Google Owns the Future

Rise of google, By Cheng Gao, all rights reserved

 


1           The Rise of Google

 

On Stanford campus in the late-nineties, two students crossed paths while working towards their doctorates—Larry Page and Sergey Brin. By 1998, the pair had tapped into the Silicon Valley culture of seed-funding to secure capital from a range of angel investors, including Sun co-founder Andy Bechtolheim, and Amazon’s Jeff Bezos. Using these funds, Page and Brin founded Google, which is now one of the world’s most valuable companies, its parent company Alphabet having a market capitalisation of some 733billion USD at the time of writing (Yahoo Finance, 2018).

 

This analysis will focus on Google, and the major economic, cultural, and social transformations which it has brought about. There are few companies within the technology industry, if any, to have had the impact which Google has had, making it the ideal organisation for an examination of this sort. What is immediately noteworthy about the transformative impact of Google is that, for a major part of the company’s existence, it did not actually make anything in the traditional sense of the term.

 

As a commercial entity, Google is typical of what Tim O’Reilly described when addressing the advent of Web 2.0, emphasising the evolution of the Web towards being more of a “platform”, with data becoming the “new Intel inside” (2005). O’Reilly was pointing to the rising dominance of participatory culture, or, what might be seen as the end of consumerism on the Web: “We are moving away from a world in which some produce and many consume media, toward one in which everyone has a more active stake in the culture that is produced” (Jenkins et al., 2009, p.12). O’Reilly’s reference to data being the new Intel is an allusion to the contemporary business practices of the information era; where hardware was once the focus of big tech companies, the emphasis is now on software and data, on gathering the user data necessary to conduct valuable analytics capable of answering the question with which every business and political entity is concerned – what do people want? Google’s trade is in data, largely personal data, which allows them to generate huge revenues through strategies like targeted advertising, generating “greater revenue and profitability by better targeting advertisements and delivering more advertisements through increased usage of its product platform” (Christensen et al., 2016, p.37). The public are largely aware of this, but are nonetheless willing to see their personal data and privacy commodified in exchange for a service they see as huge beneficial to their everyday lives. Jenkins et al. (2013, p.305) argue that the Web, thanks to services like Google, is now “more inclusive, more dynamic, and more participatory than before”—that sense of participation is precisely the thing that they are selling.

 

1.1         How Google Became the World

 

Page and Brin were not the first entrepreneurs to see the rising social centrality and related commercial value in search engines, rather, they developed what is considered to be one of the first search engines to privilege organic search results over their inorganic counterparts (Baye et al., 2016). The success of Google is based on its algorithm’s ability to return results that users see as more relevant to their search terms, ranking results by such relevance, rather than the directory-like model favoured by alternative engines such as Yahoo, where ranking is based in the financial commitment of content creators.

 

The transformative effect of Google is linked to this idea of relevance, which constructs their search framework as somewhat reciprocal, in that they profit from the aggregation of content that has been created by others, but conversely, they provide easier access to such content by providing more meaningful search engine results. This core concept drove Google’s rapid development, which started in 1998 as a relatively modest startup; so modest, in fact, that in 1999 internet portal Excite had the opportunity to purchase the company for less than 1million USD (Siegler, 2010). Google’s development gathered significant pace in 2001 once its ranking system had been patented (Page, 2001), reinforcing its relationship with users who were increasingly seeing Google results as more legitimate than alternative engines.

 

As is the tendency of organisations of this scale, the past decade has seen Google feed further growth through acquisitions and diversification, most notably in the mobile devices (Page, 2011; Welch, 2017), navigation (Lunden, 2013), video sharing (Arrington, 2006), and artificial intelligence (Chowdhry, 2014), demonstrating the organisation’s intent to remain invested in the technology industry’s most promising current and emerging social technologies.

 

1           Structuring the Empire

 

As Google became involved in an increasing number of businesses—such as; mobile technologies, artificial intelligence, mapping, and autonomous vehicles—beyond the provision of Internet services, it was decided to create a parent company called Alphabet, which would allow all of these additional concerns to be isolated from its core revenue-generating practices (Oppitz & Tomsu, 2017). Doing so allows Google’s operations to be managed in a much more hierarchical fashion, with its central product—its search engine and associated services—remaining unhindered by less lucrative, more exploratory aspects of the organisation.

 

As noted in the introduction, Google’s parent company, Alphabet, is now one of the world’s most valuable organisations. Such is the profitability of Alphabet’s suite of product, and the dominance of such offerings within the global market, that the organisation is at the very heart of the industry and social ecology. We can see, in clearer terms, what that ecology looks in the following visualisation:

 

 

 

 

 

 

Figure 1 – Google’s Ecosystem

 

The structure of Alphabet is complex, incorporating a range of core services, customers, content creators, and competitors. Google Inc. can be considered Alphabet’s main business, and Google the search engine, the core service of that business. The business model for Google has not radically changed since first envisioned: it provides platforms for users to create and share content, and the means through which the wider public can gain access to such content. Everyone uses Google because of its ranking features, but also because of its hugely attractive platforms like YouTube, which continue to draw in new users, content creators, and subsequently, more targets for advertisers and data to mine. Google’s revenues are a consequence of an increasing number of corporations recognising the value in web-based advertising over more traditional media. Advertisers now see the Web as presenting an opportunity to target an increasingly large audience, and are “motivated to do business with Google” because it is their search engine that gives access to the most content and the widest userbase (Galavan et al., 2008, p.60).

 

To draw in the user’s necessary to drive this revenue stream, Google uses the “Platform-as-a-Service” model, which “facilitates the development and deployment of applications without the cost and complexity of buying and managing the underlying hardware and software layers” (Marston et al., 2011, p.178). In essence, they provide the infrastructure for users—whether individuals or other organisations—to create content and applications using Google’s infrastructure, saving the need to make such investment. Central to such service provision are its suits of Google applications, again, suited to individual and business use: users can have access to Google email accounts just as readily as an organisation can have all of its staff emails provisioned by the company, saving on the need for expensive in-house servers and personnel to be acquired. Everything Google does is driven towards the acquisition of more users, as they are the commodity which can be exchanged for greater advertising revenues, from the aforementioned full-scale product offerings, to more subtle strategies like the occasional replacement of the Google logo on its homepage with interactive games and infographics designed to capture attention.

 

As much of Google’s revenue is driven through advertising and in an articulation of its ecology, one can represent advertisers as its core customers. Users are primarily seen by Google as content creators, and indeed, the commodity through which they can attract more advertisers. While Google does generate revenue through user purchasing of content—via platforms like Google Play, Google Music, and YouTube—the majority of its revenue, some 70%, still comes from the sale of advertising and its innovative pay-per-click model (Statista, 2018a). What has furthered Google’s success in this domain is the reality that they face little competition in this specific regard, as argued by McGrath, their innovative search function is one contributing factor, but the fact that advertisers no longer have any real alternative is the major reason for the company’s continued growth (McGrath, 2010, p.255). McGrath also argues that Google “pioneered a major innovation in business models” with its ‘adsense’ platform, a program which allows businesses to analyse and invest in the placement of more targeted and effective messages, which allows advertisers to increase the effectiveness of their campaigns while subsequently “reinforcing Google’s advantage” (McGrath, 2010, p.255). This strategy is furthered by Search Engine Optimisation, the need for advertisers to actively develop their content in a manner that makes it suited to Google’s ranking system. Having to structure their content in a “Google-friendly” manner keeps the search engine at the forefront of advertisers’ thinking.

 

In the business of Internet searching, Google has few competitors left, controlling some 90% of the market share (Statista, 2018b). It’s closest competitors, with a comparatively meagre 6% and 3% of the market are Bing and Yahoo, respectively. Beyond its core Internet services, Google does have competitors, most notably in the shape of Amazon, with which they are competing for the smart home market, as well as Microsoft, who own Bing and develop Edge, a competitor to Google’s Chrome browser, which holds 60% of the market share (GlobalStats 2018). As the majority of Google’s revenue comes from advertising derived from its massive userbase, Google’s biggest competitor is arguably Facebook, which has the capacity to generate as much advertising revenue and user data as Google, operating in the same social technology sector (Bhasin, 2018).

 

 

2           The Impact of Google

Google impact, by Catch 22, all rights reserved

 

 

Google did not change the world, it became the world. So dominant is our association with Google as the default engine through which we navigate the information era, that “googling” has entered vernacular vocabulary as a verb (Schwartz, 2018, n.p.). It has transformed our understanding of the Internet as a creator-driven space to a user-driven space, while also demonstrating the capacity for commercial entities to profit from the provision of free platforms and services. Google has also brought about profound socio-cultural and political shifts: the Web has become omnipresent in our lives, and so a platform that dictates access to the Web for some 90% of us has a major impact on how we interact with each other and wider society. In Who Owns the Future?, Jaron Lanier argues that our broad social acceptance of platforms like Google, and the reality that they profit off a manipulation of user data, means that we are forgoing personal freedoms within the digital space (Lanier, 2014, p.123). Privacy and control of information, it seems, are commodities worth trading in return for access to information.

While Google’s ranking engine suggests a democratic search process wherein information is returned based on relevance to the user’s needs, many scholars argue that any such algorithm will have embedded biases, and in some instances, by privileging technical structures that dominated by ruling classes, reinforces dynamics and racism and sexism (Noble, 2018, pp.4–5). There are also concerns that Google, as a US organisation, is furthering to Americanisation of global cultures, and the reification of American models of neoliberal capitalism as the world’s dominant economic model (Yeo, 2015). We can see evidence for this in the fact that regulatory processes were triggered in China, a socialist state, to prevent Google from gaining access to its population (Cheng, 2010).

 

3           Conclusions

 

As demonstrated throughout this post, users have allowed Google to develop a business model which operates through the exchange of information which the company has not created—much of which is private, individual data—drawing in users as content creators, and then selling these users as audiences to advertisers in a self-contained eco-system where the creators are also the audience. The transformative impact of this model can be seen in the fact that many individuals now define themselves as creators, evidenced in the rise of phenomena like the “YouTube celebrity” (Sedláček, 2016). With few competitors to challenge its primary source of revenue generation, and its drive to capitalise on emerging future social technologies, at this present juncture in time the answer to Lanier’s provocation is clear: Google owns the future.

 

 

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About Cheng Gao 2 Articles
Student in USYD

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