page and Brin are like a tag team, taking turns as they chide employees for devising something that is merely a “cute” solution, not a fundamental one. Schmidt says, “They think about what should be, and they assume it is possible.”
At the end, Schmidt ironically says that arrogance is what kills companies:
[Schmidt] believes that because Google is “run by three computer scientists we’re going to make all the mistakes computer scientists running a company would make. But one of the mistakes we’re not going to make is the mistake that non-scientists make. We’re going to make mistakes based on facts and data and analysis.” He paused. Then he said, “What kills a company is not competition but arrogance. We control our fate.”
I say ironically because at this point, Google itself has developed a significant reputation for arrogance, from how it has entered into new areas without working with existing stakeholders, to how it has refused to provide features to advertisers assuming they would be too incompetent to use them, to how it has assumed that people know it will never do harm to them, rather than the reality that people naturally worry about big corporations. The company has made great strides in losing some of its arrogance, but it remains one of the toughest challenges ahead.
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