Google’s Business Model

From Kaplak Blog. Promoted by Kaplak Stream

Nicolas Carr has written an in-depth analysis of Google and the implications of the company’s rapid growth and business style, which is well worth the read. It is a clearheaded and concise piece, which is a must read for anyone with even the slightest interest in Google’s business model. Here’s an excerpt :

The way Google makes money is actually straightforward: It brokers and publishes advertisements through digital media. More than 99 percent of its sales have come from the fees it charges advertisers for using its network to get their messages out on the Internet. [...]

For Google, literally everything that happens on the Internet is a complement to its main business. The more things that people and companies do online, the more ads they see and the more money Google makes. In addition, as Internet activity increases, Google collects more data on consumers’ needs and behavior and can tailor its ads more precisely, strengthening its competitive ad­vantage and further increasing its income. As more and more products and services are delivered digitally over computer networks — entertainment, news, software programs, financial transactions — Google’s range of complements is expanding into ever more industry sectors.

Carr’s latest book The Big Switch came out earlier this month (January 7th), and I’m looking forward to reading it. I’m curious if there’s a level in the book beyond the dreary dystopic visions of a future beyond our control, which is a dominating theme in many of the reviews I’ve managed to trawl tonight.

At first mention, I have difficulty swallowing Carr’s notion of a World Wide Computer. Yes, it is true we leave information everywhere about ourselves and our online behaviour patterns whenever we use the internet, and companies (such as Google) are able to collect and analyze a lot of all this data. What’s critical IMHO, is not that this data is available and can be analyzed by individuals as well as companies, but that the means of creating the technological architectures of it’s control are as widely distributed as possible (as well as, which follows, the tools and methods of collecting, analyzing and consuming the data produced by these architectures). Which is why open source software, or more importantly free software, is so important, and why the use and spread of open file formats (as opposed to proprietary formats) should be as widely encouraged as possible by policy makers.

I also have some difficulty with the idea (in the excerpt) that everything happening on or with the internet is somehow beneficial to Google. At a superficial level, Carr is right, new websites is the lifeblood of Google, but the same lifeblood may choke the company, if it doesn’t develop methods of finetuning or reforming search as a method. Google as well as other search engines face an unprecedented growth in the amount of accessible information globally which presents great difficulties for search fundamentally as a method of finding information, at least as any kind of general purpose tool. Anyone who in recent years has experienced lousier and lousier search results can testify to this.

On a related note, I’d like to highly recommend David Vise’s The Google Story for anyone who’d like an enjoyable introduction to the amazing story of the rise of an amazing company - also available in a convenient audio format.

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