Has Google peaked?
Its mantra was "don't be evil" and it shunned the conventional.
By doing so, Google became the world's second most valuable company.
One that's been able to garner a vast trove of personal data and turn it into advertising gold.
Ken Auletta is one of America's top business journalists and had unprecedented access to Google's executives to write "Googled: The end of the world as we know it."
He's in New Zealand for the Auckland Writer's Festival this weekend and sat down with The Nation's Simon Shepherd who asked him if the Google juggernaut that has left media and ad industries gasping has peaked yet.
Ken Auletta:" I don’t think so. I mean, there was a point in time where I was reporting my book that Steve Ballmer, who is the head of Microsoft, said that Google was a one-trick pony; it was all search. In fact, if you look at it, it's a multi-trick pony. It’s not just search, which it continues to do very well but it’s also Android, which is the operating system for mobile phones that is now the dominant platform in the world, and it can decide at any point to start charging for Android.
Simon Shepherd: And they don’t charge for that yet?
"No. They have the three-quarter, 75% market share in the world with Android, so that’s one. They have YouTube, which is the largest television network in the world – over a billion users a month – which is generating money today. And then they’re doing all of these experiments with driverless cars and Google glasses and all these other things. I think it’s a very creative company with enormously deep pockets."
But it has scared people. Some people have called it Googzilla. Some people believe it’s become too dominant in search and so no longer does their motto ‘do no evil’ apply.
"I think people all over the world are frightened of someone who has a dominant market share, who appears to be a monopoly. That’s a problem they’re running into in Western Europe today, where the European Union has basically charged them with being a monopoly and were favouring in their search their own products."
"And so they’ve got to deal with that, but they’ve had to deal with governments. One of the lessons you learn from watching the engineers at Google – they are brilliant at figuring out algorithms and how to collect and massage data. They are not good at things they can’t measure, like people’s fear – governments’ fear that it's a monopoly, people’s fear that their privacy is being invaded. And those are the troubles they’re encountering today."
You talk about privacy – are people more relaxed about giving up their data these days than they were?
"No, I think in the post-Snowden world, I think people are more alarmed and concerned about their privacy and more curious about, ‘What are you doing with the information you collect from me?’ And there’s another interesting clash. I mean, the engineers think that data is virtuous, so the more data they can collect about you, the better they think they can serve you and predict what consumers might want. On the other hand, how much of my data do you actually have and what are you doing with it? Are you selling it to advertisers?"
Yeah, what does Google know about me?
A lot? And should I be scared that they do know a lot, and who they’re going to sell that to, and is the government going to access it?
"Google will claim that it doesn’t know your name. It doesn’t have much of your credit card information. Apple does, Amazon does; Google doesn’t. It has some credit card information – very little. But that is one of the questions – how transparent are they or is any digital company, not just Google, about what data they have on you?"
Are the public happy to give up their privacy for the convenience of the Google speed and the speed of the service that they deliver?
"Sometimes we are. If I write in ‘jobs’, they don’t give me unemployment figures; they give me Steve Jobs because they know I’ve searched over the years for Steve Jobs. So that’s a convenience for me that I like."
"But there’s always a but. But how much do you know about my previous searches?"
That’s right. Okay, so they know all that information about previous searches. It’s sitting there on their servers. The government wants to know that. The government has gone and demanded that before.
"Government wants to know about the searches that people are suspected of being terrorists or linked to terrorists have, and this raises another interesting question that has not yet been resolved. In light of what happened with Edward Snowden, where digital companies like Google were embarrassed and lost some support from their users, who worried, ‘What are you giving to the government? Are you invading my privacy?’ Google then comes out and says, as does Facebook and the others, ‘We are going to create a wall that the government cannot penetrate. We’re going to encrypt the data so the government cannot find out what’s going on.’ The government then comes to Google and says, ‘Hey, wait a second. In order to track down and protect your security, we need to be able to track what potential terrorists and people we have tracked in Europe and elsewhere are doing.’"
So we’ve got security versus privacy butting heads here?
"It’s right now butting heads and it has not been resolved."
Is Google also trying to recover some trust lost with its users over this issue?
"Oh, totally, and understandably. They need our trust. Any digital company does in order to continue to function. We’re giving them a tremendous amount of information. I mean, I’m writing emails, you’re writing emails, which are very personal. I mean, to your family or whatever. The searches you do can be very personal. The gifts you might buy for your wife or a loved one, whatever, can be very personal. So we worry about people having access to that."
What about the governments who want to use that particular information to spy on its citizens? I mean, does Google know what the government’s doing with the information that it’s demanding from Google?
Well, Google knows who the government has asked to have access to their emails, let say, or their purchase history. It knows that. But it doesn’t know who the person is. I mean, again, they don’t know your name. They know your ISP address but they don’t know your name. They can figure out geographically where you are and what income level you’re in and what you buy but they don’t know your actual name.
So you mentioned before that they’re butting heads with the government, not only Google but Facebook and other tech giants, because the government wants the metadata, Google says no, other companies say no. Who’s going to win that particular battle?
"I suspect the government will. Government will get what it wants on the theory that it's protecting the citizens, and it’s not at all clear the citizens won’t support government in that. You know, the fear of terrorist activities, including the lone wolf – it’s not just 9/11 and the planes going into the World Trade Center or the Pentagon; it’s the shoe bomber or someone carrying a hand-made bomb – and people are frightened. It’s Charlie Hebdo."
Yeah, so have we reached a point where privacy online doesn’t exist?
"I think that that’s something that the future — it will unfold in the future. I think Edward Snowden’s incident and the information he disclosed I think excited a lot of interest in the privacy issue. Will that persist is a question. But I think there’s no question that people are more concerned about privacy today than they were."
Could Google put in much greater security and encrypt all emails and bring all that kind of security in place to regain trust? But at the same time that would go against this business model of hoovering up all this free information.
"Oh, no. You see, you can encrypt and to prevent outsiders like government getting access but fundamental to an engineer’s psyche and business sense is the more data we have, the more virtuous we are because we can help you and make things more — we can predict what you’d like and therefore make it much more efficient for you."
So why don’t they protect us?
"Well, they argue they are, but the question is – will they protect us and do we want them to? From government subpoenas, they say, ‘We need to be able to go through your back door to check this potential terrorist.’"
You just talked about the engineers being virtuous through the use of their data. Google were started with ‘don’t be evil’ as its motto, but it’s trying to reinvent itself. Larry Page, the CEO, is saying that maybe that motto doesn’t apply any more. What kind of company is Google going to be?
"I don’t think it’s clear. They’re going to be a powerful company – that’s clear. They’re going to be a company of many different businesses – that’s clear. They’re going to be a company that experiments and throws money up against the wall to see if Google Glass or driverless cars, if that sticks and it works. And that’s a wonderful thing that they’re doing that. But search will continue to decline. "
"It's slightly declining. It’s still a money machine."
The second most valuable company in the world, yes.
"But its business model will continue to change, and as it changes, it will be forced to make compromises that it at one point would have considered evil. Does it want to be in China? So far it has stood its ground and resisted, but that’s a really big market, and in order to get in that market, you’re going to have to make some compromises."
So what about the traditional media companies? Is anybody going to be able to make money? Is it just going to be Facebook and Google?
"Well, I mean, their companies still make money. You know, the New Yorker, my magazine, makes money. I mean, you know, it doesn’t make money the way Google makes money and profit margins are not as big as Facebook’s are."
I’m sure they’d love to, but, yeah.
"I’m sure. But, you know, newspapers are threatened, even the great New York Times, arguably the best newspaper in the world, which now has 950,000 digital subscribers, which is enormous. But the economic problem is the average reader of the New York Times spends 35 minutes a day reading the New York Times newspaper. That same reader online spends 34 minutes a month. So an advertiser says, ‘You’re not spending enough time to look at my ads, therefore I’m paying you one-tenth for the same ad in the digital.’"
So the revenues are just going down?
"So what happens is that the advertising revenue, even though digital is growing, advertising revenues for the newspapers is declining."
Just finally, Google has become so dominant in the search area. It is looking into all these other areas. You’ve spent a lot of time looking at the people behind it. Do you like Google as a company?
"Oh, I think it’s a great company. I mean, it’s a troubled company in some ways. I mean, I think engineers are brilliant but robotic in many ways and don’t trust instincts and, you know, human relationships the way we do, in traditional media, I think much more so. But I think they’re just an amazing company. And still for a mature company – it’s been around since 1998 – they’re leaning forward and they’re trying new things all the time. And some of the new things they’re trying are quite extraordinary – how to prolong life, for instance. They’re investing hundreds of millions of dollars in science, and so I think Google is – if you ask me do I think they’re a plus for the world? Yes, I do."
Watch the full interview here.