The Rise & Rise of Google: Part 2 - Ubiquity Not Scarcity

Eric Schmidt, Google’s’ CEO, has described the internet as “a tool of ubiquity and not scarcity”; and few would argue about how ubiquitous Google has become in its fields of endeavour!

However, when Eric speaks of ubiquity, he’s not in fact referring to Google; rather he’s talking about his theory of supply and demand of goods and services on the Internet. Schmidt’s doctrine is that unlike traditional business models where similar businesses compete for a finite number of customers and hence revenue (scarcity), the Internet, by comparison, has a (virtually) unlimited supply of both customers and revenue (ubiquity).  He posits, with some credibility, that as the usage of services such as Twitter and Facebook increases, so too does the usage of Google. So, far from competing with Google and reducing its usage, the presence of other successful online services actually increases Google’s usage. Put simply, the more people do online and the greater the frequency that they do it, then the more likely it is that they will interact with Google; and that is of course a good thing for Google. I’m quite sure however, that if Google could supplant, or acquire, either or both of these other services then they would happily do so!

Mostly, I agree with Eric’s theory – except for one important caveat – and that is when users have to start paying for things. Usage of Google’s search facilities is free, as are most of its other services. Google makes its money by charging advertisers to place adverts on its services; and advertisers have budgets, and budgets are finite! So, if Yahoo, Twitter, Facebook, et al manage to devise advertising models that provide ROIs that are as compelling as Google’s, then advertisers will start to give these alternative solutions serious consideration. If advertisers do start to choose other services, and their budgets are finite, then Google’s advertising income will certainly decrease. The only way to prevent this is to get more advertisers, which is how I suspect Schmitt might counter, if posed the question. He might also say that if all advertising channels were producing great ROIs then there would be no need to maintain finite budgets, as spending more on advertising, albeit with other services, would increase revenues, thereby paying for the additional advertising costs. However, the World is finite, and therefore, ultimately a model of scarcity will always apply.

When interviewed, Google’s top executives might appear to be quite blithe about competition, market saturation; and the effects of scarcity. But often actions speak louder than words and Google’s actions are deafening. Google understands that another way of beating scarcity is to increase the number of markets that it operates in, and Google’s ambition in this respect is truly stunning. In a recent interview, Schmidt said that in the future he wanted Google to become the third part of a human’s brain, where Google’s services enabled mankind to access its “Collective Intelligence” as instinctively, quickly and effortlessly as we access our thoughts and memories today. One assumes that he was not being literal, although you never know with Google! But if Google becoming an innate part of you sounds all a bit too Terminator or Matrix for you, then I would have to agree!

I am a huge fan of Google. Every day it helps me solve problems, discover knowledge, and achieve things that otherwise I would not be able to do. Yet in spite of all these great services to humanity, an undercurrent of concern about Google, its power, practices and purported glib attitude to privacy, is starting to build and ultimately, this could mire its rate of growth and threaten its ambition.

I believe that it is the scale and frankness of Google’s naked ambition that scares people. I am less worried, as I understand that if they are to achieve their goals, then my live will probably become enriched; but I also know that they must be equally as open and honest about their practices and responsibilities.

For years governments have mostly created a balanced system whereby the benefits society accrues (schools, hospitals, road infrastructure, and absence of total anarchy) outweighs the civil liberties that it must forgo in order to maintain equilibrium. Basically, most people are better off than they would be if anarchy prevailed; and because of this, we accept that the apparatus of state requires taxes, laws, policemen, etc. in order to maintain the status quo. In spite of our disdain for some of these things, we continue to support the system as long as we feel that it benefits us, is fair and just, and is not being abused by those controlling it. If any of these things stop to being true, then as many MPs found out over the summer, the backlash can be swift and unequivocal.

In order to achieve its goals, Google will have to acquire and retain a lot of data about society as a whole, and the individuals contained within it. This puts Google in a position of great power and privilege; therefore it must understand that with this comes great responsibility. Society as a whole is likely to tolerate Google’s elevation to a World power, if, and only if, it clearly sees and recognises the benefits of forgoing such levels of privacy, and if it trusts Google not to abuse its position.

As governments are brought to book for misusing their powers, so too will Google face the wrath of public opinion and governmental intervention, if it fails to sate the quite reasonable concerns of society. I just hope that Google’s dividend hungry shareholders remember this; and Google’s oft quoted mantra: Do No Evil!

In the next of this series of articles (The Rise & Rise of Google: A Service for Everyone) I will talk about just how widespread Google’s activities are, and consider where it might go in the future.