Google’s glory is it has increased access to information with the ingenuity of its search algorithm, says Richard Fitzpatrick
GOOGLE is going places fast. A Wall Street analyst with BGC Partners predicted in October that Google will be the world’s first $1tn (€826.3bn) firm by market capitalisation.
It’s predicted to hit the mark in 2020, which isn’t bad going for an outfit two guys started from a garage a few days after surviving the 1998 Burning Man festival in the Nevada desert.
Douglas Edwards joined the company early on. He called the memoirs of his time with Google’s co-founders Sergey Brin and Larry Page, I’m Feeling Lucky: The Confessions of Google Employee Number 59, which was a nod to the firm’s famous search term.
Edwards left a secure job with the San Jose Mercury News to catch the dotcom wave that was breaking across California in the late ’90s.
The 20 years he spent working in print journalism couldn’t have prepared him for Brin’s unconventional interview technique. The entrepreneur conducted it in his roller hockey gear.
He says: “At that point, there was not a lot of formality around interviews or anything else in terms of start-up companies.”
Brin, who struck Edwards as being very young but sharp, had an interesting tack for assessing his candidate. He asked a lot of questions; then he set Edwards an intellectual challenge. He gave him five minutes — leaving the room in the process — to think of something complicated that Brin knew nothing about, and got him to explain it.
Edwards spoke about the theory of marketing. “His rationale,” says Edwards, “was that if he was going to have to sit there and talk to somebody, he didn’t want to waste his time so even if he didn’t hire me at least he’d learn something in the process.”
Edwards passed the test and was hired as brand manager, but he expected they’d be out of business within the year. The same week he got his job, his paymasters hired a chef (Charlie Ayers, who used to cook for the Grateful Dead) and two massage therapists.
“That didn’t seem like the most fiscally prudent move to build a company,” he says dryly. It had no revenue and no clear business model, but it had good technology and Page, he says, always had a sense of the long play.
“The original technology was based on improving internet search, but even from the very beginning they cautioned us that we shouldn’t become too attached to search as the only product that Google would ever produce, particularly Larry Page.
He was an amazing visionary. He was thinking as far back as 1999 about all of the different things that technology could improve. Search was just the first step because that was the technology he started with when he and Sergey were students at Stanford University.
“Larry had visions right from the beginning of scanning every book in the world and making an online library of all human knowledge. He would talk about everything from space elevators, which are a way of lifting material into space, to nanotechnology.
He was never really limited in his view of what the company could become as well as being the best search engine in the world. He often compared the company, as he saw it, to General Electric. He liked the diversity of GE’s product line, and how it managed a disparate set of products as one company.”
Google has realised Page’s vision with its Project X portfolio of research interests. (See below)
Brin, too, has always pitched in with some science fiction ideas. “Sergey used to talk about physical integration with search so you’d have an implant in your brain that would allow you to search all of the world’s knowledge,” says Edwards.
“We used to think he was joking, or at least half-joking, but I’m not sure he was. They really believe that almost any major system whether it’s advertising or self-driving cars or enhanced reality — all of that can be improved through technology. I don’t think there are any limits to what they are willing to explore.”
Edwards pinpoints the moment Google won Yahoo as a client in 2000 as a tipping point. The company did an initial public offering in August 2004.
On the eve of the IPO, the firm’s engineers were warned that if anyone arrived to work the following day in a Ferrari, a baseball bat would be taken to it. A couple of staff went out and bought airplanes.
Ironically, It has been the art of selling ads that has made the firm’s fortune.
“Larry and Sergey hated advertising,” says Edwards. “If you go back and look at their dissertation work on search technology at Stanford, they wrote that advertising would corrupt search results. It was a terrible thing and they really were opposed to including it.
They were finally persuaded that a) they needed some revenue and advertising was a key element of it, and b) the only reason they went along with it was because they felt that they could make it better and they could make it actually useful.”
Edwards argues their philosophy — based on the messages pushed at staff in his time with the company, which he left in 2005 — was to ensure ads should at least be as useful as the search result.
They displayed ads that were targeted and text only, and prominence wasn’t based solely on the old practice of: The more money you spend, the more visible your ad will be. They had a utilitarian logic — if an ad isn’t being clicked on, its ranking suffers and it disappears from view.
Google’s trawling of information about consumers — intentional or not — has profound implications for privacy. Robert W McChesney, author of Digital Disconnect: How Capital is Turning the Internet Against Democracy, hints at an Orwellian spectre.
“The problem that Google has — and that Facebook has — is that their entire business model is based on knowing everything possible about everyone. Their commercial surveillance is beyond our comprehension. How much Google and these companies know about you online is far more than any sane person would want to have known about himself or herself.
“Their profitability, their wealth, their status, everything about these companies, increases the more they know about us. They have to vacuum up data and slice and dice it with super computers so they can sell us advertising.
"That’s the driving mechanism of Google. That’s where they make their money. They view the whole crisis over privacy not as an issue: ‘Gee whiz, we shouldn’t be doing this. It really violates people’s rights.’ They view it as a public relations problem.
“In the United States, the great crisis that Google faces is that with the Edward Snowden revelations, it’s now clear that these companies have shared this information to great benefit politically with the government, and commercial benefit at times, with the National Security Agency, and various secretive police operations in the United States, and military operations.
So you get a world where this monopoly power is fused with the top-secret national security establishment, which is completely unaccountable to Congress. That takes our American society to places that are completely antithetical to democracy and the rule of law. That’s a place Europeans can be very concerned about not getting back to. You’ve done it in the past and you know where that ended up.”
Google’s glory is that it solved some fundamental problems of the internet and has increased our access to information with the ingenuity of its search algorithm. Humanity has never been so connected or, thanks to Google Maps, so rarely lost. The fact, though, that people optimise for Google can have positive and negative consequences for companies in its hinterland, maintains Benedict Evans, who works with the Silicon Valley- based venture capital firm, Andreessen Horowitz.
“Google is a kingmaker for anybody on the internet. That creates a lot of competitor friction around the edges: ‘You’re sending us traffic; you’re not sending us traffic.’ Google argue they try and do that in as neutral a way as possible, in a non-manual, non-judgemental way, putting up results that people appear to value at the top, but there is always people that say, ‘Oh, Google change their algorithm and our perfectly good content dropped from the top of the search results to the third page’.”
Google’s rise has been so prolific it accounts for over 90% of online searches in Europe (68% in the US), according to comScore. Its dominance has caused the European Commission’s antitrust watchdogs to snap at its heels. It has accused Google of giving favourable treatment to its own products.
In November, the European Parliament passed a nonbinding vote to break up the company and split its search engine from “other commercial services”. It’s the latest move in an investigation that stretches back to November 2010. In a similar case in the US, which delivered its verdict in January 2013, the US Federal Trade Commission cleared Google of favouring its own searches over competitors.
Mario Mariniello of Bruegel, a research organisation in Brussels, cites it as an informative reference case: “The main allegation in the US, which is also the main allegation here, is about the manipulation of search results, meaning that Google would demote its competitors’ links, and push up its own links. What they found in the US was that there is probably evidence that this is what is happening. That there is bias and self-selection, but they also found that it is not a problem.”
The FTC commissioners concluded that “Google’s search algorithms — even those that may have had the effect of harming individual competitors — could be plausibly justified as innovations that improved Google’s product”.
Mariniello says it is unlikely Google will be forced to unbundle itself in Europe, and that it would be an impractical sanction to impose and too invasive — it would mean going to the heart of its algorithm, which would affect the quality of its product. “This is something that has been lost,” cautions McChesney.
“Google will oftentimes say: ‘We’re not really a monopoly because we can’t force anyone to use our product. Our competitors are only a click away. We can lose all our business in one day, and there’s nothing we can do about it.’
“But the reason why Google’s network effect is unchallengeable is because of its capital investment in servers. When you enter a search on Google, about 700 to 1,000 separate computers go to work immediately on just your request. It purchases around 15% of all computer servers. So if you want to compete with Google and have a similarly effective search engine, before you make a cent, you would have to make an investment of tens of billions of dollars in servers to have a similar speed. This gives them an inordinate advantage.”
Some of Google’s Project X portfolio of research interests:
The original idea was to get defibrillators to people suffering from a heart attack within two minutes, but Google ran into problems integrating its technology with America’s emergency services. Instead, it expanded its initial concept to encompass same-day delivery for all kinds of items to inaccessible areas or for disaster relief missions. Its launch project delivered dog food to a farmer in a remote Australian corner.
According to Google engineers, the autonomous drones can deliver things in “just a minute or two”.
Expectations flew high when Google announced Project Loon in June 2013, promising to build “a ring of balloons, flying around … on the stratospheric winds that provide internet access to the Earth below”.
The idea is that balloons are launched 20 miles into the sky (twice as high as the path of airplanes but under the radar of satellites). They float along with the prevailing winds, which are mostly east to west, so they effectively “steer” their way around the world on travelling along with wind currents.
Solar panels, about the size of a pool table, sit underneath the free-flying balloons and generate enough power for a day. The internet signal is then beamed down to stations that are spread about 100 miles apart.
Google acquired Lift Labs a few months ago. The California-based start-up came up with an ingenious invention — a spoon that cancels out the shakes.
The Liftware spoon, as it’s known, works on the principle that it is a stabiliser. It detects when a person’s hand makes a tremor and adjusts to keep the spoon steady, allowing the hand to shake while the cancelling technology in the handle, which includes an on-board computer, stabilises the spoon.
In clinical trials, shaking has been removed by an average of 76% for different eating manoeuvres.
The idea is that it functions the same way as a smartphone except it allows the user to carry out instructions hands free because the device is wrapped around your head like a pair of glasses.
At over €1,000, Google Glass is not cheap, especially when you can get the same functionality on a smartphone or a more fashionable wearable technology items like a smartwatch for a fifth of the price.
Google’s first Project X initiative, which got under way in 2010. The state of Nevada followed shortly after with a vote of confidence when it issued its first self-drive licence in May 2012 to a Toyota Prius, which runs on Google technology. Four states across America, have now legalised self-drive cars, though critics worry that the legislation is, ahem, driving ahead of the technology.
The Google software that powers self-drive cars is called, wait for it: Google Chauffeur, and the cars used in testing have lettering on the side and back which identifies them as being a “self-drive car”.
The cars have a range finder — enabling the car to generate a 3D map of its surroundings — mounted on top of their roofs, which are reminiscent of the detachable sirens American cop cars used in the 1970s.
Project failLike any lab, a lot of ideas get tossed around between Google X’s team. Some of them are so zany or impractical they don’t get off the ground:
Google tried to fashion a viable jetpack but it couldn’t make one energy-efficient enough. It could only get its flying machine to travel a quarter of a mile on a gallon of fuel while throttling along with a roaring engine as loud as a motorbike’s.
What one wouldn’t give to be able to say, “Beam me up, Scotty” just once? Google had a crack, but were unable to defy several laws of physics to realise the dream.
An elevator that stretches into space, running from a station on Earth to another beyond the atmosphere, tethered by a cable to a satellite in orbit. Apparently, the idea was scotched because the only materials strong enough to build it were carbon nanotubes. Strands have yet to be made that stretch more than 1m.
Size and past success brings no guarantees
THE best inventions are never finished. When the German engineer Karl Benz invented the first petroleum-powered automobile, he did not just create an engine with wheels; he set in motion an industry that revolutionised the way society was structured.
Similarly, the English computer scientist Tim BernersLee did not only build the world’s first website. He laid the groundwork for the World Wide Web. Neither could have anticipated the impact of what he was doing.
If there is one lesson economic policymakers should heed in 2015 and beyond, it is this: Just as invention is dynamic, so are the industries it creates. As we learned in 2014, it is a lesson that has yet to sink in entirely.
When Google was launched, people were amazed they were able to find out about almost anything by typing a few words into a computer. The engineering behind it was technically complicated, but what you got was pretty rough: a page of text, broken up by 10 blue links. It was better than anything else, but not great by today’s standards.
So our co-founders Larry Page and Sergey Brin — like all other successful inventors — kept iterating.
They started with images. After all, people wanted more than just text. This first became apparent after the 2000 Grammy Awards, where Jennifer Lopez wore a green dress that caught the world’s attention. At the time, it was the most popular search query ever. But we had no surefire way of getting users what they wanted. Google Image Search was born.
When people search Google for an address, they do not want a link to websites that mention the street. They usually want to know how to get there. So we built a map that was clickable, draggable, and easy to explore.
But Google’s efforts to provide direct answers to questions have fuelled complaints at the European Commission. Companies like Expedia, Yelp, and TripAdvisor argue Google searches are depriving their websites of valuable traffic, putting their businesses at a disadvantage.
A few years ago, a lawyer for one of our competitors drew a picture of a coastline with a little island offshore. He added a dotted line, explaining this was the only ferry connecting the island to the mainland. His point was Google was just like the ferry: the only way to navigate the internet.
In reality, there are many ways to get around on the web. For news, you might go directly to your favourite news service. If you want to buy something, you might go directly to Amazon.
The real point is that the economic landscape in which we are operating is not only competitive; it is changing constantly. This year, for the first time, people are spending more time on mobile devices than on their desktop computers. Time spent on desktops has fallen to just 40%. And people use mobile devices differently from desktops. Seven out of every eight minutes spent on a mobile phone is spent within an app.
Many people look at Facebook, Google, Apple, and Amazon, among others, as companies that no competitor could ever beat. I am less certain. History is full of examples that show size and past success guarantee nothing. A few years ago, firms like Yahoo, Nokia, Microsoft, and Blackberry seemed unrivaled. They have all since been disrupted by a new wave of tech companies — Google among them.
Google works very differently from other companies that have been dubbed “gatekeepers” and are regulated accordingly.
We are not a ferry, a telecommunications network, a railroad, or an electricity grid with only one line serving you and no competitors allowed. No one is stuck using Google. If we cease to be useful, our users will leave. Competition is just one click away.
Someone in a garage somewhere is gunning for us, and 2015 could be their year. I know, because not long ago, we were in that garage. And I know that the next Google will not do what Google does, just as Google did not do what AOL did.
The upheavals resulting from momentous technological change are rarely expected. The telegraph disrupted the postal service. Radio and television shook up the newspaper industry. Airplanes ended the age of ocean liners. Inventions are always dynamic; that is why the future will always be as exciting as the past.
-Eric Schmidt is executive chairman of Google.
Copyright: Project Syndicate, 2014.
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