I’ve spent much of the week pondering Microsoft and Yahoo’s new search deal. Given that Google’s similar offer to Yahoo! last year was deemed anticompetitive, and that the status quo in search based ads may also be anticompetitive, we should at least consider the possibility that this partnership could be a good thing.
Some background: Yahoo! Search has been tanking for a long time. Since the money is in selling ads alongside the search results (whether keyword buys or bulk display), Yahoo! can’t monetize those search pages if the results are no good. Microsoft had a similar problem for a while (see Windows Live, Fiasco That Was) but it was nothing compared to the bigger threat Google poses to them in the application space—if (when) Google succeeds in moving us all to cloud applications, Microsoft’s real money pot, in office software, is cooked. To Google, cloud apps don’t matter as standalone revenue sources but as part of a massive data-mining operation. So as long as Microsoft and Yahoo! continue to lumber along independently, with both losing to Google in search and Google closing in on Microsoft in applications, Google has nothing to worry about.
Does that change with a deal like this? Yahoo! agrees to give up its search technology and let Microsoft, with its new Bing search engine, power search results on Yahoo! sites. Yahoo! and Microsoft then share the ad revenue on the results, except that Yahoo! gets 88% of it. A lot of pundits balked at the whole premise, but I disagree.
Yahoo! beats Google in one category of sites Google offers consumers as a ploy to gather data—media content. Yahoo!’s portal pages—its news aggregators, finance listings and fantasy sports leagues, for example—are more robust and richly developed—than anything Google has on offer. Yahoo! has all these people (myself included) turning up to check on their fantasy teams, but they can’t keep them there and effectively monetize them because the users don’t stick around to use the search bar. If they can outsource the search to Microsoft, they can keep those folks around and make a neat little business as a portal. Maybe it keeps some small fraction of users off Google who would otherwise flit there from the Yahoo! pages, but not enough to unseat Google. It’s not quite pro-competitive in that sense, but it is pro-innovation because it allows Yahoo! to keep developing a competency in something Google doesn’t do well.
Moreover, it may train Microsoft to finally trust the web. Have a look at the character of the experience provided on a Yahoo-powered-by-Microsoft home page: it’s free content with ads, just like Google pages are, but it’s less Googley in tone. Yahoo’s portal sites differ from Google’s (see above) in that they are more developed, more curated. Microsoft’s search technology differs from Google’s in that it’s less crowd-sourced and more directed. Like Yahoo!, it’s designed for and marketed to people who are sick of navigating the web for themselves, who WANT a little direction and intelligent design. The synergy here makes sense.
If it works, it may open Microsoft’s eyes to a broader business in serving those users, which is where Microsoft’s ultimate salvation has to be. Google still hasn’t convinced Microsoft’s big corporate clients to replace Excel with Google Spreadsheets—what Microsoft needs to offer isn’t a copycat product that also spare and barebones, but something a little more robust and only partially open, what I might call cloud-lite. I have no idea what this would look like, but I think it’s something Microsoft has the best shot of anyone at developing and would be a new addition to the space, an actual innovation.
In other words, what these deal actually does is secure Google’s continued dominance in search, Yahoo!’s in curated content and potentially Microsoft’s in office applications—even in the cloud age. It doesn’t end any monopolies but splits the current market of ALL ONLINE CONTENT into three into which each of these firms can dominate a piece. That at least cuts them all down to a focused size and makes them, perhaps, easier for smaller fry to take on in a focused way.
According to a new libel ruling from the UK courts, Google can’t be sued/fined for malicious falsehoods that appear on its news and blog pages (like this one). That makes legal sense, since no one employed by Google produces the content on the sites.
But here’s the problem: it’d be awfully hard to sue/fine some of the folk with Google blogs for their output either, since most of them consider what they do to be not-quite-published, and more akin to the kind of speech covered under slander law than the kind of published text covered under libel law. Clearly, the web has erased the most obvious divide between slander and libel, but it doesn’t really erase the qualitative one. A falsehood on my friend’s travelog about her summer in Equador is just not the same as a falsehood from Robert Reich.
Moreover, the underlying logic of libel law is based on private profit. You sue the people who make/write/print the falsehoods and if you win, you take back the profits they earned by spreading the lies.
The problem with private blogs on Google’s server is not only that they don’t aspire or try to uphold fact standards that are libel-proof but also that there’s an imperfect overlap between the person who produces the content (and thus might be morally responsible for it) and the person (AKA Google) who profits from that content (and thus might be fined to avenge a wrong).
The UK ruling thus underscores the argument I have been making about Google all along–they aren’t necessarily in open defiance of the laws, but their existence, their business model demonstrates the gap between the structure of our laws and reality of the internet economy. And try as I might, I can’t think of a way to solve this without in some way cutting Google down to size.
The August issue of WIRED has an interesting article on the growing antitrust pressure on Google, a pet cause of mine. It’s well reported, and well-written, as WIRED usually is. It more or less lays out the case against Google that I would make: that the individual markets in which it has x or y share are irrelevant, because Google is building a macro-market by aggregating data over all web content. Then it lays out the most common  counter-argument: that regulators shouldn’t be trying to stop companies the public likes/benefits from to protect the fluidity of the market. I disagree with this counter-argument. Other regulatory provisions–like consumer fraud laws–respond to public opinion, but antitrust laws exist explicitly to protect and promote competition.
What struck me about the WIRED piece, however, was its attempt at neutrality and its muted tone. [If you’re skeptical, go to the library, find a copy, and see for yourself.] WIRED never does that. It has an opinion about ever tech-related debate, usually an opinion that reflects the views of its editor, Chris Anderson, which I’ve discussed before. Elsewhere in the same issue is an article advising readers to embrace illegal downloads as a form of civil disobedience. [I’ve got plenty of free music on my computer that shouldn’t strictly speaking be there, but I’d never be so presumptuous as to pretend it was anything more than miserliness that landed it there.]
The tone of the Google piece suggests to me the major problem with WIRED. It’s a magazine about the modern technology industry written by people who helped create the modern technology industry, by people who moved out to the Valley before it was cool. Their natural instinct is to explain tech companies to the rest of us, and defend those companies from the big bad economy back East. The folks at WIRED still they think they are writing about scrappy endearing startups, even though those companies aren’t scrappy or small anymore.
Yes, this piece is an improvement over a February article that painted the attack on Google as an evil conspiracy of big bad telecom companies. But even where their own reporting suggests there’s a real antitrust case to be made against Google, their personal sympathy for the GOOG prevents them from giving the piece the kind of umph they give to everything else.
It’s all pretty ironic, since as magazine writers who work for Conde Nast, everyone at WIRED is part of the ‘old’ economy. And while they advocate that everyone else give up their content for free and celebrate that Google will own it, their own website is pretty closely protected. That’s why this blog post has no links to the current issue–it’s been mailed to subscribers in print, but it’s not yet available online.
It was a big week in Google-land, what with un-beta-ing of Google Apps and the subsequent release of Chrome OS. Obviously, this was Google’s shot across the bow at Microsoft as both companies gear up for a battle to control the cloud. To be honest, I think the cloud will ultimately be controlled by some third player none of us can imagine, just as Google scooped Yahoo! and Microsoft scooped IBM. [See disruptive technology].
Still, in the short term, it’s a big play for Google. What worries me is that as larger and larger shares of our economy move online, cloud computing will allow Google or its unknown successor to dominate multiple markets and do somewhat anticompetitive things with that cross-control. I already have misgivings about its search-ad business; it’s too early to tell whether cloud apps will work the same way.
What amuses me about this whole thing is whiplash it should give to those who apologize for Google’s business practices with claims that Google is “not evil,†or not really a business at all. Firstly, this week shows that Google wants big corporate customers just as much as Microsoft. Secondly, this week shows that their success is manifestly not predicated, as some suggest, on turning big business on its head by getting people to embrace beta as a new standard. Instead, they’ve had to give up this image of being frazzled-but-well-intentioned to get the big fish.
That doesn’t really make up for my worries about their broader business, but at least we can now discuss their tactics without the cuddly rhetoric. Or is that asking too much?
Exhibit B: After cautioning against the takeover of politics, media, etc by individualists over institutionalists, I am overjoyed to see the Fast Talker–a citizen-media enthusiast and individualist liberal-tarian at times–taking my side. What woke him up? A glimpse at the individualist Rightin David Cameron, and the damage the Tory bashing of MP’s expenses has done to his party–Labour–in the lead-up to this week’s local elections. Here is the thing: To turn the tide for Labour, British lefties have to develop a defense of institutions, and that includes many institutionsthat the individualist Left likes to rail against. Liberal-tarians whining about corporate bonuses sets up a conservative critique of big government. Both kinds of whining need to be given up, but the cultural tide towards individualism in both left- and right- leaning circles makes that unlikely.
On Monday, we saw more evidence that the content model of the future will involve vertically integrated news organizations that will allow their audiences to engage at multiple levels for multiple prices. Today, we got a taste of what the ad model to support that might look like–the NYT’s Bill Keller told the NY Observer that the Times would seek some sort of ad share deal with Google rather than going after them aggressively as a monopoly the way others seem bent on:
The solution? He said that the Times is looking at a “carrot approach,†in which, along with the collaboration with Google, The Times would embed ads in its copy, and those ads would stay with the copy wherever it is reproduced.
Despite my own antitrust misgivings re: Google, this is exactly what I recommended for the news industry a while ago. And, I’ve also pointed out, the NYT is already a vertically integrated news org that has grown multiple layers of expertise in-house. It is nice to be right two days running. It’s even nicer to think that the future model of journalism is coming to focus.
When I posted my concerns about the market power of Google a few weeks ago, I got the following arguments in response:
–what Google offers the ordinary computer user is the opposite of a monopolized experience: free innovate products. Let’s call this argument “Google is not evil.”
–what Google offers the buyers of ad space and data is also the opposite of a monopolized experience: innovative services that cost less than their competitors. Let’s call this argument “Google is not greedy.”
–Google has achieved its dominance of search-based advertising and data-aggregation on the merits of its algorithms. Let’s call this argument “Google is not cheating”
–Google plays in many fields but doesn’t own any of them, since there’s still all that TV, radio and yes, print advertising still out there that Google hasn’t yet taken over. Let’s call this argument “Google is not that big.” Read the rest of this entry »
I’m usually sanguine about the new digital order, because I believe in the basic legal structures of a functioning market economy: the checks placed on any one company by the requirement to compete with others and the checks placed on all companies by government should, in theory, protect us from total Googleization and the violation of our privacy rights.
Here’s the problem: Google has become a monopoly and the entity entrusted to crack down on monopolies–the State–is dependent on various forms of digital data mining, at which Google excels. Now government has colluded with trusts and cartels before, but usually there is a body of journalists and consumers who pressure them to right the wrong. The real problem with the Google is how much civil society has cheerled monopolization: Read the rest of this entry »
If you’re here on the blog page, you’ll notice right away some tweaks in the layout. I am experimenting with my Google Reader again. I’ve been reading all my blogs through Google for a little over a year now, but I haven’t really taken advantage of the sharing feature until now. There are some good reasons for this:
1. As a blogger with a Google-hosted blog, I can see the same updates from my blogger homepage, the site I log-in to when I want to write posts, read comments or monitor traffic.
Reading my feeds here is not only more efficient than going through reader directly, I find the Blogger Dashboard more user-friendly and aesthetically pleasing as an interface.
2. I actually don’t want to send all the stories I enjoy to all my friends–I tend to send occasional group emails to categories of people or individuals. I email a funny story about New York to friends I know in the city. I send a geeky economics item to fellow bizjournos. I send a mention of Brown to friends from college. I send an essay about moms to my mom. Etc. So the premise of Google Reader–reading as exhibitionism–doesn’t really match my habits of reading as relationship-deepening.
3. Many of the items I want to share with these friends aren’t in my RSS feeds because there are some publications I prefer to read in print than online. I read the NYTimes in print, or at least the front section, but with the exception of a few blogs I subscribe to directly (Krugman, Bruni), I don’t want every minute’s update from the site. Same for BusinessWeek, Fortune, the WSJ, the New Yorker, and the Atlantic Monthly. Google Reader doesn’t allow me to add individual URLs, from things I’ve already read in print and searched for online afterwards, to my shared items if the source isn’t in my feed subscription.
BUT since I occasionally do blog posts that are just digests of things I’ve read, and since I want to do more original reporting and informed opinion, I have opted for Google Reader just to outsource the aggregation component of blogging. Note to any friends who are checking my Reader-shared stories on a regular basis: the stories I’m sharing aren’t ALL my favorites from the web, but JUST the ones I want to feed to the digest box because I think they have some links to the “Revolution in Culture” I’m blogging about. The personalized emails will not stop.
This still doesn’t solve problem 3–wanting to add stuff to the digest that isn’t in my RSS feed. For now, I’ll have to include those in actual posts: today, I encourage you to read David Brooks on Hamiltonianism (I TOLD you so) and Tom Friedman on the bank bailouts.
If I find a new way to update that solves this issue, and is more pleasing to use than the Reader, I may tweak the site again, so any suggestions as to what you like are welcome.
You’d think the above was a fairly simple statement, but apparently Jeff Jarvis, big shot of media commentators, does not understand it. He’s written a book called “What Would Google Do?” in which he takes Google’s business model and suggests that since they have been successful with it, everyone should run their companies–in all industries–this way. I haven’t read the book, but I know this is the argument, because Jarvis has taken his own advice and generated much of the book through suggestions from his blog readers this past year. You can watch him explain the idea here:
