2005/09/04

Is Google the new Big Brother?

Googzilla
In just a few years, the search firm has become the world's most valuable media company and Silicon Valley's most intimidating player. And it's just getting warmed up


DAVID OLIVE

"Their ultimate aim seems to me to be, `One Google under Google, for which it stands.' "


Brian Lent, erstwhile Stanford University classmate of Google Inc. cofounders Larry Page and Sergey Brin, on the firm's mission.

It's a coincidence, surely, that a month before Google Inc.'s stock-market value eclipsed that of Time Warner Inc. to become the most valuable media firm on the planet, former Grateful Dead caterer Charlie Ayers left the Googleplex for the last time.

When he signed on as Google's executive chef in 1999, Ayers had only 40 mouths to feed. More recently, the task of preparing his organic delicacies for a burgeoning workforce of 3,000 was running him ragged, prompting Ayers to seek more entrepreneurial pastures as operator of a new chain of Silicon Valley restaurants promoting healthy eating.

In the mere seven years since its cofounding by 20-something Stanford drop-outs Larry Page, now 32, and Sergey Brin, 31, Google has supplanted Microsoft Corp. as Silicon Valley's most intimidating player. Once celebrated as an underdog and renegade — the combination that admits even brave failures into the Valley's Hall of Fame — Google is now resented as a juggernaut that sucks up scarce talent, inflating by as much as 50 per cent the cost of recruiting the most sought-after software programmers and computer engineers.

"Google is doing more damage to innovation in the Valley right now than Microsoft ever did," Reid Hoffman, founder of two Internet ventures, told a U.S. journal last week, referring to Google's adverse impact on skills-starved startups.

No doubt Page and Brin believe their company can be faithful to its mission statement, which includes the admonition, "Don't be evil," even as Google has pushed pioneering rivals such as AltaVista, Excite and Overture to the sidelines or into an early grave, and is now girding to do battle with the much larger players Microsoft, eBay Inc., Motorola Inc., Nokia Corp. and the Baby Bells.

Today, "arrogance" is a label many Valley veterans apply to Google's in-your-face aggressiveness. The warning signs that Google was destined to shed its touchy-feely image were baldly evident last year when the firm blithely ignored a string of regulatory probes into its nearly botched initial public offering.

The highly secretive firm also broke with the standard IPO practice of informing prospective investors of the use to which the company planned to put the $1.7 billion (U.S.) it raised last August. The practice continues with Google's refusal to spell out why it needs the $4 billion it hopes to raise in an imminent secondary offering.

But the turning point was likely back in 2001, when for the sake of "adult supervision," Eric Schmidt was brought on board as CEO. Irked by a reputation for insufficient haste in new-product development in his previous gig as CEO of Utah networking-software firm Novell Inc., Schmidt, 49, has been on a manic mission to diversify Google from its search franchise.

Schmidt's early moves — adding free email, mapping, digital-picture and news agglomeration features — were natural enough embellishments to Google's core business. But the firm now appears to be taking on all comers.

Last week, Google unveiled two audacious initiatives that will plunge it into instant messaging and the nascent Internet telephony field. And speculation based on its acquisitions and high-profile recruits poached from Microsoft, eBay and other tech leaders, has Google developing a Linux-compatible operating system to crack Microsoft's Windows monopoly, an online payment service to compete with eBay's PayPal service, and a software platform for mobile phones that takes direct aim at Motorola and Nokia.

Corporate historians will judge whether these are noble initiatives enabling Google to grow into its bubble-priced stock, or an undisciplined bid for dominance in too many sectors, some of which find it playing catch-up against competitors with far deeper pockets. (Microsoft alone boasts a cash hoard of $37 billion.)

What most observers already agree on is that Google's elbows have gotten sharper. As if the stories of Google strong-arming suppliers and potential partners wasn't sufficiently reminiscent of Microsoft's first two decades, Bill Gates himself has offered the dubious accolade that Google is "more like us than anyone else we have ever competed with."

The paranoia characteristic of senior Microsofties has rubbed off on decision-makers at the Googleplex in Mountain View, Calif., who sacked a new hire earlier this year for jesting online that free meals at the on-site Chez Ayers along with gyms, masseuses, an all-you-can-eat supply of Ben and Jerry's and other perks was a device for keeping drones from straying at length from their veal-fattening pens.

Last month, Google mowed down Elinor Mills, a reporter for the respected online journal CNET News, whose offence was to "Google" Eric Schmidt in a sympathetic article about how Google deals with privacy concerns. Google responded by vowing not to talk with CNET for a year.

In his May avowal that, "When we talk about organizing all of the world's information, we mean all," Schmidt apparently meant to exclude Google searches of the company itself or its personnel.

Google has brushed off concerns expressed by Dutch politicians about Google Earth, which provides aerial and satellite images of thousands of landmarks and neighbourhoods worldwide. The Dutch legislators are troubled that detailed aerial views of the Dutch parliament in the Hague and of Europe's fourth-busiest airport, Schiphol in Amsterdam, are a potential aid to terrorists. The maps and photos used by Google Earth are publicly available, Google says, and it's had no complaints from the Pentagon. End of discussion.

Critics say the same apparent insensitivity marks Google's regard for copyright. Last year's launch of Google Scholar, which indexes and cross-references technical and scientific journals that, in many cases, charge a subscription price in the thousands of dollars.

Google is also proceeding with a new project to scan and index the content of copyrighted textbooks without permission of copyright holders. Google says publishers are welcome to opt out, after scanning their extensive current and back lists of titles to determine if they've been targeted by Google.

Publishers say that process is extraordinarily cumbersome. Random House Inc., the world's largest book publisher, has contacted Google to raise its concerns. And Peter Gilver, executive director of the Association of American University Presses, says the Google scheme is "tantamount to saying Google can make copies of every copyrighted work ever published, period."

Google is also at loggerheads with U.S. television networks, including CBS and NBC, over video.google. com, a new service that enables users to call up still images and partial transcripts using simple search terms like "Dr. Phil." When preliminary talks over copyright between Google and the networks bogged down last year, Google began to record material from the networks' San Francisco affiliates without permission, later asserting it has the legal right to do so because it isn't broadcasting entire programs.

But some networks have demanded that Google remove its programming from the service, pending a mutually agreed compensation for use of material under copyright. A CBS spokesperson says Google "didn't show proper respect for us as potential partners," and told a U.S. newspaper in June, "We're not just going to give this away for free." Google responded with a statement that it "respects the rights of copyright holders."

Google and its surviving search rivals are a godsend to researchers, including this one. We take heart that two months ago Google added to the scores of languages it scans Romansh, native tongue for some 35,000 Swiss. Perhaps in this realm, Google is reaching the limits to growth.

"We pose the question," writes Business Week columnist Robert Barker, a rare sage who years ago warned that early investors in Krispy Kreme Doughnuts Inc. were on a sugar high: "If Google grew in June by adding Romansh, how will it grow in July — by addressing Antarctica's penguin population?"

Google's profits more than tripled last year, to $399 million, mostly from advertising tied to its searches. But with revenues last year of only $3.2 billion, Google investors may be fantasizing about the firm's ability to expand its search business enough to justify its spectacular $80 billion market cap. (Time Warner's revenues last year were $42 billion.)

If only to maintain the lofty valuation of its stock, Google will have to make good on another of the co-founders' mantras — that Google "makes the world a better place."

But they mean to be paid for it; and please don't get in their way.
Additional articles by David Olive

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